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<TITLE>FORM S-1</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
 <B><FONT size="2">As filed with the Securities and Exchange
Commission on February&nbsp;13, 2004</FONT></B>
</DIV>

<DIV align="right">
<B><FONT size="2">Registration
No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B>
</DIV>

<DIV align="center">
<HR size="1" width="100%" align="center" noshade>
</DIV>

<DIV align="center">
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</DIV>

<P align="center">
<B><FONT size="4">UNITED STATES SECURITIES AND EXCHANGE
COMMISSION</FONT></B>

<DIV align="center">
<B>Washington, D.C. 20549</B>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="5">Form&nbsp;S-1</FONT></B>

<DIV align="center">
<B>REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933</B>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="4">CDRJ NORTH ATLANTIC (Lux)
S.&#224;r.l.</FONT></B>

<DIV align="center">
<B><FONT size="2">To Be Renamed</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="6">Jafra S.A.</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Exact name of Registrant as specified in its
charter)</FONT></I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Luxembourg</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">2844</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">98-0185445</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="2">(State or other jurisdiction of<BR>
    incorporation or organization)</FONT></I></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(Primary Standard Industrial<BR>
    Classification Code Number)</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(I.R.S. Employer Identification No.)</FONT></I></TD>
</TR>

</TABLE>
</CENTER>

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<P align="center">
<B><FONT size="2">174&nbsp;route de Longwy</FONT></B>

<DIV align="center">
<B><FONT size="2">L-1940 Luxembourg</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Luxembourg</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">352 22 6027</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Address, including zip code, and telephone
number, including</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">area code, of Registrant&#146;s principal
executive offices)</FONT></I>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="2">Ralph S. Mason, III</FONT></B>

<DIV align="center">
<B><FONT size="2">Vice Chairman, Executive Vice President
and</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">General Counsel</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Jafra Cosmetics International, Inc.</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">2451&nbsp;Townsgate Road</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Westlake Village, California 91361</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(805)&nbsp;449-3004</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Address, including zip code, and telephone
number, including</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">area code, of Registrant&#146;s agent for
service)</FONT></I>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><I><FONT size="2">Copies to:</FONT></I></B>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Steven J. Slutzky, Esq.<BR>
    Debevoise &#38; Plimpton LLP<BR>
    919 Third Avenue<BR>
    New York, New York 10022<BR>
    (212)&nbsp;909-6000</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">William J. Whelan III, Esq.<BR>
    Cravath, Swaine &#38; Moore LLP<BR>
    825 Eighth Avenue<BR>
    New York, New York 10019<BR>
    (212) 474-1000</FONT></B></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Approximate
date of commencement of proposed sale to the public:</B> As soon
as practicable after this Registration Statement becomes
effective.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the securities being registered on this Form are being offered
on a delayed or continuous basis pursuant to Rule&nbsp;415 under
the Securities Act, check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is filed to register additional securities for an
offering pursuant to Rule&nbsp;462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment filed pursuant to
Rule&nbsp;462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<DIV align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment filed pursuant to
Rule&nbsp;462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
delivery of the prospectus is expected to be made pursuant to
Rule&nbsp;434, check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="2">CALCULATION OF REGISTRATION FEE</FONT></B>

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<TR>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
</TR>

<TR>
    <TD colspan="5" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
</TR>

<TR>
    <TD colspan="5" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Proposed Maximum Aggregate</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Amount of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Title of Each Class of Securities to be Registered</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Offering Price(1)</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Registration Fee</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
</TR>

<TR>
    <TD colspan="5" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common Stock, $2.00 par value
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$100,000,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$12,670
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD colspan="5" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Estimated solely for the purpose of calculating
    the amount of the registration fee in accordance with
    Rule&nbsp;457(o) promulgated under the Securities Act of 1933,
    as amended. Includes shares of common stock subject to the
    underwriters&#146; over-allotment option.
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The
Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section&nbsp;8(a)
of the Securities Act of 1933, or until this Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section&nbsp;8(a), may determine.</B>
</FONT>

<P align="center">
<HR size="1" width="100%" align="center" noshade>

<DIV align="center">
<HR size="1" width="100%" align="center" noshade>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="1" cellpadding="5"><TR><TD>
<FONT size="2" color="#E8112D">The information in this
prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.</FONT><FONT size="2"> <BR>
</FONT>
</TD></TR></TABLE>

<P align="center">
<B><FONT size="2" color="#E8112D">Subject to
Completion</FONT></B>

<DIV align="center">
<B><FONT size="2" color="#E8112D">Preliminary Prospectus dated
February&nbsp;13, 2004</FONT></B>
</DIV>

<P align="left">
<B><U><FONT size="2">PROSPECTUS</FONT></U></B>

<P align="center">
<B><FONT size="5">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares</FONT></B>

<P align="center">
<IMG src="v96362v9636200.gif" alt="(Jafra Logo)">

<P align="center">
<B><FONT size="6">Jafra S.A.</FONT></B>

<P align="center">
<B><FONT size="4">Common Stock</FONT></B>

<P align="center">
<HR size="1" width="27%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are
selling &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock and the selling stockholders are
selling &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock. We will not receive any of the proceeds from
the shares of common stock sold by the selling stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering, there has been no public
market for our common stock. The initial public offering price
of our common stock is expected to be between
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. We intend to apply to list the shares on the New York
Stock Exchange under the symbol &#147;JFA&#148;.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Investing in our common stock involves risks that are
described in the &#147;Risk Factors&#148; section beginning on
page&nbsp;11 of this prospectus.</B>

<P align="center">
<HR size="1" width="27%" align="center" noshade>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Public offering price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Underwriting discount
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds, before expenses, to Jafra
    S.A.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds, before expenses, to the selling
    stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters have an option to purchase a
maximum
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares from the selling stockholders at the public offering
price, less the underwriting discount, within 30&nbsp;days from
the date of this prospectus to cover over-allotments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Delivery of the shares of common stock will be
made on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
</FONT>

<P align="center">
<HR size="1" width="27%" align="center" noshade>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD align="left"><B><FONT size="5">Merrill Lynch &#38; Co.</FONT></B></TD>
    <TD align="right"><B><FONT size="5">Credit Suisse First Boston</FONT></B></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="5">Banc of America Securities LLC</FONT></B>

<P align="center">
<HR size="1" width="27%" align="center" noshade>

<P align="center">
<FONT size="2">The date of this prospectus
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004.
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">[Inside Front Cover]</FONT></B>

<P align="center">
<IMG src="v96362v9636200.gif" alt="(Jafra Logo)">

<P align="center">
<B><FONT size="2">[Photographs of skin care and color cosmetic
products;</FONT></B>

<DIV align="center">
<B><FONT size="2">photographs depicting Jafra
consultants]</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">MARKET AND INDUSTRY DATA</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">TRADEMARKS AND TRADE NAMES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">PRESENTATION OF FINANCIAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">EXPLANATORY NOTE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">PROSPECTUS SUMMARY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">Summary Consolidated Financial and Other Data</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">RISK FACTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">FORWARD-LOOKING STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">USE OF PROCEEDS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">CAPITALIZATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">DILUTION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">BUSINESS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015">MANAGEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#016">FISCAL YEAR-END OPTION VALUE TABLE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#017">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND SELLING STOCKHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#019">DESCRIPTION OF OUR INDEBTEDNESS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">DESCRIPTION OF CAPITAL STOCK</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">SHARES ELIGIBLE FOR FUTURE SALE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#023">CERTAIN MATERIAL LUXEMBOURG TAX CONSIDERATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#024">UNDERWRITING</A></TD></TR>
<TR><TD colspan="9"><A HREF="#025">NOTICE TO CANADIAN RESIDENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#026">LEGAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#027">EXPERTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#028">WHERE YOU CAN FIND MORE INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="v96362exv23w1.htm">CONSENT OF ERNST & YOUNG LLP</A></TD></TR>
<TR><TD colspan="9"><A HREF="v96362exv23w2.htm">CONSENT OF DELOITTE & TOUCHE LLP</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Market and Industry Data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">i</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trademarks and Trade Names
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">ii</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Presentation of Financial Matters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">ii</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Explanatory Note
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">ii</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prospectus Summary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risk Factors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Forward-Looking Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Use of Proceeds
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividend Policy
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dilution
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selected Historical Consolidated Financial and
    Other Data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Management&#146;s Discussion and Analysis of
    Financial Condition and Results of Operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Business
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Management
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Security Ownership of Certain Beneficial Owners,
    Management and Selling Stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Certain Relationships and Related Party
    Transactions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Our Indebtedness
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Capital Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares Eligible for Future Sale
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Certain Material U.S. Federal Income Tax
    Considerations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Certain Material Luxembourg Tax Considerations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Underwriting
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notice to Canadian Residents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal Matters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Experts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Where You Can Find More Information
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Index to Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Independent Auditors&#146; Report
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Independent Auditors&#146; Report
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<HR size="1" width="27%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">No dealer, salesperson or other person is
authorized to give any information or to represent anything not
contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is
an offer to sell or buy only the securities offered hereby, but
only under circumstances and in jurisdictions where it is lawful
to do so. The information contained in this prospectus is
current only as of its date.</FONT></B>

<!-- link1 "MARKET AND INDUSTRY DATA" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center">
<B><FONT size="2">MARKET AND INDUSTRY DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Market data used throughout this prospectus,
including information relating to our relative position in the
direct selling cosmetics and fragrance industries, and in Mexico
and in the United States generally, are based on the good faith
estimates of management, which are based upon management&#146;s
review of internal company surveys, independent industry surveys
and publications and other publicly available information,
including reports and information prepared by the World
Federation of Direct Selling Associations, Euromonitor, the
Selig Center for Economic Growth at the University of Georgia,
and the U.S.&nbsp;Census Bureau. Although such data is
inherently imprecise, based on management&#146;s understanding
of the markets in which we compete, management believes that
such data is generally indicative of our relative market share
and competitive position.
</FONT>

<P align="center"><FONT size="2">i
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "TRADEMARKS AND TRADE NAMES" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="center">
<B><FONT size="2">TRADEMARKS AND TRADE NAMES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We own or have the right to use trademarks or
trade names used in conjunction with the operation of our
business. In addition, our name, logo and website name and
address are our service marks or trademarks. Each trademark,
trade name or service mark of any other company appearing in
this prospectus belongs to its holder. Some of the more
important trademarks that we use include <I>Adorisse, Always
Color, Chosen, Eau D&#146;Aromes, Fm&nbsp;Force Magnetique,
Jafra, JF9, Legend for Men, Le&nbsp;Moir&#233;, Optimeyes,
Precious Protein, Rediscover, Royal Almond, Royal Ginger, Tender
Moments, Time Corrector, Time Protector </I>and <I>Victus.</I>
</FONT>

<!-- link1 "PRESENTATION OF FINANCIAL MATTERS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center">
<B><FONT size="2">PRESENTATION OF FINANCIAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We report our financial statements in
U.S.&nbsp;dollars and prepare our financial statements in
accordance with accounting principles generally accepted in the
United States, or GAAP. We have adopted a fiscal year end of
December&nbsp;31.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In this prospectus, except where otherwise
indicated, references to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;$&#148; or &#147;dollars&#148; are to the
    lawful currency of the United States, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;pesos&#148; are to the lawful currency of
    Mexico.
    </FONT></TD>
</TR>

</TABLE>

<!-- link1 "EXPLANATORY NOTE" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="center">
<B><FONT size="2">EXPLANATORY NOTE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the closing of the sale of common stock
offered hereby, the issuer of the shares, CDRJ North Atlantic
(Lux) S.&#224;r.l., will convert from a Luxembourg private
company, or <I>soci&#233;t&#233; &#224; responsabilit&#233;
limit&#233;e,</I> to a Luxembourg corporation, or
<I>soci&#233;t&#233; anonyme,</I> and will change its name to
&#147;Jafra S.A.&#148;
</FONT>

<P align="center"><FONT size="2">ii
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<!-- link1 "PROSPECTUS SUMMARY" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="center">
<B><FONT size="2">PROSPECTUS SUMMARY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">This summary highlights selected information
about us. In addition to reading this summary, you should review
carefully the entire prospectus, especially the &#147;Risk
Factors&#148; section and our consolidated financial statements
and notes to those consolidated financial statements included in
this prospectus, before making any investment decision. Unless
the context otherwise requires, in this prospectus, references
to &#147;Jafra&#148;, &#147;we&#148;, &#147;us&#148; and
&#147;our&#148; mean collectively Jafra S.A., our top-tier
holding company following the completion of the liquidation of
CDRJ Investments (Lux) S.A., which we also refer to as
&#147;Jafra&#148;, Jafra Worldwide Holdings (Lux) S.&#224;r.l.,
our intermediate holding company and a wholly-owned subsidiary
of Jafra S.A., which we also refer to as &#147;Jafra
Worldwide&#148;, Jafra Cosmetics International, Inc., which we
also refer to as &#147;Jafra&nbsp;US&#148;, Distribuidora
Comercial Jafra, S.A. de C.V., our Mexican operating company
that conducts our distribution activities in Mexico, which we
also refer to as &#147;Jafra Distribution (Mexico)&#148;, and
Jafra Cosmetics International, S.A. de C.V., which we also refer
to as &#147;Jafra Mexico&#148;, and their direct and indirect
subsidiaries. In 2003, we ceased operations in Venezuela, Chile,
Colombia, Peru and Thailand. Consequently, our historical
financial statements have been revised to reflect those
operations, other than Thailand, as discontinued operations for
all periods presented and our number of direct selling
consultants has been reduced accordingly.</FONT></I>

<P align="center">
<B><FONT size="2">Our Business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a direct seller of skin and body care
products, color cosmetics, fragrances and other personal care
products. We sell our Jafra brand products through a multi-level
direct selling network of over 400,000 independent consultants,
who market and sell our products to their customers. Our largest
markets are Mexico and the United States, which together
contributed approximately 90% of our total net sales in 2002 and
are among the world&#146;s largest direct selling markets. We
have a leading market share as a direct seller of skin care
products, color cosmetics and fragrances in Mexico, where Jafra
is among the most recognized cosmetics brand names. We introduce
new products each year in many of our product categories to
motivate and excite our consultants. In developing and
introducing new products, we employ a &#147;fast follower&#148;
strategy to minimize research costs and focus our development
efforts on products that have proven successful in the
marketplace. Our independent consultant base grew 14% to 401,000
in 2002 over 2001, and 4% during the nine months ended
September&nbsp;30, 2003 over the comparable period in 2002.
During the year ended December&nbsp;31, 2002, we generated net
sales of $382.6&nbsp;million, of which $251.6&nbsp;million
represents sales in Mexico, $92.1&nbsp;million represents sales
in the United States and $38.9&nbsp;million represents sales in
Europe and other markets. We also generated Consolidated EBITDA,
as defined in the indenture governing our 10&nbsp;3/4% Senior
Subordinated Notes due 2011, or our 10&nbsp;3/4% Notes, of
$63.6&nbsp;million for the year ended December&nbsp;31, 2002 and
$45.7&nbsp;million for the nine months ended September&nbsp;30,
2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that the global direct selling market
provides substantial sales opportunity and has robust growth
prospects. The World Federation of Direct Selling Associations
estimates that in 2002, global direct selling was an
$85.6&nbsp;billion industry, as measured by the retail value of
all products and services sold. Globally, direct selling
increased at a compound annual growth rate of approximately 5%
from 1991 to 2002. In 2002, total consumer goods direct sales in
our largest markets, Mexico and the United States, were
$1.2&nbsp;billion and $28.6&nbsp;billion, respectively. These
markets ranked fourth and first, respectively, in terms of
largest markets for total direct sales in 2002. Consumer goods
direct sales in Mexico and the United States increased at a
compound annual growth rate of 9.4% and 5.8%, respectively, from
1998 to 2002. Within the United States direct selling market, we
focus on the Hispanic community, which comprises over 13% of the
entire U.S.&nbsp;population, and which is expected to increase
its buying power at a compound annual growth rate of 9.2% from
2003 through 2008.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business strategy is focused on expanding and
retaining our loyal and motivated consultant base, the growth of
which has been a significant driver of our net sales growth. Our
multi-level direct selling business model is a source of organic
growth that aligns our consultants&#146; income opportunities
with our strategy of continuing to grow our consultant base, net
sales and cash flow. We focus on providing our
</FONT>
</DIV>

<P align="center"><FONT size="2">1
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<DIV align="left">
<FONT size="2">independent consultants with a portfolio of
premium quality skin care and beauty products, superior customer
service, and excellent marketing and training support. Our
established, cost-effective distribution infrastructure allows
us to generate high levels of operating profitability and
requires relatively low capital investment and working capital
to support and expand our business. We believe that these
strengths of our business model have given us a competitive
advantage in attracting and retaining a productive consultant
base, which in turn has contributed to our success and positions
us well for ongoing growth in net sales and profitability.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We were founded 48&nbsp;years ago in Southern
California and were acquired in April 1998 from The Gillette
Company by an affiliate of Clayton, Dubilier&nbsp;&#38; Rice,
Inc., a New York-based private investment firm, along with a
newly formed management team highly experienced in the direct
selling industry. Since our acquisition, we have grown our
consultant base more than 95% from approximately 205,000 to
approximately 401,000 consultants as of December&nbsp;31, 2002.
Our net sales have grown from $241.9&nbsp;million to
$382.6&nbsp;million from 1998 to 2002 largely as a result of
this growth in our consultant base.
</FONT>

<P align="center">
<B><FONT size="2">Our Competitive Strengths</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Attractive Direct Selling Business Model.
</FONT></I><FONT size="2">Our direct selling business model
requires relatively low investment, promotes organic growth and
generates high levels of operating profitability and cash flow.
We believe that we provide our independent consultants with a
compelling career opportunity and have various competitive
advantages in attracting and retaining our consultant base. We
have designed our multi-level compensation and incentive system
to align our consultants&#146; income opportunity with our
objectives of both sustained, profitable net sales growth and
ongoing expansion of the consultant base. Our consultants&#146;
direct compensation, which we refer to as commissions, from the
sale of products is equal to the differential between the
wholesale price paid to Jafra and the retail price paid by the
customer. Our compensation system also encourages consultants to
recruit additional consultants since they can also receive an
override, or percentage of the sales of the consultants they
have sponsored. We believe that the cost for an individual to
become a Jafra consultant, which averages $25 in Mexico and $39
in the United States, is among the lowest of the leading direct
sellers in these markets. Furthermore, we impose no inventory
maintenance requirements and, in the United States, no minimum
order requirements on our consultants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Presence in Leading Direct Selling Markets.
</FONT></I><FONT size="2">We believe we have a leading market
share of skin care products, color cosmetics and fragrance sales
in Mexico, the world&#146;s fourth largest direct selling market
in 2002, and have grown our net sales in the United States, the
world&#146;s largest direct selling market in 2002 and our
second-largest market. We believe that in Mexico, our network of
approximately 269,000 independent consultants, as of
December&nbsp;31, 2002, and our strong brand equity position,
will allow us to continue to grow our consultant base and
capture additional market share. Over the four years ended
December&nbsp;31, 2002, we grew our net sales in Mexico by a
compound annual growth rate of 22% measured in local currency
and 20% measured in U.S.&nbsp;dollars and increased our market
share of direct selling cosmetics in Mexico from approximately
17% to approximately 26%. In late 2000, we reorganized our
U.S.&nbsp;operations into a General Division and a Hispanic
Division, which is comprised of Spanish speaking consultants.
Since this reorganization, we have grown our net sales in the
United States by an average of 12% per year and increased our
U.S.&nbsp;consultant base to approximately 72,000 consultants as
of December&nbsp;31, 2002. According to the U.S.&nbsp;Census
Bureau, currently over 13.3% of the U.S.&nbsp;population is
Hispanic, and the U.S.&nbsp;Hispanic population has been the
fastest-growing segment of the U.S.&nbsp;population in recent
years. We believe our focus on this demographic will allow us to
continue to grow our net sales. Additionally, U.S.&nbsp;Hispanic
buying power is expected to grow at a compound annual growth
rate of 9.2% from 2003 to 2008, nearly double the non-Hispanic
buying power growth rate of 4.8% over the same period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Established and Growing Consultant Base.
</FONT></I><FONT size="2">We believe that as a result of
management&#146;s focus on providing our independent consultants
with superior marketing and training support and products, our
direct sales force expanded by more than 95% since our
acquisition in 1998 to approximately 401,000 consultants as of
December&nbsp;31, 2002. This rapid expansion of our consultant
base has been a primary
</FONT>
</DIV>

<P align="center"><FONT size="2">2
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<DIV align="left">
<FONT size="2">driver of our significant net sales growth. As of
December&nbsp;31, 2002, a majority of our consultants had been
affiliated with us for approximately three years. Our consultant
base is anchored by a group of approximately 17,000 independent
managers, who on average, as of December&nbsp;31, 2002, had been
affiliated with Jafra for more than eight years, and who provide
us with a source of organizational stability. We host meetings
approximately every two months with more than 60,000 of our
independent consultants in Mexico at one of our regularly
scheduled training sessions, sales and marketing workshops or
new product demonstrations. We believe that our frequent contact
with our consultants provides us a competitive advantage in our
core markets and helps us maximize our consultant retention
rates.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Premium Quality Product Offerings.
</FONT></I><FONT size="2">We develop and market a diverse
portfolio of premium quality products that we believe appeal to
a wide customer base, and enjoy significant brand equity and
strong product loyalty. We are focused on developing consumable
products that encourage repeat purchases and foster personal
interaction between consultants and their customers. We believe
that the Jafra brand is among the most widely recognized
cosmetics brands in Mexico, which presents a significant
opportunity to leverage into new cosmetics products and line
extensions. In addition, the quality of our products permits us
generally to price them at the higher end of the price range for
cosmetics sold through the direct sales channel, which is
slightly below the price point of comparable prestige products
sold in department stores.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Modern, Efficient and Scalable Operating
Infrastructure.</FONT></I><FONT size="2"> From the time of our
acquisition in April 1998 to December&nbsp;31, 2002, we invested
more than $40&nbsp;million to build a modern, efficient
operating infrastructure and prepare us for future growth. These
investments have included the establishment of a new
distribution facility in Mexico and the modernization of our
manufacturing facility in Naucalpan, Mexico. We recently decided
to move our remaining manufacturing activities in the United
States to our Mexico facility and expect that this transition
will be completed by mid-2004 and will result in cost savings
and increased profit margins. In addition, we have implemented
Enterprise Resource Planning software from JD&nbsp;Edwards as a
platform to run our core operations in the United States, our
order entry fulfillment, commission override processing and
financial system software. We also redefined our Internet
strategy and expanded our e-commerce platform. Our e-commerce
strategy is primarily a resource offered to our consultants to
facilitate placing orders on-line, monitoring the status of
orders, checking inventory and managing their individual
businesses more effectively. Since launch, our
U.S.&nbsp;consultants have embraced the system, with 75% of our
General Division orders and 21% of our Hispanic Division orders
being placed on line during 2003. Our e-commerce strategy has
not only benefited our consultants, but has allowed us to reduce
fixed overhead expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Strong Financial Performance.
</FONT></I><FONT size="2">We have combined the growth derived
from our multi-level direct selling business model with our
focus on efficiency to generate consistent operating income.
Since our acquisition in 1998, we have reduced manufacturing
costs, streamlined our corporate overhead and established a
low-cost, scalable distribution infrastructure, resulting in an
increase of 8.6&nbsp;percentage points, as of December&nbsp;31,
2002, in our operating profit margin. Over the same period, we
generated $122.4&nbsp;million in cumulative cash flows from
operating activities. We believe that our direct selling
business model affords us opportunities to leverage our fixed
cost structure to expand margins and increase profitability as
we grow. In addition, our business model continues to generate
significant organic growth, which creates scale that increases
our efficiencies in purchasing, manufacturing, marketing,
training and technology functions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Proven and Experienced Management
Team.</FONT></I><B><FONT size="2"> </FONT></B><FONT size="2">We
are led by a highly experienced and committed senior management
team with extensive direct selling experience, most of whom have
held positions at some of the world&#146;s leading direct
selling companies. Our senior management team has developed and
executed our business strategy since our acquisition in 1998
from Gillette. In addition to our senior management team, we
have a strong middle management team with significant experience
and understanding of the business. We believe our management
team has been instrumental in growing our business and
significantly improving our operating performance.
</FONT>
</DIV>

<P align="center"><FONT size="2">3
</FONT>
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<P align="center">
<B><FONT size="2">Our Growth Strategies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Continue Core Strategy of Expanding and
Retaining Consultant Base.</FONT></I><FONT size="2"> We intend
to continue to drive growth in our business by focusing on
sponsoring and retaining loyal consultants. We believe that the
attractive income opportunities offered by our multi-level
compensation structure and our operational and cultural focus on
providing support to our consultants have been instrumental in
achieving robust consultant and net sales growth over the past
five years. We believe the emphasis we place on providing our
consultants with superior customer service, training, effective
sales and marketing materials, brochures, and new product
demonstrations, will continue to differentiate us from our
competitors. Additionally, we intend to continue to stimulate
net sales growth by motivating our consultant base at local
recognition events and by offering travel rewards, gifts and
other incentives to our most productive consultants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Capitalize on Leading Market Position and
Brand Equity in Mexico.</FONT></I><FONT size="2"> We believe our
leading market position and the strength of the Jafra brand in
Mexico position us to benefit from favorable demographic trends
and will facilitate our efforts to continue to expand our
consultant base and capture additional market share. Currently,
the average age of a Jafra consultant is 35, while over 50% of
the Mexican population is under the age of 20 and two-thirds are
under the age of 30. As the Mexican population ages and more
adults seek career and income opportunities, we believe that our
brand equity and the scale of our consultant base will position
Jafra as an attractive career opportunity and facilitate
consultant recruitment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Continue Successful U.S.&nbsp;Divisional
Strategy.</FONT></I><FONT size="2"> We will continue to pursue
our successful strategy of differentiating ourselves from other
direct selling companies by focusing on demographic
characteristics of our consultants and their target customers.
In late 2000, we bifurcated our operations in the United States
into a Hispanic Division and a General Division. The
establishment of two separate divisions in the United States has
allowed us to customize our marketing efforts. We have focused
on those separate segments of the population and will continue
to provide our U.S.&nbsp;Spanish and non-Spanish speaking
consultants with tailored recruiting programs, training
materials, seminars and product presentations. In particular, we
believe we will continue to benefit from the growth of the
U.S.&nbsp;Hispanic population and its increasing buying power.
We believe these trends will continue to benefit our sales and
recruitment efforts. Our divisional approach to the U.S. market
facilitates the interaction of our consultants with their
customers and contributed to the 16% net sales growth of our
U.S.&nbsp;business during fiscal 2002 and an 11% increase in net
sales during the first nine months of fiscal 2003 as compared
with the comparable fiscal 2002 period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Maintain Strong New Product Pipeline.
</FONT></I><FONT size="2">The development and introduction of
new products and line extensions are fundamental to our direct
selling business model in that they serve to motivate our
consultants by providing them with new and exciting products to
demonstrate and market to their customers. As part of each of
our consecutive two-month marketing and promotion cycles, we
regularly introduce line extensions, such as new colors within
our existing color cosmetics lines, and new products that employ
the latest technology and capitalize on the face-to-face
interaction between consultants and their customers. In the
development of new products, we employ a &#147;fast
follower&#148; strategy that minimizes research costs and
focuses development efforts on innovative, efficacious products
that have already proven successful in the marketplace.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Leverage Brand Strength into Complementary
Categories and Markets.</FONT></I><FONT size="2"> Since our
acquisition in 1998, we have primarily focused on growing our
loyal consultant base and establishing a cost-effective
distribution infrastructure and superior support structure for
our consultants. We have recently begun to assess incremental
growth opportunities through the development of new products in
complementary categories that leverage the Jafra brand equity
and ultimately could increase our consultants&#146; average
order size. Our measured strategy is to cost-effectively develop
selective products in complementary categories with our
consultants&#146; core customer in mind and that will
specifically lend themselves to the one-on-one meetings and
product demonstrations that are fundamental to our direct
selling business model. We also continue to evaluate the
possibility of expanding into other direct selling markets and
evaluate acquisition opportunities.
</FONT>
</DIV>

<P align="center"><FONT size="2">4
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Continue to Identify Operating Efficiencies
and Benefit from Economies of Scale.</FONT></I><FONT size="2">
From the time of our acquisition in 1998 to December&nbsp;31,
2002, we have increased our gross profit margin by approximately
5.3&nbsp;percentage points from 71.1% to 76.4% and reduced
selling, general and administrative expenses, less one-time
charges related to our May 2003 recapitalization, as a
percentage of net sales by approximately 3.3 percentage points
from 64.4% to 61.1%, primarily by reducing manufacturing and
overhead costs, streamlining our marketing efforts and improving
our working capital management. We intend to continue to pursue
additional opportunities to realize cost savings and operating
efficiencies in order to increase profitability. We recently
announced our intention to relocate our skin care and body care
manufacturing facilities to Mexico. Further, we believe our
direct selling business model will continue to generate
significant organic growth and that the resulting scale will
afford us increasing opportunities to leverage our fixed cost
base and increase efficiencies in our purchasing, manufacturing,
marketing, training and technology functions.
</FONT>

<P align="center">
<FONT size="2">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*
</FONT>

<P align="center">
<B><FONT size="2">Controlling Stockholder</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V
Limited Partnership, or CD&#38;R Fund&nbsp;V, owns approximately
84.0% of the outstanding shares of common stock of Jafra on a
fully-diluted basis on the date of this prospectus, including
all outstanding options, and will
own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of Jafra&#146;s common stock following the completion of this
offering. Clayton, Dubilier&nbsp;&#38; Rice Inc., or CD&#38;R,
is a private equity investment firm which manages CD&#38;R
Fund&nbsp;V. Of the ten members of our board of directors, three
are principals of CD&#38;R.
</FONT>

<P align="center">
<FONT size="2">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal executive offices are located at
174&nbsp;route de Longwy, L-1940 Luxembourg, Luxembourg, and our
telephone number there is 352&nbsp;22&nbsp;6027. The address of
our principal U.S.&nbsp;subsidiary&#146;s main office is
2451&nbsp;Townsgate Road, Westlake Village, California 91361,
and the telephone number there is (805)&nbsp;449-3004. Our
website is located at www.jafra.com. The information on our
website is not incorporated into and is not intended to be part
of this prospectus. Our website address is included in this
prospectus as an inactive textual reference only.
</FONT>
</DIV>

<P align="center"><FONT size="2">5
</FONT>
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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<P align="center">
<B><FONT size="2">The Offering</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Issuer
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Jafra S.A. Prior to the sale of the shares
    offered hereby, the issuer will be converted from a
    <I>soci&#233;t&#233; &#224; responsabilit&#233; limit&#233;e</I>
    into a <I>soci&#233;t&#233; anonyme</I> and its outstanding
    quotas will be recapitalized into shares of capital stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Shares of Common Stock Offered by Jafra
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Shares of Common Stock Offered by the Selling
    Stockholders
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(or &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    if the underwriters exercise their over-allotment option in full)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Shares of Common Stock Outstanding After the
    Offering
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Use of Proceeds
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Our net proceeds from this offering, after
    deducting underwriting discounts and estimated expenses, will be
    approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million.
    We intend to use our net proceeds from this offering, together
    with borrowings under our credit facility, principally to redeem
    $70&nbsp;million in aggregate principal amount of our
    outstanding 10&nbsp;3/4% Senior Subordinated Notes due 2011, or
    our 10&nbsp;3/4% Notes, and to pay related transaction fees and
    related taxes and expenses. See &#147;Use of Proceeds&#148;. We
    will not receive any proceeds from the sale of shares by the
    selling stockholders.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Dividend Policy
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">We do not expect to pay dividends on our common
    stock for the foreseeable future.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">New York Stock Exchange Trading Symbol
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">JFA
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless we specifically state otherwise or the
context otherwise requires, all information in this prospectus:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">gives effect to our conversion to an S.A. from an
    S.&#224;r.l. and the
    related &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for
    1&nbsp;split of our common shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">assumes no exercise of the over-allotment option
    granted by the selling stockholders to the underwriters; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">excludes 84,242&nbsp;shares of common stock
    issuable upon the exercise of outstanding stock options at a
    weighted average exercise price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share with exercise prices ranging from
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share to
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share; of these shares, 68,120&nbsp;shares are subject to
    currently vested stock options at a weighted average exercise
    price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share with exercise prices ranging from
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share. All exercise prices have been adjusted to reflect the May
    2003 recapitalization transactions. See &#147;Certain
    Relationships and Related Party Transactions&nbsp;&#151; May
    2003 Recapitalization.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">Risk Factors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should consider carefully all the information
included in this prospectus and, in particular, the specific
factors set forth under &#147;Risk Factors&#148; beginning on
page&nbsp;11 for risks involved in investing in our common stock.
</FONT>
</DIV>

<P align="center"><FONT size="2">6
</FONT>
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<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">Summary Consolidated Financial and Other
Data</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of consolidated
financial and other data of CDRJ North Atlantic (Lux)
S.&#224;r.l. (to be renamed Jafra S.A.) (amounts in millions
except for per share and consultant data and ratios). The
summary consolidated financial data for the years ended
December&nbsp;31, 2000, 2001 and 2002 are derived from the
audited consolidated financial statements of CDRJ North Atlantic
(Lux) S.&#224;r.l. The consolidated financial statements as of
December&nbsp;31, 2001 and for each of the two years in the
period ended December&nbsp;31, 2001 have been audited by
Deloitte&nbsp;&#38; Touche LLP, independent auditors. The
consolidated financial statements as of December&nbsp;31, 2002
and for the year then ended have been audited by
Ernst&nbsp;&#38; Young LLP, independent auditors. The audited
consolidated financial statements as of December&nbsp;31, 2001
and 2002 and for the years ended December&nbsp;31, 2000, 2001
and 2002 are included elsewhere in this prospectus. The summary
consolidated financial data as of September&nbsp;30, 2003 and
for the nine months ended September&nbsp;30, 2002 and 2003 are
derived from the unaudited consolidated financial statements of
CDRJ North Atlantic (Lux) S.&#224;r.l. included elsewhere in
this prospectus and give effect to our May 2003
recapitalization. Results for the nine months ended
September&nbsp;30, 2003 are not necessarily indicative of
results that can be expected for the year ended
December&nbsp;31, 2003. The as adjusted balance sheet data below
as of and for the period ended September&nbsp;30, 2003 reflects
adjustments to our historical financial data to give effect to
the sale of the shares offered hereby and the use of proceeds
therefrom, as well as to borrowings under the revolving portion
of our senior credit facilities, to fund the full amount of a
final liquidating distribution of up to $20&nbsp;million to
shareholders of CDRJ Investments (Lux) S.A., as if such
transactions had occurred on September&nbsp;30, 2003. You should
read the following summary consolidated financial and other data
of CDRJ North Atlantic (Lux) S.&#224;r.l. in conjunction with
the historical consolidated financial statements and other
financial information appearing elsewhere in this prospectus,
including &#147;Capitalization&#148;, &#147;Selected Historical
Consolidated Financial and Other Data&#148; and
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148;.
</FONT>

<!-- link1 "SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="center">
<B><FONT size="2">SUMMARY CONSOLIDATED FINANCIAL AND OTHER
DATA</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Statement of Income Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">286.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">207.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">219.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">212.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">224.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(g)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restructuring and impairment charges(a)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on sale of assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(g)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest (expense), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on early extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(h)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on discontinued operations, net of income
    tax expense of $0 in 1999 and 2000, $0.1 in 2001 and 2002 and $0
    in 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(i)</FONT></TD>
</TR>

</TABLE>
</CENTER>
</DIV>

<P align="center"><FONT size="2">7
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings per share from continuing operations
    (basic)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per share from discontinued operations
    (basic)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings per share (basic)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings per share from continuing operations
    (diluted)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per share from discontinued operations
    (diluted)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings per share (diluted)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Other Financial and Operational
    Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by (used in) operating
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated EBITDA(b)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average number of consultants(c)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">260,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">344,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">376,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">404,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consultants at end of period(d)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">274,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">293,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">351,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">401,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">384,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ratio of Consolidated EBITDA to consolidated
    interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">As of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Adjusted</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance Sheet Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net working capital(e)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt(f)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">248.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(a)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For 1999, $2.7&nbsp;million of our restructuring
    and impairment charges were primarily cash charges for severance
    related to the closure of our U.S.&nbsp;factory. Of the
    remainder, $1.0&nbsp;million were other restructuring charges
    and approximately $1.1&nbsp;million were non-cash asset
    impairment charges related to the write down or impairment of
    assets. For 2000, our restructuring and impairment charges
    included approximately $1.6&nbsp;million of restructuring
    charges related to the restructuring of our European operations,
    most of which were payments of severance and lease termination
    costs, and approximately $1.0&nbsp;million of non-cash asset
    impairment charges related to the write down or impairment of
    assets.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(b)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;Consolidated EBITDA&#148; as presented
    herein is a financial measure that is used in the indenture
    governing our 10&nbsp;3/4% Notes, or our &#147;10&nbsp;3/4%
    Notes Indenture&#148;, as a component of a coverage ratio that
    </FONT></TD>
</TR>

</TABLE>

<DIV align="right">
<I><FONT size="2">footnotes continued on following
page</FONT></I>
</DIV>
</DIV>

<P align="center"><FONT size="2">8
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">is used to test whether a variety of transactions
    are permitted. Consolidated EBITDA (as defined in the
    10&nbsp;3/4% Notes Indenture) differs from the term
    &#147;EBITDA&#148; as it is commonly used. In addition to
    adjusting net income to exclude income tax expense, interest
    expense and depreciation and amortization, Consolidated EBITDA
    (as defined in the 10&nbsp;3/4% Notes Indenture) also adjusts
    net income by excluding items or expenses not typically excluded
    in the calculation of &#147;EBITDA&#148;, such as extraordinary,
    unusual or nonrecurring charges, the cumulative effect of
    accounting change, unrealized foreign exchange gains or losses
    (with respect to currency agreements, indebtedness or certain
    intercompany obligations), non-cash charges and losses and
    income or loss from markets we exited in 2003. The historical
    Consolidated EBITDA measures set forth in this prospectus
    reflect the application of the terms of the 10&nbsp;3/4% Notes
    Indenture to the financial results of the specified prior
    periods. We present Consolidated EBITDA because it is one of the
    measures upon which management assesses our financial
    performance, and is a measure of our financial performance that
    is used in the 10&nbsp;3/4% Notes Indenture to test the
    permissibility of specified types of transactions. Among other
    provisions, Consolidated EBITDA is used in the 10&nbsp;3/4%
    Notes Indenture to test whether our subsidiaries may incur
    additional indebtedness or make dividends or other advances of
    funds to us. Purchasers of our common stock may view
    Consolidated EBITDA as a measure of our ability to service debt
    and of our financial performance. However, Consolidated EBITDA
    is not a measure of financial performance or liquidity under
    GAAP. Accordingly, while providing useful information,
    Consolidated EBITDA should not be considered in isolation or as
    a substitute for consolidated statement of income and cash flow
    data prepared in accordance with GAAP as an indication of our
    operating performance or liquidity.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">The 10&nbsp;3/4% Notes Indenture provides that,
in order to enter into the following types of transactions, in
addition to other applicable requirements, the ratio of
Consolidated EBITDA (as defined in the 10&nbsp;3/4% Notes
Indenture) to our consolidated interest expense (subject to
certain adjustments as provided in the 10&nbsp;3/4% Notes
Indenture) must be greater than 2.25 to 1.00 for the four most
recent quarters for which financial statements are available,
after giving pro forma effect to the transaction being tested:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The incurrence of indebtedness in addition to
    limited specified categories of permitted indebtedness that are
    enumerated in the 10&nbsp;3/4% Notes Indenture.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mergers and consolidations involving Jafra.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Dividends, investments and other restricted
    payments in addition to limited specified categories of
    permitted restricted payments and investments that are
    enumerated in the 10&nbsp;3/4% Notes Indenture.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The re-designation of an unrestricted subsidiary
    for the purposes of the 10&nbsp;3/4% Notes Indenture.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The following table illustrates the
    reconciliation of Consolidated EBITDA to net cash provided by
    operating activities, which management believes is the most
    nearly equivalent GAAP measure. The adjustments set forth below
    are those relevant to the periods presented, and do not
    represent all adjustments that may be applicable pursuant to the
    indenture in subsequent periods.
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by (used in) operating
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in operating assets and liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset impairment charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for uncollectible accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="right">
<I><FONT size="2">footnotes continued on following
page</FONT></I>
</DIV>
</DIV>

<P align="center"><FONT size="2">9
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized foreign exchange and hedging gain
    (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for deferred taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other items to reconcile net cash provided by
    operating activities to net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on early extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized foreign exchange and hedging (gain)
    loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Transaction related costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S.&nbsp;factory closing costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">European restructuring charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sale or writedown of assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Losses from discontinued operations, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Losses in Thailand
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(c)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The average number of consultants is calculated
    based on the total ending consultant base for each month during
    the period. A consultant is included in the total ending
    consultant base if she places an order within the past four
    months. Consultant numbers are rounded to the nearest thousand.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(d)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consultant numbers are rounded to the nearest
    thousand.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(e)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net working capital is defined as total current
    assets, excluding cash and cash equivalents, less total current
    liabilities, excluding short-term debt and the current portion
    of long-term debt.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(f)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consists of long-term debt, short-term debt and
    the current portion of long-term debt.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(g)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes $15.6&nbsp;million of expenses related
    to our May 2003 recapitalization.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(h)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Relates to our redemption of debt in connection
    with our May 2003 recapitalization.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(i)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes $15.6&nbsp;million of expenses and
    $6.6&nbsp;million of losses on the early extinguishment of debt
    related to our May 2003 recapitalization.
    </FONT></TD>
</TR>

</TABLE>
</DIV>

<P align="center"><FONT size="2">10
</FONT>
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<!-- link1 "RISK FACTORS" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">An investment in our common stock involves a
high degree of risk. You should carefully consider the risks
described below, together with other information in this
prospectus, before making an investment decision. The risks
described below are not the only ones facing us. Additional
risks and uncertainties not currently known to us or that we
currently deem to be immaterial may also materially and
adversely affect our business operations. Any of the following
risks could materially and adversely affect our business,
financial condition or results of operations. In such case, you
may lose all or part of your original investment. This
prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ
materially from those anticipated in those forward-looking
statements as a result of many factors, including the risks
described below and elsewhere in this prospectus. See
&#147;Forward-Looking Statements&#148;.</FONT></I>

<P align="center">
<B><FONT size="2">Risks Related to Our Business and
Industry</FONT></B>

<P align="left">
<B><I><FONT size="2">Because our Mexican operations account for
over 60% of our business, any adverse changes in our business
operations in Mexico would adversely affect our net sales and
profitability.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approximately 66% of our net sales for the year
ended December&nbsp;31, 2002 and 62% of our net sales for the
nine months ended September&nbsp;30, 2003 were generated in
Mexico. Various factors could harm our business in Mexico and
our other non-U.S.&nbsp;markets. These factors include, among
others:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">worsening economic conditions, including a
    prolonged recession in Mexico or other applicable market;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">greater difficulty in staffing and managing
    foreign operations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">fluctuations in currency exchange rates and
    inflation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">longer collection cycles and increases in bad
    debt expenses;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">potential adverse changes in laws and regulatory
    practices, including tax laws;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in labor conditions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">burdens and costs of compliance with a variety of
    laws;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">political, social and economic instability;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">increases in taxation; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">greater difficulty in protecting intellectual
    property.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">Mexico is an emerging market economy, with
attendant risks to our results of operations and financial
condition.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican government has exercised, and
continues to exercise, significant influence over the Mexican
economy. Accordingly, Mexican governmental actions concerning
the economy and state-owned enterprises could have a significant
impact on Mexican private sector entities in general and on us
in particular, as well as on market conditions. The national
elections held on July&nbsp;2, 2000 ended 71&nbsp;years of rule
by the Institutional Revolutionary Party (or &#147;PRI&#148;)
with the election of President Vicente Fox Quesada, a member of
the National Action Party (or &#147;PAN&#148;) and resulted in
the increased representation of opposition parties in the
Mexican Congress and in mayoral and gubernatorial positions.
Although there have not yet been any material adverse
repercussions resulting from this political change, multiparty
rule is still relatively new in Mexico and could result in
economic or political conditions that could materially and
adversely affect our operations. The next national elections
will be held in 2006, and campaigning activities have begun as
of the date of this prospectus. We cannot predict the impact
that this new political landscape will have on the Mexican
economy. Furthermore, our financial condition, results of
operations and prospects and, consequently, the market price for
our securities, may be affected by currency
</FONT>

<P align="center"><FONT size="2">11
</FONT>

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<DIV align="left">
<FONT size="2">fluctuations, inflation, interest rates,
regulation, taxation, social instability and other political,
social and economic developments in or affecting Mexico.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican economy in the past has suffered
balance of payment deficits and shortages in foreign exchange
reserves. There are currently no exchange controls in Mexico.
However, Mexico has imposed foreign exchange controls in the
past. Pursuant to the provisions of the North American Free
Trade Agreement, if Mexico experiences serious balance of
payment difficulties or the threat thereof in the future, Mexico
would have the right to impose foreign exchange controls on
investments made in Mexico, including those made by U.S. and
Canadian investors. Any restrictive exchange control policy
could adversely affect our ability to obtain U.S.&nbsp;dollars
or to convert pesos into U.S.&nbsp;dollars for purposes of
paying dollar-denominated expenses, such as interest on our
indebtedness, to the extent that we may have to effect those
conversions. This could have a material adverse effect on our
business and financial condition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Securities of companies with substantial
operations in emerging market countries tend to be influenced by
economic and market conditions in other emerging market
countries. Emerging market countries, including Argentina and
Brazil, have recently been experiencing significant economic
downturns and market volatility. These events have had an
adverse effect on the economic conditions and securities markets
of other emerging market countries, including Mexico.
</FONT>

<P align="left">
<B><I><FONT size="2">There are many risks inherent in our
international operations.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our ability to conduct business outside the
United States and our revenues derived from foreign markets are
subject to the risks inherent in international operations. Our
international operations may be adversely affected by import
duties or other legal restrictions on imports, currency exchange
control regulations, transfer pricing regulations, the
possibility of hyperinflationary conditions and potentially
adverse tax consequences, among other things. In addition, the
governments of many developing nations have exercised and
continue to exercise significant influence over many aspects of
their domestic economies. For example, in Brazil, we have
encountered significant tax costs associated with the Brazilian
tax on imports of manufactured goods, or Imposto sobre Produtos
Industrializados. There can be no assurance that the governments
of nations in which we operate or may expand will not take
actions that materially adversely affect us.
</FONT>

<P align="left">
<B><I><FONT size="2">Currency exchange rate fluctuations,
particularly with respect to the U.S.&nbsp;dollar/ Mexican peso
exchange rate, could lower our net sales and net
income.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, we recognized approximately 76% of
our net sales in non-U.S.&nbsp;markets in each market&#146;s
respective local currency, including approximately 66% in
Mexican pesos. During the first three quarters of 2003, we
recognized approximately 73% of our net sales in non-U.S.
markets in each market&#146;s respective local currency,
including approximately 62% in Mexican pesos. In preparing our
financial statements, we translate net sales and expenses in
foreign countries from their local currencies into
U.S.&nbsp;dollars using weighted average exchange rates. If the
U.S.&nbsp;dollar strengthens relative to local currencies, our
reported net sales, gross profits and net income will likely be
reduced. For example, as discussed below, in 2002, the Mexican
peso weakened, which reduced our operating results on a
U.S.&nbsp;dollar reported basis. Our 2003 operating results
could be similarly harmed if the Mexican peso weakens from
current levels.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The value of the Mexican peso has been subject to
significant fluctuations with respect to the U.S. dollar in the
past and may be subject to significant fluctuations in the
future. The Mexican peso decreased in value against the
U.S.&nbsp;dollar from approximately 9.14&nbsp;pesos to the
dollar at December&nbsp;31, 2001 to approximately
11.20&nbsp;pesos to the dollar at December&nbsp;31, 2003, a
devaluation of approximately 23% over two years. Historically,
Jafra Mexico and its Mexican affiliates have been able to raise
their prices generally in line with local inflation, thereby
helping to mitigate the effects of devaluations of the Mexican
peso. However, there can be no assurance that our Mexican
operating companies will be able to maintain this pricing policy
in the future, or that future exchange rate fluctuations will
not have a material adverse
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<DIV align="left">
<FONT size="2">effect on our ability to pay when due the
principal and interest on our indebtedness, which is primarily
denominated in U.S.&nbsp;dollars.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Given our inability to predict the degree of
exchange rate fluctuations, we cannot estimate the effect these
fluctuations may have upon future reported results, product
pricing or our overall financial condition. Although we attempt
to reduce our exposure to short-term exchange rate fluctuations
by using foreign currency puts and calls, we cannot be certain
these instruments or any other hedging activity will effectively
reduce exchange rate exposure. In particular, we currently
employ a hedging strategy comprised of zero-cost collars that
are designed to protect us against sudden and extreme
devaluations in the Mexican peso. When we began purchasing these
zero-cost collars in early 2002, we were able to purchase
instruments, which expired in early 2003, that protected us
against devaluations in excess of 16%, as measured by the
difference between the U.S.&nbsp;dollar/ Mexican peso exchange
rate in effect on the date a particular instrument was entered
into and the rate specified in it. As the volatility of the
U.S.&nbsp;dollar/ Mexican peso exchange rate increased
throughout 2002 and early 2003, the range outside of which we
were able to acquire protection increased. In September 2003, we
modified our hedging policy to reduce the collar band on new
zero-cost collars to 10% in exchange for an increase in the
overall levels of the collar range in relation to the spot rate.
Currently, the hedging contracts have call strikes at
approximately 2% above current spot rates and collar bands of
approximately 10% and will therefore protect us against
devaluations in excess of approximately 12%. Consequently, our
existing zero-cost collars will not protect us (i)&nbsp;against
fluctuations in exchange rates within this range or
(ii)&nbsp;against a prolonged, gradual decline in the value of
the Mexican peso against the U.S.&nbsp;dollar. There can be no
assurance that instruments protecting us to the same or a
similar extent will be available in the future on reasonable
terms, if at all. Unprotected declines in the value of the
Mexican peso against the U.S.&nbsp;dollar will adversely affect
our ability to pay our dollar-denominated expenses, including
our obligations under our outstanding indebtedness, and will
reduce our reported net sales. See &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations&#148;.
</FONT>

<P align="left">
<B><I><FONT size="2">Mexico may experience high levels of
inflation in the future which could adversely affect our results
of operations.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mexico has a history of high levels of inflation,
and may experience inflation in the future. During most of the
1980s and during the mid-and late-1990s, Mexico experienced
periods of high levels of inflation. The annual rates of
inflation for the last five years as measured by changes in the
National Consumer Price Index, as provided by Banco de Mexico,
were:
</FONT>

<CENTER>
<TABLE width="40%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="82%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.32</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.96</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A substantial increase in the Mexican inflation
rate would have the effect of increasing some of our costs,
which could adversely affect our results of operations and
financial condition, as well as the market value of our
securities. High levels of inflation may also affect the balance
of trade between Mexico and the United States, and other
countries, which could adversely affect our results of
operations.
</FONT>

<P align="left">
<B><I><FONT size="2">The final liquidation and dissolution of
subsidiaries in our non-core markets may result in additional
costs and diversion of management resources.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our shift in strategic focus involving the recent
exit of markets in Venezuela, Chile, Colombia, Peru and Thailand
may prove to be unsuccessful for a number of reasons:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The completion of our liquidation of these
    non-core operations may take longer than we anticipate, prove to
    be more expensive and more time consuming than we project, and
    divert management&#146;s attention from our core business;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">13
</FONT>
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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We may need to obtain regulatory and other
    governmental approvals and third-party consents, and may
    encounter other factors typical in a closure that could
    significantly increase the cost and/or delay the completion of
    this process. To the extent the completion of this process is
    delayed, the costs of liquidating and dissolving these
    subsidiaries and the negative impact on our income statement
    will continue, and the exit-related transaction costs could be
    greater than planned;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our shift in strategy may reduce the morale of
    our consultant base in our remaining markets; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Tax authorities in the jurisdictions in which we
    are liquidating operations may conclude that additional taxes
    are payable as part of the liquidation process.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">If we are unable to retain our existing
independent consultants and recruit additional consultants, our
net sales will not increase.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We distribute almost all of our products through
our independent consultants and we depend on them directly for
all of our net sales. Our consultants may terminate their
services at any time, and, like most direct selling companies,
we experience high turnover among consultants from year to year.
As a result, we need to continue to retain existing and recruit
additional independent consultants. To increase our net sales,
we must increase the number and/or the productivity of our
consultants. Our operations would be harmed if we failed to
generate continued interest and enthusiasm among our consultants
and failed to attract new consultants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although in the recent past we experienced an
increase in active consultants, we could experience declines in
active consultants, including senior consultants at the manager
and district director levels. The number of our active
consultants, including those at the manager and district
director level, may not increase and could decline in the
future. We cannot accurately predict how the number and
productivity of consultants may fluctuate because we rely upon
our existing consultants to recruit, train and motivate new
consultants. Our operating results could be harmed if our
existing and new business opportunities and products do not
generate sufficient interest to retain existing consultants and
attract new consultants. The number and productivity of our
consultants also depends on several additional factors,
including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">adverse publicity regarding us, our products, our
    distribution channel or our competitors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">failure to motivate our consultants with new
    products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the public&#146;s perception of our products and
    their ingredients;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">competition for consultants from other direct
    selling cosmetics companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the public&#146;s perception of our consultants
    and direct selling businesses in general; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">general economic and business conditions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, we may face saturation or maturity
levels in a given country or market. The maturity of several of
our markets could also affect our ability to attract and retain
consultants in those markets.
</FONT>

<P align="left">
<B><I><FONT size="2">Failure of new products to gain consultant
and market acceptance could harm our business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A critical component of our business is our
ability to develop new products that create enthusiasm among our
consultant force. If we fail to introduce new products planned
for the future, our consultant productivity could be harmed. In
addition, if any new products fail to gain market acceptance,
are restricted by regulatory requirements, or have quality
problems, it would harm our results of operations. Factors that
could affect our ability to continue to introduce new products
include, among others, government regulations, proprietary
protections of competitors that may limit our ability to offer
comparable products and any failure to anticipate changes in
consumer tastes and buying preferences.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<P align="left">
<B><I><FONT size="2">The loss of key high-level consultants
could negatively impact our consultant growth and our net
sales.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2003, we had approximately
14,000&nbsp;managers, 3,000 district managers and
1,000&nbsp;district directors. These district directors,
together with their extensive networks of downline consultants,
account for substantially all of our net sales. As a result, the
loss of a high-level consultant or a group of leading
consultants in the consultant&#146;s network of downline
consultants, whether by their own choice or through disciplinary
actions by us for violations of our policies and procedures,
could negatively impact our consultant growth and our net sales.
</FONT>

<P align="left">
<B><I><FONT size="2">The regulatory environment in which we
operate is evolving, and our operations may be modified or
otherwise harmed by regulatory changes, subjective
interpretations of laws or an inability to work effectively with
national and local government agencies.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although we review applicable local laws in
developing our plans, our efforts to comply with them may be
harmed by an evolving regulatory climate and subjective
interpretation of laws by the authorities. Any determination
that our operations or activities are not in compliance with
applicable regulations could negatively impact our business and
our reputation with regulators in the markets in which we
operate.
</FONT>

<P align="left">
<B><I><FONT size="2">Government regulation of our products and
services may restrict or inhibit introduction of these products
in some markets and could harm our business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our products and our related marketing and
advertising efforts are subject to extensive government
regulation by numerous domestic and foreign governmental
agencies and authorities. These include, in the United States,
the Federal Trade Commission, the Consumer Product Safety
Commission, the Food and Drug Administration, the State
Attorneys General and other federal and state regulatory
agencies, and, in Mexico, the Ministry of Health along with
similar government agencies in other foreign markets where we
may operate. Our markets have varied regulations concerning
product formulation, labeling, packaging and importation. These
laws and regulations often require us to, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">conform product labeling to the regulations in
    each country; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">register or qualify products with the applicable
    government authority or obtain necessary approvals or file
    necessary notifications for the marketing of our products.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Failure to introduce products or delays in
introducing products could reduce our net sales and decrease our
profitability. Regulators may also prohibit us from making
therapeutic claims about products despite research and
independent studies supporting these claims. These product claim
restrictions could prevent us from realizing the potential
revenue from some of our products.
</FONT>

<P align="left">
<B><I><FONT size="2">We may shift our strategy to include the
marketing of products that we currently have no experience
selling. This shift in strategy would entail business risks, as
well as expose us to a regulatory environment in which we do not
currently operate.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may in the future seek to use our existing
consultant network to market new lines of non-cosmetics products
such as health and wellness (including weight loss), vitamins,
nutritional supplements and other products that are outside our
current core product lines. This strategy, if adopted, would
expose us to a number of new risks that we do not currently
face, any of which, if adversely affecting us, could be
material. These risks include, among others:
</FONT>
<P>

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    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our becoming subject to regulation in areas in
    which we have no operating experience, including increased
    regulation by the U.S. Food and Drug Administration and the
    U.S.&nbsp;Department of Agriculture and their foreign
    counterparts;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the imposition of significant penalties or claims
    due to our failure, or the failure of our consultants, to comply
    with these regulations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">increased exposure to product liability claims;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">15
</FONT>

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<P>

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    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">diversion of our consultants&#146; attention from
    sales of our existing product line;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">diversion of management&#146;s attention from the
    continued growth and development of our existing business; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the fact that our management has no experience,
    and our independent consultants may have no experience, in
    marketing these new product lines.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">Laws and regulations may prohibit or
severely restrict our direct sales efforts and cause our net
sales and profitability to decline.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Various government agencies throughout the world,
including in the United States and Mexico, regulate direct sales
practices. These laws and regulations are generally intended to
prevent fraudulent or deceptive schemes, often referred to as
&#147;pyramid&#148; schemes, that compensate participants for
recruiting additional participants irrespective of product sales
and/or do not involve legitimate products. The laws and
regulations in our current markets often:
</FONT>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">impose on us order cancellations, product
    returns, inventory buy-backs and cooling-off rights for
    consumers and consultants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">require us or our consultants to register with
    governmental agencies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">impose on us reporting requirements to regulatory
    agencies; and/or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">require us to ensure that consultants are not
    being compensated solely based upon the recruitment of new
    consultants.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Complying with these sometimes inconsistent rules
and regulations can be difficult and requires the devotion of
significant resources on our part. If we are unable to continue
business in existing markets or commence operations in new
markets because of these laws, our net sales and profitability
will decline.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, countries where we operate could
change their laws or regulations to negatively affect or
prohibit completely network or direct sales efforts. Government
agencies and courts in these countries may also use their powers
and discretion in interpreting and applying laws in a manner
that limits our ability to operate or otherwise harms our
business. If any governmental authority were to bring a
regulatory enforcement action against us that interrupts our
business, our net sales and earnings would likely suffer.
</FONT>

<P align="left">
<B><I><FONT size="2">Challenges by private parties to the form
of our multi-level marketing system could harm our
business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may be subject to challenges by private
parties, including our consultants, to the form of our
multi-level marketing system or elements of our business. In the
United States, the multi-level marketing industry and regulatory
authorities have generally relied on the implementation of rules
and policies designed to protect consumers, to prevent
inappropriate activities and to distinguish between legitimate
multi-level marketing distribution plans and unlawful pyramid
schemes. We have adopted rules and policies based on case law,
rulings of the FTC, pronouncements of regulatory authorities in
several states and domestic and global industry standards. Legal
and regulatory requirements concerning multi-level marketing
systems, however, involve a high level of subjectivity, are
inherently fact-based and are subject to judicial and
administrative interpretation. Because of the foregoing, we can
provide no assurance that we would not be harmed by the
application or interpretation of statutes or regulations
governing multi-level marketing, particularly in any civil
challenge by a current or former consultant.
</FONT>

<P align="left">
<B><I><FONT size="2">Our consultants are independent contractors
and not employees. If regulatory authorities were to determine,
however, on a facts and circumstances basis, that our
consultants are legally our employees, we could have significant
liability under social benefit laws.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our consultants are self-employed and are not our
employees. Periodically, the question of the legal status of our
consultants has arisen, usually in regard to possible coverage
under social benefit laws
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<DIV align="left">
<FONT size="2">that would require us, and in most instances our
consultants, to make regular contributions to social benefit
funds. This issue has not been fully resolved in all of the
markets in which we operate, including the United States. If
there should be a final determination adverse to us, the cost
for future, and possibly past, contributions could be
substantial and materially adversely affect our business and
financial condition.
</FONT>
</DIV>

<P align="left">
<B><I><FONT size="2">Improper consultant actions could harm our
business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Consultant activities in our existing markets
that violate governmental laws or regulations or that are
otherwise improper could result in governmental actions against
us in markets where we operate. Given the size of our consultant
force, we experience problems with consultants from time to
time. In particular, some of our consultants may make
unauthorized claims about either our products or the earnings
potential related to becoming a Jafra consultant. These claims
could harm our reputation or otherwise adversely impact us if
regulatory authorities were to determine that we should have
prevented such behavior.
</FONT>

<P align="left">
<B><I><FONT size="2">If our industry, business or its products
are subject to adverse publicity, our business may
suffer.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are very dependent upon our consultants&#146;
and the general public&#146;s perception of the overall
integrity of our business, as well as the safety and quality of
our products and similar products distributed by other
companies. The number and motivation of our consultants and the
acceptance by the general public of our products may be
negatively affected by adverse publicity regarding:
</FONT>
<P>

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    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the legality of multi-level marketing systems in
    general or Jafra&#146;s multi-level marketing system
    specifically;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the safety and quality of our products and
    product ingredients;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">regulatory investigations of our products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the actions of our consultants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our management of our consultants; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the direct selling industry.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">We have provided notice to our primary
contract manufacturer that we are not extending the term of
their manufacturing agreement; and we may have difficulties
migrating the additional manufacturing burden to our own
facilities.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have outsourced certain product manufacturing
functions to a third-party contractor located in Chino,
California. In 2002, products supplied by this manufacturer
accounted for approximately 29% of our net sales. On
December&nbsp;8, 2003, we provided this supplier with notice
that we are not extending the term of their manufacturing
agreement, which will expire on July&nbsp;1, 2004. Upon the
termination of the manufacturing agreement, the majority of
products previously sourced from this supplier will be
manufactured by us at our manufacturing facilities in Mexico
City. In the interim, if this supplier has unscheduled downtime
or is unable to fulfill its obligations under this manufacturing
agreement because of equipment breakdowns, natural disasters,
power failures or any other cause, it could adversely affect our
overall operations and financial condition. Although we provide
all of the formulations used to manufacture our products, we
have limited control over the manufacturing process itself. As a
result, any difficulties encountered by the third-party
manufacturer that result in product defects, production delays,
cost overruns or the inability to fulfill orders on a timely
basis could have a material adverse effect on our business,
financial condition and operating results. Additionally, if the
transition of additional manufacturing burden to our facilities
in Mexico City results in downtime or the inability to supply
finished goods due to equipment failure, labor stoppages or any
other cause, it could materially adversely affect our overall
operations and financial condition.
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<P align="left">
<B><I><FONT size="2">After July&nbsp;1, 2004, we will rely on
one manufacturing facility to provide products accounting for
substantially all of our net sales.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Beginning in July of 2004, we will manufacture
products accounting for approximately 90% of our net sales at
our manufacturing facility in Mexico City. Workers at this
facility are unionized pursuant to a collective bargaining
agreement that expires in January of 2005. In the past we have
experienced many minor work stoppages at this facility. If
manufacturing operations were to be interrupted for a material
period of time because of an employment dispute, strike or any
other labor-related cause, it could have a material adverse
effect on our overall operations and financial condition.
Additionally, if manufacturing operations at this facility were
interrupted due to equipment failures, natural disasters, power
failures, lack of suitable water supply or any other reason, our
overall operations and financial condition could be materially
adversely affected.
</FONT>

<P align="left">
<B><I><FONT size="2">Failure of our Internet and other
technology initiatives to create sustained consultant enthusiasm
and incremental cost savings could negatively impact our
business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have been developing and implementing a
strategy to use the Internet to sign-up consultants and take
orders from consultants for our products. There can be no
assurance, however, that any cost savings from our Internet
strategy in Mexico and the United States will prove to be
significant or that we will be successful in adapting and
implementing our strategy to other markets in which we operate.
This could result in our inability to service our consultants in
the manner they expect, which could adversely impact our
profitability and growth.
</FONT>

<P align="left">
<B><I><FONT size="2">If we are unable to protect our
intellectual property rights our ability to compete could be
negatively impacted.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The market for our products depends to a
significant extent upon the goodwill associated with our
trademark and trade names. We own, have licenses or have the
right to use the material trademark and trade names used in
connection with the packaging, marketing and distribution of our
major products in the markets where such products are
principally sold. Therefore, trademark and trade name protection
is important to our business. Although most of our trademarks
are registered in the United States and in certain foreign
countries in which we operate, we may not be successful in
asserting trademark or trade name protection. In addition, the
laws of certain foreign countries may not protect our
intellectual property rights to the same extent as the laws of
the United States. The costs required to protect our trademarks
and trade names may be substantial.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other parties may infringe on our intellectual
property rights or intellectual property rights which we are
licensed to use, and may thereby dilute our brand in the
marketplace. Any such infringement of our intellectual property
rights would also likely result in a commitment of our time and
resources to protect these rights through litigation or
otherwise.
</FONT>

<P align="left">
<B><I><FONT size="2">Governmental authorities may question our
intercompany transfer pricing or other payment policies or
change their laws in a manner that could increase our effective
tax rate or otherwise harm our business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a group doing more than 76% of its business in
non-U.S. markets during 2002, we are subject to foreign tax and
intercompany pricing laws, including those relating to the flow
of funds among our companies pursuant to, for example, purchase
agreements, licensing agreements, intercompany loans or other
arrangements. Regulators (including tax authorities) in the
United States, Mexico and in other foreign markets may closely
monitor our corporate structure and how we effect intercompany
fund transfers. If such regulators successfully challenge our
structure or these mechanisms, we may be subject to additional
taxes, interest and penalties, which could have a material
adverse impact on our cash flow, net income and effective tax
rate. Furthermore, proposed changes in United States tax laws
may adversely affect the ability of Jafra US to deduct interest
on its indebtedness. If such changes are enacted, our effective
tax rate may increase.
</FONT>

<P align="center"><FONT size="2">18
</FONT>

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<P align="left">
<B><I><FONT size="2">We depend on our key personnel and the loss
of the services provided by any of our executive officers or
other key employees could harm our business and results of
operations.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our success depends to a significant degree upon
the continued contributions of our senior management, many of
whom would be difficult to replace. These employees may
voluntarily terminate their employment with us at any time. We
may not be able to successfully retain existing personnel or
identify, hire and integrate new personnel. We do not have key
person insurance policies in place for these employees.
</FONT>

<P align="left">
<B><I><FONT size="2">Our markets are intensely competitive, and
market conditions and the strengths of competitors may harm our
business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The markets for our products are intensely
competitive. Our results of operations may be harmed by market
conditions and competition in the future. Many of our
competitors have much greater name recognition and financial
resources than we have, which may give them a competitive
advantage. For example, our products compete directly with
branded, premium retail products. We currently do not have
significant patent or other proprietary protection, and
competitors may introduce products with the same ingredients
that we use in our products. At least two of such competitors,
Mary Kay and Avon, utilize direct sales marketing and have
substantially larger numbers of salespersons, sales volume and
resources.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also compete with other multi-level marketing
companies for consultants. Some of these competitors have a
longer operating history and greater visibility, name
recognition and financial resources than we do. Some of our
competitors have also adopted and could continue to adopt some
of our successful business strategies, including our
compensation strategy for our consultants. Consequently, to
successfully compete in this market and attract and retain
consultants, we must ensure that our business opportunities and
compensation plans are financially rewarding. We cannot assure
you that we will be able to successfully compete in this market
for consultants.
</FONT>

<P align="left">
<B><I><FONT size="2">Product liability claims or recalls could
harm our business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may be required to pay for losses or injuries
purportedly caused by our products. To date, we have not been
subject to any material product liability lawsuits. We could,
however, become subject to such suits in the future. Claims
could be based on allegations that, among other things, our
products contain contaminants, include inadequate instructions
regarding their use or inadequate warnings concerning side
effects and interactions with other substances. In addition, any
such claim may result in negative publicity that may adversely
affect our net sales. Also, if one of our products is found to
be defective we may be required to recall it, which may result
in substantial expense and adverse publicity and adversely
affect our net sales. Although we maintain, and require our
material suppliers and manufacturers to maintain, product
liability insurance coverage, potential product liability claims
may exceed the amount of insurance coverage or potential product
liability claims may be excluded under the terms of the policy,
which could hurt our financial condition.
</FONT>

<P align="left">
<B><I><FONT size="2">System failures could harm our
business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because of our diverse geographic operations and
our complex consultant compensation plan, our business is highly
dependent on efficiently functioning information technology
systems. These systems and operations are vulnerable to damage
or interruption from fires, earthquakes, telecommunications
failures and other events. They are also subject to break-ins,
sabotage, intentional acts of vandalism and similar misconduct.
Despite any precautions, the occurrence of a natural disaster or
other unanticipated problems could result in interruptions in
services and reduce our net sales and profits. We have licensed
and implemented a highly customized JD Edwards commercial
software system currently for use by our U.S. operations. As
anticipated, we are in the process of addressing necessary
system corrections. If we are unable to complete these or
subsequently required corrections in a timely manner, our
service levels, net sales and profits could be negatively
impacted.
</FONT>

<P align="center"><FONT size="2">19
</FONT>
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<P align="left">
<B><I><FONT size="2">Our net sales depend on consumer confidence
and spending, which may fluctuate from period to period for
reasons beyond our control.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The sale of cosmetics and other personal care
products correlates strongly to the level of consumer spending
generally, and thus is significantly affected by the general
state of the economy and the ability and willingness of
consumers to spend on discretionary items. Reduced consumer
confidence and spending generally may result in reduced demand
for our products and limitations on our ability to maintain or
increase prices. A decline in economic conditions or general
consumer spending in any of our major markets could have a
material adverse effect on our business, financial condition and
results of operations.
</FONT>

<P align="left">
<B><I><FONT size="2">Our quarterly results may exhibit
significant volatility due to our two-month business cycle
practices.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We execute six two-month marketing cycles per
year. Each marketing cycle includes specific catalogue,
promotional and product offerings, and sometimes certain
seasonal offerings. Sales are typically stronger in the second
month of a two month cycle. Due to the fact that the second and
fourth quarters coincide with the end of a business cycle while
the first and third quarters do not, quarter to quarter results
may exhibit significant levels of volatility that could impact
our stock price. In addition, because the types of promotions
and the timing of certain key new product launches may vary from
year to year, quarter over quarter comparisons are generally not
representative of our growth.
</FONT>

<P align="left">
<B><I><FONT size="2">If we acquire any companies, businesses or
products in the future, they could prove difficult to integrate,
disrupt our business, dilute shareholder value or have an
adverse effect on our results of operations.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to expand our business primarily
through internal growth, but from time to time we may consider
strategic acquisitions. Any future acquisition would involve
numerous risks, including, without limitation:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">potential disruption of our ongoing business and
    distraction of management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">difficulty integrating the operations and
    products of the acquired business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">unanticipated expenses related to technology
    integration;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">exposure to unknown liabilities, including
    litigation against the companies we may acquire;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">additional costs due to differences in culture,
    geographic locations and duplication of key talent; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">potential loss of key employees or customers of
    the acquired company.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we make acquisitions in the future,
acquisition-related accounting charges may affect our balance
sheet and results of operations. We may not be successful in
addressing these risks or any other problems encountered in
connection with any acquisitions.
</FONT>

<P align="center">
<B><FONT size="2">Risks Related to Our Substantial
Indebtedness</FONT></B>

<P align="left">
<B><I><FONT size="2">Our substantial indebtedness could have a
material adverse effect on our financial health, our ability to
obtain financing in the future and our ability to react to
changes in our business.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a significant amount of debt. On a pro
forma basis assuming that this offering and the use of proceeds
to us thereof as described in &#147;Use of Proceeds&#148;, as
well as the dividend and related borrowing to be made prior to
this transaction, occurred on September&nbsp;30, 2003, we would
have had approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
of debt outstanding and a total debt to equity ratio
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
Our significant amount of debt could have important consequences
to you. For example, it could:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">make it more difficult for us to satisfy our
    obligations to the holders of the 10&nbsp;3/4% Notes and to the
    lenders under our senior credit facilities, resulting in
    possible defaults on and acceleration of such indebtedness;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">20
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">increase our vulnerability to adverse economic
    and general industry conditions, including interest rate
    fluctuations, because a significant portion of our borrowings is
    and will continue to be at variable rates of interest;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">increase our vulnerability to fluctuations in the
    exchange rate of the principal currency in which we sell
    products, the Mexican peso, to the U.S. dollar, the currency in
    which our interest obligations are payable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">require us to dedicate a substantial portion of
    our cash flow from operations to payments on our debt, which
    would reduce the availability of our cash flow from operations
    to fund working capital, capital expenditures or other general
    corporate purposes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit our flexibility in planning for, or
    reacting to, changes in our business and industry;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">place us at a disadvantage compared to
    competitors that have proportionately less debt; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit our ability to borrow additional funds in
    the future.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any of the foregoing impacts of our substantial
indebtedness could have a material adverse effect on our
business, financial condition and results of operations.
</FONT>

<P align="left">
<B><I><FONT size="2">We and our subsidiaries may be able to
incur substantial additional indebtedness.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and our subsidiaries may be able to incur
substantial additional indebtedness in the future. Although the
terms of the indenture governing our 10&nbsp;3/4% Notes include
restrictions on the incurrence of additional indebtedness, the
restrictions are subject to a number of significant
qualifications and exceptions, including an exception for
indebtedness incurred under our senior credit facilities, which
provide for an additional revolving facility of up to
$40.0&nbsp;million, including letters of credit. Under certain
circumstances, the indebtedness incurred in compliance with
these restrictions could be substantial. Such restrictions apply
only to our subsidiaries, and do not limit our ability to incur
debt at Jafra. In addition, the restrictions contained in the
indenture governing our 10&nbsp;3/4% Notes do not prevent us or
our subsidiaries from incurring obligations not included within
the definition of Indebtedness in that indenture. If new debt is
added to our and our subsidiaries&#146; current debt levels, the
related risks that we and they now face would intensify.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to make additional borrowings of up to
$20&nbsp;million and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
respectively, to fund the payment of a final liquidating
distribution to shareholders of our former parent company and to
pay the redemption premium and accrued and unpaid interest on
$70&nbsp;million in aggregate principal amount of our
10&nbsp;3/4% Notes. See &#147;Certain Relationships and Related
Party Transactions&#148; and &#147;Use of Proceeds.&#148;
</FONT>

<P align="left">
<B><I><FONT size="2">Our subsidiaries may not be able to
generate sufficient cash to service all of their and our
indebtedness, and may be forced to take other actions to satisfy
their and our obligations under such indebtedness, which may not
be successful.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our subsidiaries&#146; ability to make scheduled
payments on or to refinance their and our debt obligations
depends on our subsidiaries&#146; financial condition and
operating performance, which is subject to prevailing economic
and competitive conditions and to certain financial, business
and other factors beyond their or our control.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We cannot assure you that our subsidiaries will
maintain a level of cash flows from operating activities
sufficient to permit them and us to pay the principal, premium,
if any, and interest on their and our indebtedness.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If our subsidiaries&#146; cash flows and capital
resources are insufficient to fund our and their debt service
obligations, we and our subsidiaries may be forced to reduce or
delay capital expenditures, sell assets, seek additional capital
or restructure or refinance our and their indebtedness. These
alternative measures may not be successful and may not permit us
and our subsidiaries to meet our and their scheduled debt
service obligations and, even if successful, may not be
favorable to you. In the absence of
</FONT>

<P align="center"><FONT size="2">21
</FONT>
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<DIV align="left">
<FONT size="2">such operating results and resources, we and they
could face substantial liquidity problems and might be required
to dispose of material assets or operations to meet our and
their debt service and other obligations. The senior credit
facilities and the indenture governing the 10&nbsp;3/4% Notes
restrict our subsidiaries&#146; ability to dispose of assets and
use the proceeds from the disposition. Our subsidiaries may not
be able to consummate those dispositions or to obtain the
proceeds which could be realized from them and, even if
consummated, such proceeds may not be adequate to meet any debt
service obligations then due.
</FONT>
</DIV>

<P align="left">
<B><I><FONT size="2">Restrictive covenants in our debt
instruments may adversely affect our financial
flexibility.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our senior credit facilities and the indenture
governing the 10&nbsp;3/4% Notes contain various covenants that
limit our subsidiaries&#146; ability to engage in specified
types of transactions. These covenants limit our
subsidiaries&#146; ability to, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur indebtedness or issue preferred shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">pay dividends or make distributions or other
    restricted payments to us;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">make investments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">create liens without securing our 10&nbsp;3/4%
    Notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">consolidate, merge, sell or otherwise dispose of
    all or substantially all of our assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into certain transactions with us and our
    affiliates; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">designate our subsidiaries as unrestricted
    subsidiaries.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, our senior credit facilities contain
covenants that require our restricted subsidiaries to maintain
specified financial ratios and satisfy other financial condition
tests. Our subsidiaries&#146; ability to meet those financial
ratios and tests can be affected by events beyond our and their
control, and we cannot assure you that they will meet those
tests. A breach of any of these covenants could result in a
default under our senior credit facilities. Upon the occurrence
of an event of default under our senior credit facilities, the
lenders could elect to declare all amounts outstanding under our
senior credit facilities to be immediately due and payable and
terminate all commitments to extend further credit. If we or
they were unable to repay those amounts, the lenders under our
senior credit facilities could proceed against the collateral
granted to them to secure that indebtedness. Jafra Worldwide,
Jafra US, Jafra Mexico and Jafra Distribution (Mexico) have
pledged substantially all of their assets as collateral under
our senior credit facilities. If the lenders under our senior
credit facilities accelerate the repayment of borrowings, we
cannot assure you that we will have sufficient assets to repay
our senior credit facilities or our 10&nbsp;3/4% Notes, and, in
such circumstances, we could be forced into liquidation or
reorganization.
</FONT>

<P align="left">
<B><I><FONT size="2">The instruments governing our debt contain
cross default provisions that may cause all of the debt issued
under such instruments to become immediately due and payable as
a result of a default under an unrelated debt
instrument.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing our 10&nbsp;3/4% Notes
and the agreements governing our senior credit facilities
contain numerous operating covenants and require our
subsidiaries to meet certain financial ratios and tests. Our
failure to comply with the obligations contained in the
indenture governing the 10&nbsp;3/4% Notes, the senior credit
facilities or other instruments governing our indebtedness could
result in an event of default under the applicable instrument,
which could result in the related debt and the debt issued under
other instruments becoming immediately due and payable. In such
event, we would need to raise funds from alternative sources,
which funds may not be available to us on favorable terms, on a
timely basis or at all. Alternatively, such a default could
require us to sell our assets and otherwise curtail our
operations in order to pay our creditors. Such alternative
measures could have a material adverse effect on our business,
financial condition and results of operations.
</FONT>

<P align="center"><FONT size="2">22
</FONT>
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<P align="center">
<B><FONT size="2">Risks Related to our Common Stock and This
Offering</FONT></B>

<P align="left">
<B><I><FONT size="2">Jafra may not have access to the cash flow
and other assets of its subsidiaries that would be needed to pay
dividends on our common stock.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra&#146;s operations are conducted through its
subsidiaries and our ability to pay dividends is dependent on
the earnings and the receipt of funds from our subsidiaries via
dividends or intercompany loans. However, none of our
subsidiaries is obligated to make funds available to us for the
payment of dividends. In addition, payments of dividends and
interest among the companies in our group may be subject to
withholding taxes. Further, the terms of the indenture governing
our 10&nbsp;3/4% Notes and the agreement governing our senior
credit facilities significantly restrict Jafra Worldwide and
Jafra&#146;s other subsidiaries from paying dividends and
otherwise transferring assets to Jafra. For example, the ability
of Jafra Worldwide to make such payments is governed by a
formula based on 50% of its consolidated net income (which, as
defined in the indenture governing the 10&nbsp;3/4% Notes,
excludes goodwill impairment charges and any after-tax
extraordinary, unusual or nonrecurring gains and losses)
accruing from October&nbsp;1, 2002. In addition, as a condition
to making such payments to Jafra based on such formula, Jafra
Worldwide must have a consolidated coverage ratio (as defined in
the indenture governing the 10&nbsp;3/4% Notes) of at least 2.25
to 1 after giving effect to any such payments. Notwithstanding
such restrictions, the indenture governing the 10&nbsp;3/4%
Notes permits an aggregate of $5.0&nbsp;million of such payments
to be made whether or not there is availability under the
formula or the conditions to its use are met. As of
September&nbsp;30, 2003, Jafra Worldwide would have been able to
distribute $18.0&nbsp;million to Jafra, including the
$5.0&nbsp;million unrestricted amount. This amount will be
reduced by any amounts we receive from our subsidiaries to fund
the payment of a final liquidating distribution of up to
$120&nbsp;million to shareholders of CDRJ Investments (Lux) S.A.
described &#147;Use of Proceeds&#148;. Furthermore, Jafra&#146;s
subsidiaries are permitted under the terms of the senior credit
facilities and other indebtedness to incur additional
indebtedness that may severely restrict or prohibit the making
of distributions, the payment of dividends or the making of
loans by such subsidiaries to Jafra. In addition, Luxembourg law
imposes surplus and timing requirements that may restrict our
ability to pay dividends to holders of our common stock, as well
as dividend withholding taxes.
</FONT>

<P align="left">
<B><I><FONT size="2">There currently exists no market for our
common stock. We cannot assure you that an active trading market
will develop for our common stock. If our share price fluctuates
after this offering, you could lose all or a significant part of
your investment.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering, there was no public
market for our common stock. An active and liquid market for our
common stock may not develop following the completion of this
offering or, if developed, may not be maintained. If an active
trading market does not develop or is not maintained, you may
have difficulty selling any shares of our common stock that you
buy. We negotiated the initial public offering price with the
underwriters. The initial public offering price may not be
indicative of the price at which our common stock will trade
following completion of this offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The market price of shares of our common stock
may also be influenced by many other factors, some of which are
beyond our control, including, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the failure of securities analysts to cover our
    common stock after this offering or changes in financial
    estimates by analysts;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">announcements by us or our competitors of
    significant contracts, acquisitions, strategic partnerships,
    joint ventures or capital commitments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">variations in quarterly operating results;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">loss of a large supplier or important sales
    consultant(s);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">general economic conditions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">terrorist acts or wars;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">23
</FONT>
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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">future sales of our common stock; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">investor perceptions of us and the direct
    marketing industry.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of these factors, investors in our
common stock may not be able to resell their shares at or above
the initial offering price. In addition, the stock market in
general has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the
operating performance of companies like us. These broad market
and industry factors may materially reduce the market price of
our common stock, regardless of our operating performance.
</FONT>

<P align="left">
<B><I><FONT size="2">If the market price of our common stock is
volatile, we may be the target of securities litigation, which
is costly and time-consuming to defend.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the past, following periods of market
volatility in the price of a company&#146;s securities,
securityholders have often instituted class action litigation.
If the market value of our common stock experiences adverse
fluctuations and we become involved in this type of litigation,
regardless of the outcome, we could incur substantial legal
costs and our management&#146;s attention could be diverted from
the operation of our business, causing our business to suffer.
</FONT>

<P align="left">
<B><I><FONT size="2">Our articles of incorporation may
discourage takeovers and business combinations that holders of
our common stock might consider to be in their best
interests.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Provisions in our articles of incorporation may
delay, defer, prevent or render more difficult a takeover
attempt that holders of our common stock might consider to be in
their best interests. These provisions include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">establishment of a classified board of directors
    with staggered, three year terms; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">establishment of advance notice requirements for
    stockholder proposals and nominations for election to the board
    of directors at stockholder meetings.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These provisions may prevent holders of our
common stock from receiving the benefit from any premium to the
market price of our shares offered by a bidder in a takeover
context. Even in the absence of a takeover attempt, the
existence of these provisions may adversely affect the
prevailing market price of our common stock if they are viewed
as discouraging takeover attempts in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See &#147;Description of Capital Stock&#148; for
additional information on the anti-takeover measures applicable
to us.
</FONT>

<P align="left">
<B><I><FONT size="2">A few significant stockholders control the
direction of our business. If the ownership of our common stock
continues to be highly concentrated, it will prevent you and
other purchasers of our common stock from influencing
significant corporate decisions.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the completion of this offering,
Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
Partnership will beneficially own
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of the outstanding shares of our common stock. As a result,
Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
Partnership will continue to exercise control over the
composition of our board of directors and other matters
requiring stockholder approval, and control over our policy and
affairs, including, for example, being able to direct the use of
proceeds received from this and future securities offerings and
decisions regarding future change of control transactions. In
addition, Clayton, Dubilier&nbsp;&#38; Rice, Inc., which manages
Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
Partnership, will continue to provide us with financial advisory
and management consulting services following the completion of
this offering and it will be entitled to receive fees, including
financial advisory fees, in the future. See &#147;Certain
Relationships and Related Party Transactions.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The concentrated holdings of Clayton,
Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited Partnership and the
presence of Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V
Limited Partnership&#146;s designees may result in a delay or
the deterrence of possible changes in control of our company,
which may reduce the market price of our shares. The interests
of our existing stockholders may conflict with the interests of
our other stockholders,
</FONT>

<P align="center"><FONT size="2">24
</FONT>

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<DIV align="left">
<FONT size="2">and we cannot assure you that our existing
stockholders will not resolve any such conflicts in a manner
adverse to you.
</FONT>
</DIV>

<P align="left">
<B><I><FONT size="2">Our share price may decline due to the
large number of shares eligible for future sale.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales of substantial amounts of common stock, or
the perception that such sales may occur, may adversely affect
the price of our common stock and impede our ability to raise
capital through the issuance of equity securities. We cannot
predict the size of future issuances of common stock or the
impact that such sales may have on the market price of the
shares purchased by you.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon consummation of this offering, there will
be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock outstanding. Of these shares, the shares of
common stock sold in the offering will be freely transferable
without restriction or further registration under the Securities
Act of 1933. The
remaining &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock outstanding, excluding shares sold by the
selling stockholders in this offering, including the shares
owned by Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
Partnership, will be restricted securities within the meaning of
Rule&nbsp;144 under the Securities Act, but will be eligible for
resale subject to applicable volume, manner of sale, holding
period and other limitations of Rule&nbsp;144. We and our
existing stockholders have agreed to a &#147;lock-up&#148;,
meaning that neither we nor they will sell any shares without
the prior consent of Merrill Lynch, Pierce, Fenner&nbsp;&#38;
Smith Incorporated and Credit Suisse First Boston&nbsp;LLC for
180&nbsp;days after the date of this prospectus. Following the
expiration of this 180&nbsp;day lock-up period, all of
these &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock will be eligible for future sale, subject to
the applicable volume, manner of sale, holding period and other
limitations of Rule&nbsp;144. In addition, our existing
shareholders have the right under certain circumstances to
require that we register their shares for resale. See
&#147;Shares Eligible for Future Sale&#148; and &#147;Certain
Relationships and Related Party Transactions&nbsp;&#151;
Registration and Participation Agreement&#148; for a discussion
of the shares of common stock that may be sold into the public
market in the future.
</FONT>

<P align="left">
<B><I><FONT size="2">Purchasers of our common stock in this
offering will experience immediate and substantial dilution
resulting in their shares being worth less on a net tangible
book value basis than the amount they invested.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The initial public offering price is expected to
be significantly higher than the net tangible book value per
share of our common stock. Purchasers of the shares in this
offering will experience an immediate dilution in net tangible
book value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share purchased, based on our net tangible book value per share
as of September&nbsp;30, 2003. In the past, we issued options to
acquire shares of common stock at prices that may be
significantly below the price per share equivalent to the
initial public offering price. To the extent that these
outstanding options are exercised, there will be further
dilution to investors. Accordingly, in the event we are
liquidated, investors may not receive the full amount of their
investment. See &#147;Dilution.&#148;
</FONT>

<P align="left">
<B><I><FONT size="2">Because Jafra is not a U.S. company, it may
be difficult for you to effect service of process on us or on
our directors or to enforce any judgment you may receive against
us from a U.S. court.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra is a Luxembourg company. Certain of our
officers and directors may be residents of various jurisdictions
outside the United States. All or a substantial portion of our
assets may be located outside the United States. As a result, it
may be difficult for investors to effect service of process
within the United States upon such persons or to enforce in
Luxembourg courts judgments obtained against such persons in
United States courts and predicated upon the civil liability
provisions of the United States federal securities laws.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra has been advised by Bonn Schmitt Steichen,
our Luxembourg counsel, that there is doubt as to
(i)&nbsp;whether a Luxembourg court has jurisdiction to
entertain original cases or actions predicated solely upon the
United States federal securities laws, (ii)&nbsp;the
enforceability, in original actions in Luxembourg courts, of
liabilities predicated solely upon the United States federal
securities laws and (iii)&nbsp;the enforceability in Luxembourg
courts of judgments of United States courts obtained in actions
predicated upon the civil liability provisions of the United
States federal securities laws.
</FONT>

<P align="center"><FONT size="2">25
</FONT>
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<!-- link1 "FORWARD-LOOKING STATEMENTS" -->
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<P align="center">
<B><FONT size="2">FORWARD-LOOKING STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus includes &#147;forward-looking
statements&#148;. You should not place undue reliance on these
statements. Forward-looking statements include information
concerning our possible or assumed future results of operations,
including descriptions of our business strategies. These
statements often include words such as &#147;believe&#148;,
&#147;expect&#148;, &#147;anticipate&#148;, &#147;intend&#148;,
&#147;plan&#148;, &#147;estimate&#148;, &#147;seek&#148;,
&#147;will&#148;, &#147;may&#148; or similar expressions. These
statements are based on certain assumptions that we have made in
light of our experience in the industry as well as our
perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate
in these circumstances. As you read and consider this
prospectus, you should understand that these statements are not
guarantees of performance or results. They involve risks,
uncertainties and assumptions. Many factors could affect our
actual financial results and could cause actual results to
differ materially from those expressed in the forward-looking
statements. Some important factors include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">operations and prospects;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">business and financing plans;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">funding needs and financing sources;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in the marketplace;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">fluctuations of exchange rates and inflation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">growth of the direct selling cosmetics industry
    in our major markets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">characteristics of competition;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">actions of third parties, such as legislative
    bodies and government regulatory agencies; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">various other factors beyond our control.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In light of these risks, uncertainties and
assumptions, the forward-looking statements contained in this
prospectus might not prove to be accurate and you should not
place undue reliance upon them. All forward-looking statements
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the foregoing cautionary
statements. All such statements speak only as of the date made,
and we undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new
information, future events or otherwise.
</FONT>

<P align="center"><FONT size="2">26
</FONT>

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<!-- link1 "USE OF PROCEEDS" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that our net proceeds from the sale
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock being offered by us hereby at an assumed
initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, the midpoint of the range set forth on the cover page of
this prospectus, after deducting estimated underwriting
discounts and estimated offering expenses, will be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million.
We will not receive any proceeds from the sale of
the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock being offered by the selling stockholders,
or the additional shares that would be sold by the selling
stockholders if the underwriters exercised their over-allotment
option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to use the net proceeds to us from the
sale of common stock, together with borrowings under our senior
credit facilities, principally to fund the redemption of
$70&nbsp;million in aggregate principal amount of our
outstanding 10&nbsp;3/4% Notes due 2011 and to pay related
transaction fees, expenses and taxes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the estimated
sources and uses from this offering (dollar amounts in
millions), assuming the sale of the shares of our common stock
offered hereby occurred on September&nbsp;30, 2003.
</FONT>

<CENTER>
<TABLE width="50%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Sources</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash on hand
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Drawings under revolving credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock offered by us hereby
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="50%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Uses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Redemption of 10&nbsp;3/4% Notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Estimated fees, expenses and taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, prior to the closing of this
offering, we expect to make a final liquidating distribution of
up to $20&nbsp;million in cash to shareholders of CDRJ
Investments (Lux) S.A. We expect to fund this payment by drawing
on the revolving portion of our senior credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the May 2003 recapitalization,
we used the proceeds from the sale of the 10&nbsp;3/4% Notes to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;redeem or satisfy and discharge all of
    our then-outstanding 11&nbsp;3/4% Senior Subordinated Notes due
    2008, in an amount equal to 105.875% of the aggregate
    outstanding principal amount thereof, plus accrued and unpaid
    interest to the redemption date;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;repay all amounts outstanding under our
    then-existing credit facilities concurrently with the
    termination of all commitments thereunder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;make a liquidating distribution of
    approximately $157.6&nbsp;million to shareholders of our former
    parent company, CDRJ Investments (Lux) S.A.;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(4)&nbsp;make certain compensatory payments of
    approximately $10.4&nbsp;million to holders of options to
    acquire capital stock of CDRJ Investments (Lux) S.A., including
    to certain directors and members of management, in connection
    with such liquidating distribution; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(5)&nbsp;pay related transaction fees, expenses
    and taxes.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">27
</FONT>
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<P align="center">
<B><FONT size="2">DIVIDEND POLICY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not expect to pay dividends on our common
stock for the foreseeable future. Instead, we anticipate that
all our earnings in the foreseeable future will be used for the
operation and growth of our business. The payment of dividends
by us to holders of our common stock is limited by our senior
credit facilities and the indenture governing our 10&nbsp;3/4%
Notes, which restrict our operating subsidiaries&#146; ability
to pay dividends or make loans to Jafra. Any future
determination to pay dividends on our common stock is subject to
the discretion of our board of directors and will depend upon
various factors, including our results of operations, financial
condition, liquidity requirements, surplus and timing
restrictions imposed by Luxembourg law, other restrictions that
may be imposed by applicable law and our contracts, and other
factors deemed relevant by our board of directors. For a
discussion of the tax treatment of dividends we may elect to pay
in the future, see &#147;Certain Material U.S.&nbsp;Federal
Income Tax Considerations&#148; and &#147;Certain Material
Luxembourg Tax Considerations.&#148;
</FONT>

<P align="center"><FONT size="2">28
</FONT>

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<!-- link1 "CAPITALIZATION" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="center">
<B><FONT size="2">CAPITALIZATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth as of
September&nbsp;30, 2003 on a consolidated basis:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our actual capitalization, which takes into
    effect our May 2003 recapitalization;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our as adjusted capitalization that gives effect
    to (i)&nbsp;our sale
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock in this offering at an assumed initial
    public offering price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share, the midpoint of the range set forth on the cover page of
    this prospectus and (ii)&nbsp;the application of the net
    proceeds therefrom together with borrowings under the revolving
    portion of our senior credit facilities to redeem
    $70&nbsp;million in aggregate principal amount of our
    outstanding 10&nbsp;3/4% Notes as described in &#147;Use of
    Proceeds&#148; and to fund the payment of premium and accrued
    and unpaid interest thereon.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our as adjusted capitalization also gives effect
to the payment prior to our sale of the shares of our common
stock offered hereby of a final liquidating distribution of up
to $20 million in cash to shareholders of CDRJ Investments (Lux)
S.A. and related borrowings under the revolving portion of our
senior credit facilities, as described in &#147;Certain
Relationships and Related Party Transactions&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This table should be read in conjunction with
&#147;Use of Proceeds,&#148; &#147;Management&#146;s Discussion
and Analysis of Financial Condition and Results of
Operations,&#148; &#147;Description of Our Indebtedness&#148;
and our consolidated financial statements and related notes
thereto included elsewhere in this prospectus.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">As of September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Adjusted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(in millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Short-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revolving credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Term loans
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10&nbsp;3/4% Notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total long term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">248.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock, $2.00 par value (0 shares
    outstanding, actual,
    and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    outstanding, as adjusted)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">191.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">29
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "DILUTION" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="center">
<B><FONT size="2">DILUTION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you invest in our common stock, your interest
will be diluted to the extent of the difference between the
initial public offering price of the shares of our common stock
and the net tangible book value per share after this offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net tangible book value per share represents the
amount of total tangible assets less total liabilities, divided
by the number of shares of common stock then outstanding. Our
net tangible book value as of September&nbsp;30, 2003 was
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, based on
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock outstanding as of such date. After giving effect
to our sale
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
in this offering at an assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, the midpoint of the range set forth on the cover page of
this prospectus, and after deducting estimated underwriting
discounts and estimated offering expenses, our net tangible book
value as of September&nbsp;30, 2003 would have been
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. This represents an immediate increase in the net tangible
book value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to existing stockholders and an immediate and substantial
dilution of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to new investors purchasing shares in this offering. The
following table illustrates this dilution:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assumed initial public offering price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net tangible book value as of September&nbsp;30,
    2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase attributable to this offering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net tangible book value after this offering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dilution in net tangible book value to new
    investors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">The following table summarizes as of
September&nbsp;30, 2003 the total number of shares of common
stock purchased from us, the total consideration paid to us, and
the weighted average price per share paid by existing
stockholders and by new investors purchasing shares from us in
this offering at our assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, the midpoint of the range set forth on the cover page of
this prospectus and before deducting underwriting discounts and
estimated offering expenses payable by us.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Acquired</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Consideration</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Price Per</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Share</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Existing stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New investors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The foregoing discussion and tables assume no
exercise of outstanding stock options. As of September&nbsp;30,
2003, there were options outstanding to purchase a total of
84,242 shares of our common stock at a weighted average exercise
price, adjusted to reflect the May 2003 recapitalization
transactions, of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent that any of these stock options are
exercised, there may be further dilution to new investors. See
&#147;Capitalization,&#148; &#147;Management&#148; and note 13
to the consolidated financial statements included elsewhere in
this prospectus.
</FONT>

<P align="center"><FONT size="2">30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="center">
<B><FONT size="2">SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND
OTHER DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the selected
historical consolidated financial and other data of CDRJ North
Atlantic (Lux) S.&#224;r.l. (to be renamed Jafra S.A.) (amounts
in millions except for per share and consultant data and
ratios). The selected historical consolidated financial data as
of December&nbsp;31, 2001 and 2002 and the years ended
December&nbsp;31, 2000, 2001 and 2002 are derived from the
audited consolidated financial statements of CDRJ North Atlantic
(Lux) S.&#224;r.l. included elsewhere in this prospectus. The
consolidated financial statements as of December&nbsp;31, 2001,
and for each of the two years in the period ended
December&nbsp;31, 2001 have been audited by Deloitte&nbsp;&#38;
Touche LLP, independent auditors. The consolidated financial
statements as of December&nbsp;31, 2002 and for the year then
ended have been audited by Ernst&nbsp;&#38; Young LLP,
independent auditors. The selected historical consolidated
financial data as of September&nbsp;30, 2002 and 2003 and for
the nine months ended September&nbsp;30, 2002 and 2003 are
derived from the unaudited consolidated financial statements of
CDRJ North Atlantic (Lux) S.&#224;r.l. included elsewhere in
this prospectus. Such unaudited consolidated financial
statements, in the opinion of our management, include all
adjustments necessary for the fair presentation of our financial
condition and results of operations for such periods and as of
such dates. The financial data prior to April&nbsp;30, 1998
reflect the business prior to the acquisition of the Jafra
business from the Gillette Company and are referred to as the
&#147;Predecessor&#148; operations. You should read the
following selected historical consolidated financial and other
data of CDRJ North Atlantic (Lux) S.&#224;r.l. in conjunction
with the historical consolidated financial statements and other
financial information appearing elsewhere in this prospectus,
including &#147;Summary&nbsp;&#151; Summary Consolidated
Financial and Other Data&#148;, &#147;Capitalization&#148; and
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148;.
</FONT>

<P align="center"><FONT size="2">31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND
OTHER DATA</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">CDRJ North Atlantic (Lux) S.&#224;r.l.</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Predecessor</FONT></B></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(to be renamed Jafra S.A.)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Four</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Eight</FONT></B></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">April&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Statement of Income Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">75.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">166.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">286.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">310.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">365.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">382.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">285.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">276.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cost of sales(a)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">54.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">79.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">76.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">84.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">90.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">66.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">63.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">53.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">112.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">207.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">233.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">281.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">292.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">219.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">212.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">48.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">105.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">173.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">188.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">224.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">233.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">174.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">188.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(i)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Restructuring and impairment charges(b)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss (gain)&nbsp;on sale of assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5.0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">30.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">42.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">56.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">58.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">44.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">24.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(i)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Other income (expense):
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Exchange (loss)&nbsp;gain
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(11.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(9.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(10.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(9.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(7.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Interest (expense) income, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(11.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(17.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(15.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(13.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(11.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(8.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(14.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss on early extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(6.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)(j)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Other income (expense), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income (loss) from continuing operations before
    income taxes and cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(6.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">33.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">36.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">25.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)(k)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income (loss) from continuing operations before
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(7.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gain (loss) on discontinued operations, net of
    income tax expense of $0 in 1998, 1999 and 2000, $0.1 in 2001
    and 2002 and $0 in 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income (loss) before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(8.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">15.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19.0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">15.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(8.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cumulative effect of accounting change, net of
    income tax expense of $0.1 in 2001 and $0 in 2002(c)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(8.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16.0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(8.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)(k)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Earnings per share from continuing operations
    (basic)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss per share from discontinued operations
    (basic)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Earnings per share (basic)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Earnings per share from continuing operations
    (diluted)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss per share from discontinued operations
    (diluted)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Earnings per share (diluted)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Weighted average number of shares outstanding:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">32
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">CDRJ North Atlantic (Lux) S.&#224;r.l.</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Predecessor</FONT></B></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(to be renamed Jafra S.A.)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Four</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Eight</FONT></B></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">April&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Other Financial and Operational
    Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by (used in) operating
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average number of consultants(d)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">221,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">260,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">344,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">376,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">404,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consultants at end of period(e)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">232,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">274,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">293,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">351,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">401,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">384,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance Sheet Data (at end of
    period):</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net working capital(f)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">278.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">291.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">289.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt(g)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">141.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">248.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net debt(h)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">130.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">104.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">239.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholder&#146;s equity (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">106.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(a)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Cost of sales for the eight months ended
    December&nbsp;31, 1998 includes a $2.7&nbsp;million charge
    relating to the sale of certain inventories that were revalued
    to fair value in conjunction with the acquisition of the Jafra
    business by CDRJ Investments (Lux) S.A. and its subsidiaries.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(b)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For 1999, $2.7&nbsp;million of our restructuring
    and impairment charges were primarily cash charges for severance
    related to the closure of our U.S.&nbsp;factory. Of the
    remainder, $1.0&nbsp;million were other restructuring charges
    and approximately $1.1&nbsp;million were non-cash asset
    impairment charges related to the write down or impairment of
    assets. For 2000, our restructuring and impairment charges
    included approximately $1.6&nbsp;million of restructuring
    charges related to the restructuring of our European operations,
    most of which were payments of severance and lease termination
    costs, and approximately $1.0&nbsp;million of non-cash asset
    impairment charges related to the write down or impairment of
    assets.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(c)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In connection with the adoption of SFAS
    No.&nbsp;133, &#147;Accounting for Derivative Instruments and
    Hedging Activities,&#148; on January&nbsp;1, 2001, we recorded a
    net gain of $0.1&nbsp;million (net of a tax effect of
    $0.1&nbsp;million) as a cumulative transition adjustment to
    earnings. In connection with the adoption of SFAS No.&nbsp;142,
    &#147;Goodwill and other Intangible Assets&#148;, on
    January&nbsp;1, 2002, we recorded a net loss of
    $0.2&nbsp;million (net of a tax effect of $0) as a cumulative
    transition adjustment to earnings.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(d)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The average number of consultants is calculated
    based on the total ending consultant base for each month during
    the period. A consultant is included in the total ending
    consultant base if she places an order within the past four
    months. Consultant numbers are rounded to the nearest thousand.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(e)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consultant numbers are rounded to the nearest
    thousand.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(f)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net working capital is defined as total current
    assets, excluding cash and cash equivalents, less total current
    liabilities, excluding short-term debt and the current portion
    of long-term debt.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(g)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consists of long-term debt, short-term debt and
    the current portion of long-term debt.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(h)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net debt is total debt less cash and cash
    equivalents.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(i)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes $15.6&nbsp;million of expenses related
    to our May 2003 recapitalization.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(j)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Relates to our redemption of debt in connection
    with our May 2003 recapitalization.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(k)&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes $15.6&nbsp;million of expenses and
    $6.6&nbsp;million of losses on the early extinguishment of debt
    related to our May 2003 recapitalization.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">33
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="center">
<B><FONT size="2">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS
OF</FONT></B>

<DIV align="center">
<B><FONT size="2">FINANCIAL CONDITION AND RESULTS OF
OPERATIONS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following discussion of the results of
operations, financial condition and liquidity of Jafra should be
read in conjunction with the historical consolidated financial
statements and notes and other financial information related to
Jafra appearing elsewhere in this prospectus, including
&#147;Prospectus Summary&nbsp;&#151; Summary Consolidated
Financial and Other Data&#148;, &#147;Capitalization&#148; and
&#147;Selected Historical Consolidated Financial and Other
Data&#148;. The results of operations for the periods reflected
herein are not necessarily indicative of results that may be
expected for future periods.</FONT></I>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a direct seller of skin and body care
products, color cosmetics, fragrances and other personal care
products. We sell our Jafra brand products through a multi-level
direct selling network of over 400,000 independent consultants,
who market and sell our products to their customers. Our largest
markets are Mexico and the United States, which together
contributed approximately 90% of our total net sales in 2002.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Markets</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business operates in four primary markets:
Mexico, the United States, Europe and South America. Of these,
Mexico is the largest, with approximately two-thirds of total
net sales, and the United States, Europe and South America
represented 27%, 8% and 3%, respectively, of total net sales in
the nine months ended September&nbsp;30, 2003. In 2000, we
divided the United States into two divisions: our General
Division and our Hispanic Division, which is comprised of
Spanish-speakers, and represents two-thirds of our total
U.S.&nbsp;business. In Europe, we operate in Germany,
Switzerland, Italy, Austria and Holland, and several other
countries through distributors. We have renewed our focus on the
strengths of our Mexican, U.S. and European markets by exiting
operations in certain markets in South America and Thailand. In
the third quarter of 2003, we discontinued operations in Chile,
Colombia, Peru and Venezuela, and in the fourth quarter of 2003,
we ceased our operation in Thailand. Consequently, our
historical financial statements have been revised for all
periods presented to reflect our operations in these markets,
other than Thailand, as discontinued operations and our number
of consultants have been reduced accordingly. We also
reevaluated our strategy in Brazil and Argentina, which we
believe are good market opportunities for our business. During
the fourth quarter of 2003, we completed an aggressive
restructuring in Brazil and Argentina, which included cost
cutting measures and new product management strategies.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seasonality
and Sales Cycles</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business, measured both in terms of net sales
and in terms of numbers of consultants, is subject to certain
seasonal trends. Both net sales and the number of consultants
typically increase at year end, primarily due to the winter
holiday season both as an occasion for the purchase of gifts and
as a time of year when there may be increased interest in
joining our consultant network as a way of generating extra
income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Consultant turnover occurs throughout the year,
as is typical in the direct sales industry, and results in
variation in our consultant base as measured at the end of
intra-year reporting periods. In addition, our consultant base
and net sales fluctuate within quarterly reporting periods
because we have six two-month sales cycles in each fiscal year.
The second and fifth sales cycle straddle our first and second,
and third and fourth quarters, respectively. As a result, our
first and third quarters, which each include only the first half
of one of the two cycles in the period, may result in relatively
lower net sales than our second and fourth quarters, which each
include the second half of that sales cycle.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We typically schedule sales promotions to
coincide with the beginning of a new sales cycle, but our
product launches may come at various times throughout the year
based on the product development cycle. A successful product
launch in a particular reporting period may cause that period to
exhibit relatively stronger results because of the higher level
of interest in the new product or line. Some fiscal
</FONT>

<P align="center"><FONT size="2">34
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">quarters may appear to have generated stronger or
weaker net sales or consultant interest as expressed in the
number of consultants than the preceding period because of the
number of sales cycles closing within that quarter. In addition,
because the types of promotions and the timing of certain key
new product launches may vary from year to year, quarter over
quarter comparisons are generally not representative of our
growth potential.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Measures of
Consultant Performance</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In evaluating our results of operations, we
utilize several key measures relating to the performance of our
independent consultants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Consultants at End of Period or Consultant
Base.</FONT></I><B><FONT size="2"> </FONT></B><FONT size="2">We
define our consultants or consultant base at the end of a period
as the number of consultants that have placed an order within
the past four months as of the end of the period. We use
period-to-period comparisons of our consultant base as an
indicator of the growth of our business. As a result of this
four-month convention, the number of consultants from one month
to the next may vary significantly due to the timing of certain
key events, promotions and product launches.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Average Number of Consultants.
</FONT></I><FONT size="2">The average number of consultants is
calculated based on the number of consultants at the end of each
month during the period, divided by the number of months in the
period. We use period-to-period comparisons of our average
number of consultants as an indicator of the growth of our
business, and this number is more directly correlated with net
sales than the ending consultant number for a given period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Consultant
Productivity.</FONT></I><B><FONT size="2">
</FONT></B><FONT size="2">Management also regards consultant
productivity as an important measure of our ability to generate
net sales on a cost-efficient basis. Consultant productivity
refers to the amount purchased by each consultant during the
period and is calculated by dividing net sales during the period
by the average number of consultants during that period.
U.S.&nbsp;dollar productivity is impacted by fluctuations in
exchange rates. We believe that productivity in local currency
is a better indicator of our performance. In a period of rapid
growth of the consultant base, productivity can be impacted by
the number of new consultants whose average order size is
typically lower than that of established consultants. A
component of productivity is the activity rate of our
consultants. The activity rate is defined as the percentage of
our consultants included in the base who have placed an order
during any given period.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compensation
of our Multi-level Direct Selling Network</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Consultants earn income by purchasing products
from us at wholesale prices and selling to consumers at
suggested retail prices. In addition, consultants who sponsor a
certain number of recruits and meet certain minimum sales levels
can become managers or lineage leaders. The compensation of a
manager or lineage leader includes overrides, which are equal to
a percentage of the sales generated by consultants recruited
directly or indirectly by them. The overrides are paid to
motivate and compensate the managers to train, recruit and
develop downline consultants. Additionally, managers are also
incented to perform collection efforts on our behalf, as
overrides paid on a consultant&#146;s downline productivity are
paid only upon the collection of our receivables. The overrides
represent a significant portion of our selling, general and
administrative expense.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research
&#38; Development&nbsp;&#151; &#147;Fast Follower&#148;
Strategy</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Research and development is a key part of new
product introductions that motivate our consultant base and
increase net sales. We have our own in-house development
department staffed with 10&nbsp;trained professionals. We have
chosen a &#147;fast follower&#148; strategy that allows us to
focus most of our efforts on the development side. We utilize
research and industry developments as well as proven market
concepts and products as a base for our development of new
products. As a result, our R&#38;D expenses are less than 1% of
sales, but we have delivered a very steady stream of value-added
new products, including some first-to-market concepts.
</FONT>

<P align="center"><FONT size="2">35
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Foreign
Currency Translation</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We generate the majority of our net sales through
peso-denominated sales to consultants in Mexico, which is our
largest market. We also have operations in other overseas
markets, each of which generates net sales in its respective
local currency. Because we report our financial results in, and
nearly all of our debt is denominated in, U.S.&nbsp;dollars, we
are exposed to significant foreign currency related risks in
connection with the translation of our activities outside the
United States from local currencies into U.S.&nbsp;dollars and
the translation of currency for the repayment of our debt,
payment of our interest expense and other dollar-denominated
obligations into U.S.&nbsp;dollars.
</FONT>

<P align="left">
<B><FONT size="2">Results of Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net sales. </FONT></I><FONT size="2">We record
net sales based on the wholesale price of product sold to our
consultants. Our net sales represent our net revenue plus the
shipping, handling and other fees paid to us by consultants,
less any commissions paid by us to the consultants on their
personal sales. Approximately 90% of these net sales are
product-related and are commissionable, while 10% are consultant
kits and other sales aids, training materials and certain other
products which are non-commissionable. Sales are recorded upon
shipment by third-party carrier to the consultants. The retail
price of our products is at the high end of the range for
comparable direct selling merchants. Our wholesale price is
determined by the commission earned by the consultant based on
the size of the order.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cost of Sales.</FONT></I><B><FONT size="2">
</FONT></B><FONT size="2">Our cost of sales primarily represents
the cost to us of the products we sell to our consultants,
including our manufacturing and other production-related
expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, General and Administrative Expense.
</FONT></I><FONT size="2">Selling, general and administrative
expenses (&#147;SG&#38;A&#148;) include sales promotional
expenses, including the cost of events, meetings and prizes,
distribution expenses, and shipping and handling costs, as well
as selling, marketing and administrative expenses, including
general management, finances, human resources and information
technology. SG&#38;A expenses also include override payments to
our lineage leaders who earn a percentage of the sales of the
consultants in their downline and bad debt expense related to
uncollectible accounts receivable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table represents selected
components of our consolidated results of operations, in
millions of dollars and as percentages of net sales.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Nine Months Ended September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">219.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">212.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">224.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restructuring and impairment charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exchange loss, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on early extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other income (expense), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from continuing operations
    before income taxes and cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">36
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Nine Months Ended September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from continuing operations
    before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on discontinued operations, net of income
    tax expense of $0 in 2000, $0.1 in 2001 and 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of
    income tax expense of $0.1 in 2001 and $0 in 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables represent selected
components of our consolidated results of operations by market.
We evaluate market performance based on segment operating
income, excluding reorganization and restructuring charges,
unusual gains and losses, and amortization of goodwill and other
intangible assets. Results for subsidiaries in South America and
the Dominican Republic are combined and included in the
following tables under the caption &#147;All Others.&#148; We
expect that in future periods, results for the Dominican
Republic will be included in the U.S. segment. Corporate
expenses, reorganization and restructuring charges, unusual
gains and losses and amortization of goodwill and other
intangible assets are included under the caption
&#147;Corporate, Unallocated and Other.&#148;
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="21%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Corporate,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unallocated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Dollars in millions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexico</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Others</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Segments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consolidated Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Nine Months Ended</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">September&nbsp;30, 2003</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">172.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">74.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">22.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">276.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">276.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">41.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">65.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">63.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">130.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">57.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18.0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">210.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">212.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">85.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">46.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">157.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">30.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">188.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income (loss)&nbsp;from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">44.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">53.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(28.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">24.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Nine Months Ended<BR>
    September&nbsp;30, 2002</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">190.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">66.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">285.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">285.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">45.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">67.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">66.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">144.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">52.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">219.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">94.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">41.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">160.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">174.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income (loss)&nbsp;from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">50.0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">57.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(13.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">44.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">37
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Corporate,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unallocated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Dollars in millions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexico</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Others</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Segments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consolidated Total</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Year Ended December&nbsp;31, 2002</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">251.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">191.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">213.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Year Ended December&nbsp;31, 2001</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">278.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">199.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">224.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Year Ended December&nbsp;31, 2000</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">199.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">234.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">165.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restructuring and impairment charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">See Note&nbsp;11 to our consolidated financial
statements included elsewhere in this prospectus.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Nine Months Ended September&nbsp;30, 2003
    Compared to Nine Months Ended September&nbsp;30,
    2002</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net sales.</FONT></I><FONT size="2"> Net sales
for the nine months ended September&nbsp;30, 2003 decreased to
$276.7&nbsp;million from $285.3&nbsp;million for the nine months
ended September&nbsp;30, 2002, a decrease of $8.6&nbsp;million,
or 3.0%. Net sales measured in local currencies for the first
nine months of 2003 increased 3.8% compared to net sales
measured in local currencies for the first nine months of 2002.
The net sales decrease measured in U.S.&nbsp;dollars compared to
the net sales increase measured in local currencies was
primarily due to weaker average exchange rates of the Mexican
peso to the U.S.&nbsp;dollar during 2003 compared to 2002. Our
average number of consultants for the nine months ended
September&nbsp;30, 2003 increased to approximately 405,000, or
10.0%, over the average number of consultants for the nine
months ended September&nbsp;30, 2002. Annualized consultant
productivity measured in U.S.&nbsp;dollars for the first nine
months of 2003 decreased 11.8% compared to annualized consultant
productivity for the first nine months of 2002. Measured in
local currencies, annualized productivity decreased 5.6% for the
nine months ended September&nbsp;30, 2003, compared to the nine
months ended September&nbsp;30, 2002.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, net sales, excluding inter-segment
sales, for the first nine months of 2003 decreased
$18.4&nbsp;million, or 9.7%, to $172.1&nbsp;million from
$190.5&nbsp;million for the first nine months of 2002. Net sales
measured in local currency increased 1.2% for the first nine
months of 2003, compared to the first nine months of 2002. The
increase measured in local currency was primarily due to an
increase in the average number of consultants, partially offset
by a decrease in consultant productivity. The average number of
consultants in Mexico was approximately 261,000 for the first
nine months of 2003, an increase of 6.0% over the comparable
prior year period. Annualized consultant productivity measured
in local currency for the nine months ended September&nbsp;30,
2003 decreased 4.5% compared to consultant productivity for the
nine months ended September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, net sales, excluding
inter-segment sales, for the first nine months of 2003 increased
to $74.5&nbsp;million from $66.9&nbsp;million for the first nine
months of 2002, an increase of $7.6&nbsp;million, or 11.4%, with
increases in both divisions. Net sales in the Hispanic Division
increased 13.6% to $50.3&nbsp;million for the first nine months
of September&nbsp;30, 2003, compared to the first nine months of
2002, due to a larger consultant base, offset by reduced
consultant productivity. The average number of consultants in
the Hispanic Division for the period was approximately 48,000,
an increase of 29.6% over the comparable prior year period.
Annualized consultant productivity in the Hispanic Division
decreased 12.4% for the first nine months of 2003 compared to
the first nine months of 2002. The number of active ordering
consultants in the Hispanic Division decreased during the
period. Net sales in the General Division increased 7.0% to
$24.1&nbsp;million for the nine months ended September&nbsp;30,
2003, compared to the nine months ended September&nbsp;30, 2002
as a result of a 5.4% increase in consultant productivity and an
increase in the average number of consultants. The average
number of General Division consultants during the period
increased 1.2% to approximately 30,000 consultants for the nine
months ended September&nbsp;30, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, net sales, excluding inter-segment
sales, increased to $22.7&nbsp;million for the nine months ended
September&nbsp;30, 2003, from $18.6&nbsp;million for the nine
months ended September&nbsp;30, 2002, an increase of
$4.1&nbsp;million, or 22.0%, in part due to stronger average
exchange rates compared to the U.S.&nbsp;dollar. In local
currencies, net sales increased 1.4% for the first nine months
of 2003, compared to the first nine months of 2002. The average
number of consultants for the nine months ended
September&nbsp;30, 2003 was approximately 18,000, an increase of
11.9% over the comparable prior year period. Consultant
productivity measured in local currencies decreased 9.4% for the
nine months ended September&nbsp;30, 2003 compared to the nine
months ended September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net sales in the other markets decreased to
$7.4&nbsp;million for the nine months ended September&nbsp;30,
2003, compared to $9.3&nbsp;million for the nine months ended
September&nbsp;30, 2002, a decrease of $1.9&nbsp;million, or
20.4%. The decrease in net sales was primarily due to weaker
average exchange rates of South American currencies during 2003
compared to 2002 and decreased net sales measured in local
currency in the Dominican Republic, partially offset by
increased net sales measured in local currency in Brazil.
Measured in local currencies, net sales increased 1.4% for the
nine months ended September&nbsp;30, 2003 compared to the nine
months ended September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gross profit.
</FONT></I><FONT size="2">Consolidated gross profit for the nine
months ended September&nbsp;30, 2003 decreased to
$212.9&nbsp;million from $219.2&nbsp;million for the nine months
ended September&nbsp;30, 2002, a decrease of $6.3&nbsp;million,
or 2.9%. Gross profit as a percentage of net sales (gross
margin) increased to 76.9% for the nine months ended
September&nbsp;30, 2003 from 76.8% in the comparable prior year
period. The increase in gross margin for the nine months ended
September&nbsp;30, 2003 compared to the nine months ended
September&nbsp;30, 2002 was primarily due to increased gross
margin in Europe and favorability in the &#147;Corporate,
Unallocated and Other&#148; segment, partially offset by
decreased gross margin in the United States and the All Others
markets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, gross margin for the nine months ended
September&nbsp;30, 2003 decreased to 75.9% from 76.0% for the
nine months ended September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, gross margin for the nine
months ended September&nbsp;30, 2003 decreased to 77.4% from
77.9% for the nine months ended September&nbsp;30, 2002. The
decrease in gross margin was
</FONT>

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<DIV align="left">
<FONT size="2">primarily the result of unfavorable direct cost
variances during the nine months ended September&nbsp;30, 2003,
compared to favorable direct cost variances during the nine
months ended September&nbsp;30, 2002.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, gross margin for the nine months ended
September&nbsp;30, 2003 increased to 79.3% from 77.4% for the
comparable prior year period due to the favorable impact of
exchange rates on U.S.&nbsp;dollar-denominated inventory
purchases, partially offset by reduced gross margin as a result
of the mix of product offerings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, general and administrative expenses.
</FONT></I><FONT size="2">SG&#38;A expenses for the nine months
ended September&nbsp;30, 2003 increased to $188.5&nbsp;million,
compared to $174.9&nbsp;million for the nine months ended
September&nbsp;30, 2002, an increase of $13.6&nbsp;million, or
7.8%. SG&#38;A expenses, as a percentage of net sales, increased
to 68.1% for the nine months ended September&nbsp;30, 2003 from
61.3% for the nine months ended September&nbsp;30, 2002 due
primarily to increased selling, general and administrative
expense in the &#147;Corporate, Unallocated and Other&#148;
segment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, SG&#38;A expenses for the nine months
ended September&nbsp;30, 2003 decreased by $9.0&nbsp;million, or
9.5%, to $85.7&nbsp;million, compared to $94.7&nbsp;million for
the nine months ended September&nbsp;30, 2002. SG&#38;A expenses
increased, as a percentage of net sales, in Mexico to 49.8% for
the nine months ended September&nbsp;30, 2003, compared to 49.7%
for the nine months ended September&nbsp;30, 2002. The increase
in SG&#38;A expenses as a percentage of net sales was primarily
due to increases in override and promotional expenses, partially
offset by decreased administrative expenses. Sales promotional
expenses increased as a percentage of net sales due to the
timing and nature of promotional activities and override
expenses increased due to better collection of receivables.
Administrative expenses decreased due to the employment of cost
containment measures and less expense related to the allowance
for uncollectible accounts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, SG&#38;A expenses for the
nine months ended September&nbsp;30, 2003 increased by
$4.9&nbsp;million, or 11.9%, to $46.1&nbsp;million from
$41.2&nbsp;million for the nine months ended September&nbsp;30,
2002. SG&#38;A expenses, as a percentage of net sales, in the
United States were 61.9% for the nine months ended
September&nbsp;30, 2003 compared to 61.6% for the nine months
ended September&nbsp;30, 2002. The increase in SG&#38;A expenses
as a percentage of net sales was primarily attributable to
increased sales promotional and override expenses, partially
offset by reduced selling expenses during the nine months ended
September&nbsp;30, 2003 compared to the nine months ended
September&nbsp;30, 2002. Sales promotional expenses increased
due to more planned promotional spending in 2003 and expenses
related with a General Division summer trip in 2003 which was
not held in 2002. Override expense increased due to the relative
sales mix. Selling expenses, as a percentage of net sales,
decreased due to headcount vacancies and reductions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, SG&#38;A expenses for the nine months
ended September&nbsp;30, 2003 increased by $3.3&nbsp;million, or
23.2%, to $17.5&nbsp;million from $14.2&nbsp;million for the
nine months ended September&nbsp;30, 2002. SG&#38;A expenses, as
a percentage of net sales, in Europe were 77.1% for the nine
months ended September&nbsp;30, 2003, compared to 76.3% for the
nine months ended September&nbsp;30, 2002. The increase in
SG&#38;A expenses as a percentage of net sales was due to
increased sales promotional expenses in an effort to increase
sponsoring and the consultant base and increased override
expenses due to better collections and a change in the program,
partially offset by decreased administrative expenses due to
incrementally less expense related to the reserve for
uncollectible accounts in Italy and information technology
expenses during the nine months ended September&nbsp;30, 2003
compared to the same period of the prior year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SG&#38;A expenses in our other markets for the
nine months ended September&nbsp;30, 2003 decreased by
$1.8&nbsp;million, or 17.5%, compared to the nine months ended
September&nbsp;30, 2002. As a percentage of net sales, SG&#38;A
expenses were 114.9% for the nine months ended
September&nbsp;30, 2003, compared to 110.8% for the nine months
ended September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SG&#38;A expenses in the &#147;Corporate,
Unallocated and Other&#148; segment increased $16.2&nbsp;million
primarily as the result of costs related to our recapitalization
recorded during the second quarter of 2003 and certain
nonrecurring severance charges recorded during the nine months
ended September&nbsp;30, 2003.
</FONT>

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<DIV align="left">
<FONT size="2">During the nine months ended September&nbsp;30,
2003, we completed a recapitalization of its operations by
issuing new debt (see &#147;Liquidity and Capital
Resources&#148;).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Exchange gain
(loss).</FONT></I><FONT size="2"> Foreign exchange loss was
$7.8&nbsp;million for the nine months ended September&nbsp;30,
2003, compared to $9.8&nbsp;million for the nine months ended
September&nbsp;30, 2002, a decrease of $2.0&nbsp;million, or
20.4%. During the nine months ended September&nbsp;30, 2003, we
recognized $9.3&nbsp;million of exchange losses on the
remeasurement of U.S. dollar-denominated debt. This loss was
partially offset by $0.6&nbsp;million of exchange gains related
to option contracts and $0.9&nbsp;million of exchange gains on
other foreign currency transactions. During the nine months
ended September&nbsp;30, 2002, we recognized $2.2&nbsp;million
of exchange losses related to forward contracts,
$1.2&nbsp;million of exchange gains related to option contracts,
$4.6&nbsp;million of exchange losses on the remeasurement of
U.S.&nbsp;dollar-denominated debt, $5.2&nbsp;million of exchange
losses on U.S.&nbsp;dollar-denominated intercompany payables in
Brazil as the result of devaluation of the Brazilian real and
$1.0&nbsp;million of exchange gains on other foreign currency
transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest expense.</FONT></I><FONT size="2">
Net interest expense (including amortization of deferred
financing fees) for the nine months ended September&nbsp;30,
2003 increased to $14.1&nbsp;million from $8.8&nbsp;million for
the nine months ended September&nbsp;30, 2002, an increase of
$5.3&nbsp;million, or 60.2%. The increase was primarily due to a
greater average amount of debt outstanding during the nine
months ended September&nbsp;30, 2003 compared to the nine months
ended September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on extinguishment of debt.
</FONT></I><FONT size="2">On May&nbsp;23, 2003, we repurchased
our outstanding 11&nbsp;3/4% Subordinated Notes due
April&nbsp;30, 2008 (the &#147;Old Notes&#148;) in the aggregate
principal amount of $75.2&nbsp;million at a premium of
approximately $4.4&nbsp;million. Additionally, we repaid
$7.4&nbsp;million under our existing credit agreement (&#147;Old
Credit Agreement&#148;). In connection with the redemption of
the Old Notes and the termination of the Old Credit Agreement,
we wrote off approximately $2.2&nbsp;million of capitalized
deferred financing fees. The total expense related to the
extinguishment of the previous debt was $6.6&nbsp;million and
was recorded in the nine months ended September&nbsp;30, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income tax expense.
</FONT></I><FONT size="2">Income tax expense decreased to
$1.2&nbsp;million for the nine months ended September&nbsp;30,
2003 from $9.7&nbsp;million for the nine months ended
September&nbsp;30, 2002, a decrease of $8.5&nbsp;million, or
87.6%. During the nine months ended September&nbsp;30, 2003, we
reported a pretax loss of $4.4&nbsp;million and income tax
expense of $1.2&nbsp;million. Our Mexican subsidiaries reported
pretax income and income tax expense for the nine months ended
September&nbsp;30, 2003. The income tax expense was partially
offset by an income tax benefit in the U.S.&nbsp;subsidiary
based on pretax net loss. Additionally, our European and other
subsidiaries recorded valuation allowances against pretax net
losses for the nine months ended September&nbsp;30, 2003. For
the nine months ended September&nbsp;30, 2002, our effective tax
rate was 37.5% due to the release of $2.3&nbsp;million of
valuation allowances against certain deferred tax assets in the
United States and the impact of the enactment of changes in
Mexico&#146;s future corporate statutory rates on net deferred
tax liabilities of $1.2&nbsp;million during the first quarter of
2002. These benefits to the effective tax rate were offset by
valuation allowances against certain operating losses in Europe
and other subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on discontinued operations.
</FONT></I><FONT size="2">During the nine months ended
September&nbsp;30, 2003, losses on discontinued operations were
$2.5&nbsp;million, an increase of $1.4&nbsp;million compared to
a loss of $1.1&nbsp;million in the nine months ended
September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net (loss)&nbsp;income.
</FONT></I><FONT size="2">Net loss was $8.1&nbsp;million for the
nine months ended September&nbsp;30, 2003, compared to net
income of $14.9&nbsp;million for the nine months ended
September&nbsp;30, 2002, a $23.0&nbsp;million unfavorable
difference. The decrease in income was due to a
$6.3&nbsp;million decrease in gross profit, a $13.6&nbsp;million
increase in selling, general and administrative expenses, a
$5.3&nbsp;million increase in interest expense, a
$6.6&nbsp;million loss on extinguishment of debt, a
$0.5&nbsp;million unfavorable change in other and a
$1.4&nbsp;million increase in losses on discontinued operations,
partially offset by a $2.0&nbsp;million decrease in exchange
loss, an $8.5&nbsp;million decrease in income tax expense and
the absence of $0.2&nbsp;million in cumulative effect of
accounting change in 2003.
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Year Ended December&nbsp;31, 2002 Compared
    to Year Ended December&nbsp;31, 2001</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net Sales.</FONT></I><FONT size="2"> Net sales
for 2002 increased to $382.6&nbsp;million from
$365.4&nbsp;million in 2001, an increase of $17.2&nbsp;million,
or 4.7%. In local currencies, net sales increased 8.6% in 2002
compared to 2001. The number of our average ending consultants
worldwide increased 9.3% to approximately 376,000 consultants in
2002, an increase of 32,000 consultants over the 2001 average
ending number of consultants. Consultant activity decreased
approximately 1.4% as 49.3% of all consultants were considered
active in 2002, compared to 50.0% in 2001. In general,
consultants are considered to be active ordering consultants at
any one time if they place an order within the month immediately
preceding such time. Consultant productivity decreased 4.4% in
2002 compared to 2001, due primarily to weaker local currencies,
partially offset by increased productivity in our United States
market due to planned program changes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, net sales, excluding intersegment
sales, for 2002 increased 5.5% compared to net sales for 2001 as
measured in local currency. However, due to weaker average
exchange rates, net sales measured in U.S.&nbsp;dollars
increased 1.7% to $251.6&nbsp;million for 2002 from
$247.5&nbsp;million for 2001. The year-over-year increase was
due to an increase in the average number of consultants,
partially offset by reduced productivity. The increase in the
consultant base was the result of a continued focus on
sponsoring through promotions, low-cost kits and opportunity
meetings. The reduction in productivity was due to the weaker
average exchange rates and liquidity problems of the consultants
and their clients due to the difficult macroeconomic situation
in Mexico. In Mexico, the average number of consultants in 2002
increased to approximately 252,000, 9.9% over the 2001 average
number of consultants. Consultant productivity decreased 7.5% in
2002 compared to 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, net sales, excluding
intersegment sales, for 2002 increased to $92.1&nbsp;million
from $79.6&nbsp;million in 2001, an increase of
$12.5&nbsp;million, or 15.7%. The U.S.&nbsp;selling market has
established two distinct selling divisions to focus on the
individual characteristics of the Hispanic Division and the
General Division. The establishment of two distinct selling
divisions allows us to focus on independent marketing strategies
and to provide specialized recruiting, training and product
offerings, which has contributed to the increased net sales.
Sales in the Hispanic Division increased 19.7% to
$61.2&nbsp;million and sales in the General Division increased
8.6% to $30.9&nbsp;million during 2002 compared to net sales in
2001. In the Hispanic Division, the year-over-year increase was
driven by increases in the number of consultants, the number of
active consultants and consultant productivity. In the General
Division, the year-over-year increase was driven by an increase
in consultant productivity, partially offset by a smaller
consultant base. During the second quarter of 2002, we
implemented program changes in the United States to increase the
minimum order size in order for the consultant to achieve the
maximum 50% commission rate. As a result of this change in the
program, productivity in both the General and Hispanic Divisions
increased. In the General Division many promotions in 2001 were
geared toward increased activity rather than productivity. The
promotional focus in 2002 was on productivity, which also
contributed to the year-over-year productivity increase.
However, a result of increasing the minimum order size was an
increase in consultant losses which lead to a decrease in the
consultant base. In the Hispanic Division, the average number of
consultants increased 12.1% to 39,000 compared to the 2001
average. Hispanic Division consultant productivity increased
6.8% in 2002 compared to 2001 productivity. The Hispanic
Division focused on aggressive sponsoring promotions and
promotional kits in order to increase the number of consultants.
Additionally, in 2002, consultant activity increased 6.3% in the
Hispanic Division compared to 2001, with 60.7% of all
consultants considered to be active in 2002. The Hispanic
Division also reported increases in the number of leaders. In
the General Division, consultant productivity increased 16.5%
and the average number of consultants decreased 6.8% to
approximately 29,000 consultants in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, net sales, excluding intersegment
sales, for 2002 increased to $26.9&nbsp;million from
$26.4&nbsp;million in 2001, an increase of $0.5&nbsp;million, or
1.9%. Measured in local currencies, net sales in 2002 decreased
3.6% compared to net sales in 2001. The increase in net sales
measured in U.S.&nbsp;dollars was the result of the
strengthening of the euro and Swiss franc compared to the
U.S.&nbsp;dollar, partially offset by a decrease in the average
number of consultants, and reduced consultant productivity in
local currencies. In Europe, the average number consultants
decreased 2.6% to approximately 16,000 consultants. In Europe,
the decrease in the base was the result of a higher turnover due
to a low growth economy. Consultant
</FONT>

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<FONT size="2">productivity increased 5.0% in 2002, compared to
2001, due to the strengthening of local currencies compared to
the U.S.&nbsp;dollar. Measured in local currencies, consultant
productivity decreased 1.1% in 2002 compared to 2001
productivity.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gross Profit.</FONT></I><FONT size="2"> Gross
profit in 2002 increased to $292.4&nbsp;million from
$281.2&nbsp;million in 2001, an increase of $11.2&nbsp;million,
or 4.0%. Gross profit as a percentage of sales (gross margin)
decreased to 76.4% from 77.0%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, gross margin decreased nominally to
75.9% in 2002 compared to 76.0% in 2001 due primarily to
incrementally greater charges related to the reserve for slow
moving inventory in 2002 and the weakening of the peso compared
to the U.S.&nbsp;dollar, partially offset by a more favorable
product mix. Excluding charges for the reserve for slow moving
inventory in 2002, gross margin would have been approximately
76.3% in 2002, compared to 76.0% in 2001. The percentage of
commissionable sales compared to total sales remained constant
at approximately 91.0%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, gross margin remained
constant at 77.0% between 2002 and 2001. In 2002, sales of new
products contributed a greater gross margin compared to 2001.
This was offset by a lower gross margin contribution from
non-resale sale products. Charges for the reserve for slow
moving inventory were relatively constant between 2002 and 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, gross margin in 2002 decreased to
approximately 76.6% compared to 79.2% in 2001 primarily due to
more aggressive promotional activity implemented in an effort to
generate sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, General and Administrative
Expenses.</FONT></I><FONT size="2"> SG&#38;A expenses in 2002
increased to $233.8&nbsp;million from $224.8&nbsp;million in
2001, an increase of $9.0&nbsp;million, or 4.0%. SG&#38;A
expenses, as a percentage of net sales, decreased to 61.1% in
2002 from 61.5% in 2001, due to the discontinuation of
amortization of goodwill and trademarks pursuant to SFAS
No.&nbsp;142. See &#147;&#151;&nbsp;New Accounting
Pronouncements&#148;. In 2001, we recorded $3.5&nbsp;million of
charges related to amortization of intangible assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, SG&#38;A expenses increased to
$124.7&nbsp;million in 2002, from $116.8&nbsp;million in 2001.
As a percentage of net sales, SG&#38;A expenses increased to
49.6% in 2002 compared to 47.2% in 2001. The primary factors for
the increase in SG&#38;A expenses as a percentage of net sales
were selling expenses, variable freight expenses and
administrative expenses. Selling expenses increased due
primarily to an increase in the number of regional sales
managers. As a percentage of net sales, variable freight
expenses increased 1.1% due to increased orders and higher
average packaging costs. Administrative expenses increased
primarily due to an additional $3.4&nbsp;million of bad debt
expense in 2002, compared to 2001, due to declining consultant
liquidity as a result of the general economic condition.
Excluding the charge for bad debt expense, administrative
expense was relatively constant as a percentage of sales in 2002
and 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, SG&#38;A expenses increased
to $55.3&nbsp;million in 2002 from $49.8&nbsp;million in 2001,
an increase of $5.5&nbsp;million, or 11.0%. However, as a
percentage of net sales, SG&#38;A expenses decreased to 60.0%
from 62.6% primarily due to decreases in sales promotional
expenses and administrative expenses. Sales promotional expenses
decreased as a percentage of net sales due to the mix of events.
Administrative expenses decreased as a percentage of net sales
due to an increase in net sales as most of these expenses are
fixed. However, administrative expenses were relatively constant
in total. In the year 2002, we incurred $1.5&nbsp;million of
transaction related fees. In 1998, we incurred $1.2&nbsp;million
related to transaction fees in connection with the acquisition
from Gillette. We had $0.0 in transaction related costs in 1999,
2000 and 2001. Certain other variable expenses, such as period
distribution and freight out, increased in total in 2002, but
were relatively constant as a percentage of net sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, SG&#38;A expenses increased to
$19.4&nbsp;million in 2002 from $19.1&nbsp;million in 2001, an
increase of $0.3&nbsp;million. As a percentage of net sales,
SG&#38;A expenses decreased to 72.1% in 2002 from 72.3% in 2001.
Administrative expenses increased as a percentage of net sales
and in total due to larger charges related to the reserve for
uncollectible accounts in Italy and incrementally higher
information technology expenses in Germany in 2002 compared to
2001. The increase in administrative expenses, as a percentage
of net sales, was offset by reduced sales promotional and
override expenses, as a percentage of net sales, in 2002
compared to 2001.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SG&#38;A expenses in South America and Thailand
decreased to $13.6&nbsp;million in 2002, compared to
$14.0&nbsp;million in 2001, primarily due to the favorable
impact on expenses of currency devaluation of South American
currencies compared to the U.S.&nbsp;dollar, and decreased
incremental charges related to the reserve for uncollectible
accounts in our Brazilian subsidiary in 2002 compared to 2001.
SG&#38;A expenses in the corporate, unallocated and other
categories decreased $4.3&nbsp;million in 2002, compared to
2001, primarily due to the discontinuation of intangible
amortization pursuant to SFAS No.&nbsp;142 and administrative
cost savings in our corporate headquarters. During 2001, we
wrote off $0.2&nbsp;million of intangible assets as we
determined that the undiscounted cash flows were less than the
carrying amount of the assets due to a downturn in the political
and economic environment of Argentina. This item, combined with
the $0.1&nbsp;million loss on sale of assets, yields a total of
$0.3&nbsp;million of loss on sale or write-down of assets in
2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Exchange Gain or
Loss.</FONT></I><FONT size="2"> Our net foreign exchange loss in
2002 was $10.6&nbsp;million compared to $9.5&nbsp;million in
2001, an increase in exchange losses of $1.1&nbsp;million, or
10.5%. Our foreign exchange gains and losses primarily result
from our operations in Mexico and South America. The net
exchange loss has three primary elements: gains or losses on
forward currency and option contracts, unrealized and realized
gains or losses on the remeasurement of
U.S.&nbsp;dollar-denominated debt, and gains or losses on
transactions denominated in foreign currencies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002, we continued to use forward contracts to
protect against potential devaluation of the Mexican peso by
selling Mexican pesos and buying U.S.&nbsp;dollars.
Additionally, during 2002, we modified our hedging program to
include the use of foreign currency option contracts
(&#147;option contracts&#148; or &#147;options&#148;) to hedge
foreign currency exposures to the Mexican peso. In order to
execute the option contracts and to offset the current
outstanding forward contracts to sell Mexican pesos, we entered
into forward contracts to buy Mexican pesos. We purchase
exchange rate put options which give us the right, but not the
obligation, to sell Mexican pesos at a specified
U.S.&nbsp;dollar exchange rate (&#147;strike rate&#148;). The
option contracts provide protection in the event the Mexican
peso weakens beyond the option strike rate. In conjunction with
the put options, and as part of a zero-cost option collar
structure, we sold Mexican peso call options, which give the
counterparty the right, but not the obligation, to buy Mexican
pesos from us at a specified strike rate. The effect of these
contracts would be to limit the benefit we would otherwise
derive from the strengthening of the Mexican peso beyond the
strike rate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, we recognized $2.6&nbsp;million of
exchange losses related to forward contracts and
$0.9&nbsp;million of exchange gains related to option contracts
(including the reclassification of other comprehensive loss into
exchange loss). As we utilize hedge accounting pursuant to SFAS
No.&nbsp;133 for forward and option contracts to hedge certain
forecasted transactions, certain losses are deferred as a
separate component of other comprehensive loss and are
recognized in income at the same time that the underlying hedged
exposure is recognized in income. As of December&nbsp;31, 2001,
we had deferred losses of $3.7&nbsp;million as a component of
other comprehensive loss. During 2002, we deferred an additional
$1.8&nbsp;million of losses on forward exchange contracts and
$1.3&nbsp;million of exchange gains on option contracts as a
component of other comprehensive loss. Pursuant to SFAS
No.&nbsp;133, the losses and gains are recognized into income at
the same time that the underlying hedged exposure is recognized
in income. During the year ended December&nbsp;31, 2002, we
reclassified $1.6&nbsp;million of losses on forward contracts
and $0.5&nbsp;million of exchange gains on option contracts from
other comprehensive loss into exchange loss on the consolidated
statement of income. Additionally, during the year ended
December&nbsp;31, 2002, we reclassified $3.1&nbsp;million of
losses on forward contracts and $0.4&nbsp;million of exchange
gains on option contracts from other comprehensive loss into
cost of sales in the consolidated statements of income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, the Mexican peso devalued 13.5%,
which resulted in a $5.2&nbsp;million loss on the remeasurement
of U.S.&nbsp;dollar-denominated debt, most of which was
unrealized. We recognized $3.7&nbsp;million of other exchange
losses on other foreign currency transactions, most of which was
unrealized, primarily due to the weakening of the South American
currencies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, we recognized a total of
$12.2&nbsp;million of exchange losses related to forward
contracts (including the reclassification of other comprehensive
loss into exchange loss). During 2001, we deferred
$5.5&nbsp;million of losses as a component of other
comprehensive loss pursuant to SFAS No.&nbsp;133. Of this
</FONT>

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<DIV align="left">
<FONT size="2">$5.5&nbsp;million, $0.8&nbsp;million was
recognized as a component of exchange loss and $1.0&nbsp;million
was recognized as cost of sales, in the consolidated statements
of operations, resulting in $3.7&nbsp;million of exchange losses
deferred as a component of other comprehensive loss at
December&nbsp;31, 2001. As the Mexican peso strengthened in
2001, we recognized $2.8&nbsp;million of exchange gains on the
remeasurement of U.S.&nbsp;dollar-denominated debt in 2001.
Additionally, we recognized $0.1&nbsp;million of net exchange
losses on other transactions denominated in foreign currencies.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest Expense.</FONT></I><FONT size="2">
Interest expense decreased to $11.4&nbsp;million in 2002 from
$13.4&nbsp;million in 2001, a decrease of $2.0&nbsp;million, or
14.9%. The decrease was due to a lower debt balance, as total
debt decreased approximately $8.7&nbsp;million in 2002 from
2001, and lower average interest rates. Interest rates on LIBOR
based borrowings decreased from 3.6% at December&nbsp;31, 2001
to 3.1% at December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income Tax Expense.</FONT></I><FONT size="2">
Income tax expense decreased to $16.2&nbsp;million in 2002 from
$17.3&nbsp;million in 2001, a decrease of $1.1&nbsp;million, or
6.4%. Our effective income tax rate from continuing operations
decreased to 44.0% in 2002 from 51.8% in 2001. The reduced
effective tax rate was primarily the result of the release of
valuation allowances against certain deferred tax assets in the
United States and the impact of the enactment of changes in
Mexico&#146;s future corporate statutory rates on net deferred
tax liabilities partially offset by valuation allowances against
certain pretax expenses in the United States. Excluding the
impact of the release of the valuation allowance of
$2.3&nbsp;million and the impact of the enactment of changes in
the Mexico rate of $1.2&nbsp;million, the effective tax rate
would have been 53.5% in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on Discontinued Operations.
</FONT></I><FONT size="2">During the year ended
December&nbsp;31, 2002, losses on discontinued operations were
$1.5&nbsp;million, an increase of $1.3&nbsp;million, compared to
$0.2&nbsp;million during the year ended December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net Income.</FONT></I><FONT size="2"> Net
income increased to $18.8&nbsp;million in 2002 from
$16.0&nbsp;million in 2001, an increase of $2.8&nbsp;million, or
17.5%. The increase was due to a $11.2&nbsp;million increase in
gross profit, a $0.2&nbsp;million favorable change in other
income (expense), a $2.0&nbsp;million decrease in interest
expense, a $1.1&nbsp;million decrease in tax expense, offset by
an $9.0&nbsp;million increase in selling, general and
administrative expenses, a $1.3&nbsp;million increase in loss
from discontinued operations, a $1.1&nbsp;million increase in
exchange loss and $0.2&nbsp;million loss on the cumulative
effect of accounting change, compared to a $0.1&nbsp;million
gain on the cumulative effect of accounting change in the prior
year.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Year Ended December&nbsp;31, 2001 Compared
    to Year Ended December&nbsp;31, 2000</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net Sales.</FONT></I><FONT size="2"> Net sales
for 2001 increased to $365.4&nbsp;million from
$310.5&nbsp;million in 2000, an increase of $54.9&nbsp;million,
or 17.7%. Our average ending number of consultants worldwide
increased 18.6% to approximately 344,000&nbsp;consultants in
2001, an increase of 54,000 consultants over the 2000 average.
Our consultant productivity decreased 0.4% between 2001 and
2000. Consultant productivity in Mexico increased 3.5%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, net sales, excluding intersegment
sales, for 2001 increased to $247.5&nbsp;million from
$199.8&nbsp;million in 2000, an increase of $47.7&nbsp;million,
or 23.9%. Sales in Mexico in local currency increased by 22.3%
over 2000 net sales. The year-to-year increase was driven by an
increase in the average number of consultants, an increase in
consultant productivity and an increase in average consultant
branches, or leaders. Mexico defines a branch or leader as a
consultant with twelve or more active consultants in her
downline. The average number of leaders in 2001 increased 16.4 %
compared to the 2000 average. In Mexico, the average number of
consultants in 2001 increased to approximately 229,000, or 19.6%
over the 2000 average.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, net sales, excluding
intersegment sales, for 2001 increased to $79.6&nbsp;million
from $74.1&nbsp;million in 2000, an increase of
$5.5&nbsp;million, or 7.4%. During the latter part of 2000, the
U.S. business established two distinct selling divisions to
focus on the individual characteristics of the Hispanic Division
and the General Division. The focus on the distinct needs of the
consultants in each of the selling divisions contributed to the
overall sales increase. Net sales in the Hispanic Division
increased 8.1% and net sales in the General Division increased
6.4% compared to 2000 sales. The year-to-year increase was
</FONT>

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<DIV align="left">
<FONT size="2">also driven by an overall increase in the number
of consultants and an increase in the percentage of active
consultants, partially offset by a decrease in productivity. In
the United States, the average number of consultants in 2001
increased to approximately 66,000, or 7.8% above the 2000
average. The percentage of ordering consultants increased to
53.5 % of all consultants, as compared to 49.6% in 2000.
Consultant productivity decreased 7.0% over consultant
productivity in 2000.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, net sales, excluding intersegment
sales, for 2001 decreased to $26.4&nbsp;million from
$26.9&nbsp;million in 2000, a decrease of $0.5&nbsp;million, or
1.9%. The decline in net sales is primarily attributed to
unfavorable exchange rates due to the weakening of local
currency compared to the U.S.&nbsp;dollar. If exchange rates
remained constant between 2000 and 2001, net sales would have
increased nominally. In Europe, the average number of
consultants was relatively consistent at an average of
17,000&nbsp;consultants each year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gross Profit.</FONT></I><FONT size="2"> Gross
profit in 2001 increased to $281.2&nbsp;million from
$233.8&nbsp;million in 2000, an increase of $47.4&nbsp;million,
or 20.3%. Gross profit as a percentage of sales (gross margin)
increased to 77.0% in 2001 from 75.3% in 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, gross margin improved primarily due to
reduced product costs, while prices increased in line with
inflation. During 2001, the peso strengthened 5.2% compared to
the U.S. dollar in 2000. The strengthening of the peso resulted
in reduced product costs as we benefited from foreign currency
gains as some inventory and components are purchased in
U.S.&nbsp;dollar-denominated transactions. These gains were
partially offset by derivative losses on forward contracts used
to purchase inventory and accounted for using hedge accounting.
Mexico&#146;s fourth quarter 2000 gross margin included certain
adjustments related to changes in cost accounting estimates,
totaling $3&nbsp;million. These changes resulted in increased
margins of 76.3% in the fourth quarter of 2001 compared to 67.3%
in the fourth quarter of 2000 and 76.0% for the year ended
December&nbsp;31, 2001 compared to 75.6% for the year ended
December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, the gross margin decreased
as a result of a more aggressive promotional mix. In 2001, the
U.S. business sold fewer regular resale items and more
promotional and non-resale items. In 2001, 53.3% of resale items
sold were promotional products, compared to 45.0% in 2000.
Regular resale items typically contribute a greater margin than
promotional or non-resale items.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, gross margin in 2001 increased to
approximately 79.2% compared to 76.6% in 2000 primarily due to
the favorable impact of exchange rates on product costs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, General and Administrative
Expenses.</FONT></I><FONT size="2"> SG&#38;A expenses in 2001
increased to $224.8&nbsp;million from $188.8&nbsp;million in
2000, an increase of $36.0&nbsp;million, or 19.1%. SG&#38;A as a
percentage of net sales increased in 2001 to 61.6% from 60.8% in
2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Mexico, SG&#38;A as a percentage of net sales
increased to 47.2% for 2001 compared to 43.3% in 2000. The
primary factors for the increase in SG&#38;A as a percentage of
net sales were sales promotional expenses, distribution costs
and administrative expenses. Sales promotional expenses
increased because there was additional promotional activity in
2001 in an effort to generate sales. Distribution costs
increased proportionally more than sales due to the shipment of
more small packages. Administrative expense increased primarily
due to additional expenses related to reserves for uncollectible
accounts receivable. Due to declining consultant liquidity,
Mexico charged $7.7&nbsp;million to bad debt expense during
2001, of which $3.8 million was charged during the fourth
quarter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, SG&#38;A, as a percentage
of net sales, decreased to 62.6% for 2001 from 63.3% for 2000.
Selling expenses increased proportionally more than sales due to
the implementation of the expanded e-commerce platform in 2001.
In 2001, there was approximately $1.2&nbsp;million of increased
incremental e-commerce related expenses. The percentage increase
in selling expenses was partially offset by a decrease in sales
promotional expense and administrative expense, as a percentage
of net sales. Expenditures on major events were scaled back,
which resulted in a decrease in sales promotional expenses, and
cost savings measures were employed in 2001 in an effort to
reduce administrative expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Europe, SG&#38;A expenses in 2001 decreased to
72.3% of net sales compared to 75.8% in 2000, primarily as a
result of our repositioning and restructuring activities in
Europe in the second half of 2000.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Developing markets, particularly Brazil, incurred
additional SG&#38;A expenses in 2001 compared to 2000 due to the
growing nature of the business and an increase in the allowance
for bad debts as a result of declining consultant liquidity and
economic difficulties. Corporate expenses increased
$1.8&nbsp;million because of increased compensation expenses in
2001, primarily related to bonuses, compared to 2000 and
increased infrastructure expenses to support the growing
business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Restructuring and Impairment
Charges.</FONT></I><FONT size="2"> There were no restructuring
and impairment charges for 2001 compared to $2.6&nbsp;million
for 2000. In 2000, we recorded approximately $1.6&nbsp;million
of restructuring charges and approximately $1.0&nbsp;million of
asset impairment charges. The restructuring charges in 2000
related to our repositioning activities in Europe, and consisted
primarily of severance costs. The asset impairment charges
consisted of approximately $0.3&nbsp;million related to our
repositioning activities in Europe (for a total of
$1.9&nbsp;million for European restructuring in 2000) and
approximately $0.7&nbsp;million relating to the writedown of
certain capitalized computer software costs in the United
States. There were $0.0 charges for European restructuring in
each of years 1998, 1999 and 2001. This $0.7&nbsp;million,
together with the $0.1&nbsp;million of loss on sale of assets
noted on the face of the income statement, yields a total of
$0.8&nbsp;million of total loss on sale or write-down of assets
in 2000. Such losses were $0.0 in each of 1998 and 1999. In
2000, we consolidated the sales support and administrative
functions for Austria, Italy, and the Netherlands in Germany.
Field sales personnel continue to perform sales and marketing
functions in those locations. We ceased our Poland operation,
and began serving that territory through a distributor in 2001.
In 1999, we incurred $2.7&nbsp;million of restructuring costs
related to the closure of our U.S.&nbsp;factory. Restructuring
costs related to this closure were incurred in 1999 only, and
were $0.0 for each of years 1998, 2000 and 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Exchange Gain or
Loss.</FONT></I><FONT size="2"> Our net foreign exchange loss in
2001 was $9.5&nbsp;million compared to $11.7&nbsp;million in
2000, a decrease in exchange loss of $2.2&nbsp;million. Our
foreign exchange gains and losses primarily result from our
operations in Mexico. The net exchange loss has three primary
elements: gains or losses on forward currency contracts,
unrealized and realized gains or losses on the remeasurement of
U.S.&nbsp;dollar-denominated debt, and gains or losses on
transactions denominated in foreign currencies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective January&nbsp;1, 2001, we adopted SFAS
No.&nbsp;133, &#147;Accounting for Derivative Instruments and
Hedging Activities.&#148; SFAS No.&nbsp;133, as amended and
interpreted, establishes accounting and reporting standards for
derivative instruments and hedging activities and requires such
instruments to be measured and recorded at fair value. The
derivative instruments we utilized did not qualify for hedge
accounting under applicable standards prior to adoption of SFAS
No.&nbsp;133, and accordingly such instruments were
marked-to-market with gains and losses included as a component
of exchange loss in the statement of operations for the year
ended December&nbsp;31, 2000. Under SFAS No.&nbsp;133, certain
derivative contracts do not qualify for hedge accounting and the
resulting fair value is recorded as a component of exchange
loss. Under SFAS No.&nbsp;133, our use of forward contracts and
option contracts to hedge certain forecasted transactions
qualified for hedge accounting as of January 2001. Unrealized
gains and losses from such derivative instruments are deferred
as a separate component of other comprehensive income, and are
recognized in income at the same time that the underlying hedged
exposure is recognized in income. This accounting treatment
results in the matching of gains and losses from certain forward
exchange contracts with the corresponding gains and losses
generated by the underlying hedged transaction. We had
unrealized foreign exchange and hedging gains of
$2.4&nbsp;million, and $0.7&nbsp;million in 1999 and 2001,
respectively, and incurred a loss of $2.9&nbsp;million in 2000.
We had $0.0 unrealized foreign exchange gains or losses in 1998.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, we continued to use forward contracts to
protect against potential devaluation of the Mexican peso by
selling Mexican pesos and buying U.S.&nbsp;dollars. Throughout
2001, the forward currency contract pricing reflected the
market&#146;s expectation that the peso would devalue relative
to the dollar. However, in 2001, the peso to U.S.&nbsp;dollar
exchange rate strengthened, resulting in exchange losses of
$12.2&nbsp;million related to forward contracts. Upon
implementation of SFAS 133 on January&nbsp;1, 2001, we had
certain forward contracts not designated as hedges. During 2001,
we recognized foreign exchange losses totaling
$11.4&nbsp;million on certain forward contracts not designated
as hedges under SFAS No.&nbsp;133. As we utilized hedge
accounting pursuant to SFAS No.&nbsp;133 for forward contracts
to hedge certain forecasted
</FONT>

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<DIV align="left">
<FONT size="2">transactions, certain losses were deferred as a
separate component of other comprehensive income and recognized
in income at the same time that the underlying hedged exposure
was recognized in income. During 2001, $5.5&nbsp;million of
losses were deferred and $0.8&nbsp;million was recognized as a
component of exchange loss and $1.0&nbsp;million was recognized
as cost of sales, resulting in $3.7&nbsp;million of exchange
losses deferred as a component of other comprehensive income at
December&nbsp;31, 2001. The contracts were remeasured each month
and the fair value of the contracts was included in current
liabilities. As the Mexican peso strengthened in 2001, we
recognized $2.8&nbsp;million of exchange gains on the
remeasurement of U.S.&nbsp;dollar-denominated debt in 2001.
Additionally, we recognized $0.1&nbsp;million of net unrealized
and realized exchange losses on other transactions denominated
in foreign currencies.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, the peso to U.S.&nbsp;dollar exchange
rate was stable, resulting in $10.0&nbsp;million of exchange
losses on forward contracts. The remeasurement of
U.S.&nbsp;dollar-denominated debt in 2000 resulted in an
exchange loss of $0.7&nbsp;million, as the peso weakened against
the U.S.&nbsp;dollar at year-end. Net realized and unrealized
losses on other foreign currency transactions in Mexico were
$0.6&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest Expense.</FONT></I><FONT size="2">
Interest expense decreased to $13.4&nbsp;million in 2001 from
$15.7&nbsp;million in 2000, a decrease of $2.3&nbsp;million, or
14.6%. The decrease was due to a lower debt balance, as total
debt decreased approximately $15.9&nbsp;million from 2000 to
2001, and lower average interest rates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other Income
(Expense).</FONT></I><FONT size="2"> Other expense in 2001 was
nominal compared to other income for 2000 of $1.6&nbsp;million,
which consisted primarily of income related to the recovery of
the effect of inflation from a receivable due from the Mexican
government related to taxes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income Tax Expense.</FONT></I><FONT size="2">
Income tax expense increased to $17.3&nbsp;million in 2001 from
$9.7&nbsp;million in 2000, an increase of $7.6&nbsp;million, or
78.4%. The increase in income tax expense is the result of
increased income generated by Jafra Mexico and Jafra US in 2001
compared to 2000 and approximately $0.6&nbsp;million of tax
provision related to certain tax adjustments in Europe. In 2001,
our effective income tax rate decreased to 51.9% from a 60.2%
effective income tax rate in 2000. The decrease in the effective
income tax rate was driven by taxable income generated by our
European subsidiary in 2001, compared to a tax loss without any
tax benefit in 2000. This decrease in the effective income tax
rate was partially offset by higher effective income tax rates
for Jafra Mexico and Jafra US.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net Income.</FONT></I><FONT size="2"> Net
income increased to $16.0&nbsp;million in 2001 from $6.4 million
in 2000, an increase of $9.6&nbsp;million, or 150.0%. The
increase was due to a $47.4&nbsp;million increase in gross
profit, a $2.6&nbsp;million decrease in restructuring and
impairment charges, a $2.2&nbsp;million decrease in exchange
loss, a $2.3&nbsp;million decrease in interest expense, a
$0.5&nbsp;million decrease in loss on early extinguishment of
debt and a $0.1&nbsp;million gain on the cumulative effect of
accounting change, net of tax, partially offset by a
$36.0&nbsp;million increase in selling, general and
administrative expenses, an increase on loss from discontinued
operations of $0.2&nbsp;million, a $1.7&nbsp;million decrease in
other, net income (expense), and a $7.6&nbsp;million increase in
income tax expense.
</FONT>

<P align="left">
<B><FONT size="2">New Accounting Pronouncements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective January&nbsp;1, 2001, the Company
adopted SFAS No.&nbsp;133, &#147;Accounting for Derivative
Instruments and Hedging Activities.&#148; SFAS No.&nbsp;133, as
amended and interpreted, established accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. All derivatives, whether designated in
hedging relationships or not, are required to be recorded on the
balance sheet at fair value. If the derivative is designated in
a fair-value hedge, the changes in the fair value of the
derivative and the underlying hedged item are recognized
concurrently in earnings. If the derivative is designated in a
cash-flow hedge, changes in the fair value of the derivative are
recorded in other comprehensive income (loss) (&#147;OCI&#148;)
and are recognized in the statement of operations when the
hedged item affects earnings. SFAS No.&nbsp;133 defined new
requirements for designation and documentation of hedging
relationships as well as ongoing effectiveness assessments in
order to use hedge accounting. For a derivative that does not
qualify as a hedge, changes in fair value are recognized
concurrently in earnings. As of January&nbsp;1, 2001, the
Company recorded a net gain of $126,000 (net of a tax effect of
$82,000) as a cumulative transition adjustment to earnings. This
adjustment relates
</FONT>

<P align="center"><FONT size="2">48
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">to derivatives not designated as hedges prior to
adoption of SFAS No.&nbsp;133, and represents the difference
between the carrying value as measured by the difference in the
spot rate to the forward rate and the fair value as determined
by forward rates of such instruments at January&nbsp;1, 2001.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, the Financial Accounting Standards
Board (&#147;FASB&#148;) approved two new statements: SFAS
No.&nbsp;141, &#147;Business Combinations&#148; and SFAS
No.&nbsp;142, &#147;Goodwill and Other Intangible Assets.&#148;
SFAS No.&nbsp;141 requires combinations entered into after
June&nbsp;30, 2001 to be accounted for using the purchase method
of accounting. SFAS No.&nbsp;142 requires that goodwill not be
amortized, but be tested for impairment at least annually. SFAS
No.&nbsp;142 was effective for fiscal years beginning after
December&nbsp;15, 2001 for all goodwill and other intangible
assets recognized in an entity&#146;s statement of financial
position at that date, regardless of when those assets were
initially recognized. We adopted SFAS No.&nbsp;142 on
January&nbsp;1, 2002. In accordance with such adoption, we
identified all reporting units in conjunction with the
provisions of SFAS No.&nbsp;142 and allocated all goodwill
accordingly. Prior to June&nbsp;30, 2002, we completed the
transitional goodwill impairment test required by SFAS
No.&nbsp;142. Due to general market uncertainty in Colombia, we
revised our projections and recorded an impairment loss of
$0.2&nbsp;million associated with our Colombia reporting unit.
The impairment loss has been recorded as a cumulative effect of
accounting change in the accompanying consolidated statements of
income. No other impairment was identified in connection with
the annual impairment test. The changes in the carrying amount
of goodwill for the year ended December&nbsp;31, 2002 are as
follows (in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consolidated</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Goodwill</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexico</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Others</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Translation effect
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment losses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our other intangible assets consist of
trademarks. During the year ended December&nbsp;31, 2002, we
determined trademarks to have an indefinite life and performed
the transitional impairment test as required under SFAS
No.&nbsp;142. Based upon the transitional and annual test, we
determined that there was no impairment of trademarks. The
carrying value of trademarks was $44.6&nbsp;million as of
December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with SFAS No.&nbsp;142, we
discontinued amortization of goodwill and other intangible
assets with an indefinite life. A reconciliation of previously
reported net income to amounts adjusted for the exclusion of
goodwill and trademark amortization, net of the related income
tax effects, where applicable, is as follows (in millions):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill amortization, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trademark amortization, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjusted net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 2001, the Emerging Issues Task Force
(&#147;EITF&#148;) issued EITF Issue No.&nbsp;01-9,
&#147;Accounting for Consideration Given by a Vendor to a
Customer or a Reseller of the Vendor&#146;s Products.&#148; This
new guidance provides that consideration from a vendor to a
reseller is generally presumed to be a reduction of the selling
prices of the vendor&#146;s products, and, therefore, should be
characterized as a reduction of revenue when recognized in the
vendor&#146;s income statement. On January&nbsp;1, 2002, we
adopted EITF Issue No.&nbsp;01-9 and reclassified commissions
paid to consultants of $3.8&nbsp;million and $3.3&nbsp;million
on their personal sales, previously reported as a component of
selling, general and administrative expenses, as a reduction in
net sales and selling, general and administrative expenses for
the years ended December&nbsp;31, 2001 and 2000, respectively.
</FONT>

<P align="center"><FONT size="2">49
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2002, we adopted SFAS
No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets.&#148; SFAS No.&nbsp;144 supersedes SFAS
No.&nbsp;121, &#147;Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of.&#148; SFAS
No.&nbsp;144 retains substantially all of the requirements of
SFAS No.&nbsp;121, while resolving certain implementation issues
and addressing the accounting for a component of a business
accounted for as a discontinued operation. SFAS No.&nbsp;144 was
adopted with no significant impact on our financial position or
results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2003, we adopted Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;145,
&#147;Rescission of FASB Statements No.&nbsp;4, 44, and 64,
Amendment of FASB Statement No.&nbsp;13, and Corrections&#148;.
This statement rescinds or modifies existing authoritative
pronouncements including SFAS No.&nbsp;4 &#147;Reporting Gains
and Losses from Extinguishment of Debt.&#148; As a result of the
issuance of SFAS No. 145, gains and losses from extinguishment
of debt are classified as extraordinary items only if they meet
the criteria in Accounting Principles Board (&#147;APB&#148;)
Opinion&nbsp;30, &#147;Reporting the Results of
Operations&nbsp;&#151; Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions.&#148; Applying
the provisions of APB Opinion&nbsp;30 distinguishes transactions
that are part of an entity&#146;s recurring operations from
those that are unusual or infrequent or that meet the criteria
for classification as an extraordinary item. Based on the
adoption of this principle, we reclassified any gain or loss on
extinguishment of debt that was classified as an extraordinary
item in prior periods presented that does not meet the criteria
in APB Opinion&nbsp;30 for classification as an extraordinary
item.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2003, we adopted SFAS
No.&nbsp;146, &#147;Accounting for Costs Associated with Exit or
Disposal Activities&#148;, which did not result in any material
impact to our consolidated statements of income. This statement
addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies EITF
Issue No.&nbsp;94-3, &#147;Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an
Activity.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, the FASB issued SFAS No.&nbsp;148,
&#147;Accounting for Stock Based Compensation&nbsp;&#151;
Transaction and Disclosure, an amendment to FASB Statement
No.&nbsp;123.&#148; This Statement requires more extensive
disclosure, including interim disclosure, related to stock based
compensation for all companies and permits additional transition
methods for companies that elect to use the fair value method
for employee stock compensation. This statement is effective for
fiscal years ending after December&nbsp;15, 2002. We adopted the
disclosure requirements of SFAS No.&nbsp;148 without material
impact on our results of operations or financial position. (See
footnote 13 in the accompanying footnotes to the audited
consolidated financial statements of CDRJ Investments (Lux) S.A.
and subsidiaries.)
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2003, the FASB issued SFAS No.&nbsp;150,
<I>Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity</I>. SFAS
No.&nbsp;150 establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics
of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). SFAS No.&nbsp;150
is effective for financial instruments entered into or modified
after May&nbsp;31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after
June&nbsp;15, 2003. The adoption of SFAS No.&nbsp;150 on
July&nbsp;1, 2003 did not have a material impact on the
Company&#146;s financial position or results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2003, the FASB issued Interpretation
No.&nbsp;46, <I>Consolidation of Variable Interest Entities, an
Interpretation of ARB No.&nbsp;51, Consolidated Financial
Statements</I>. FIN&nbsp;46 requires the consolidation of
variable interest entities by the party considered to be the
primary beneficiary of that entity. The FASB amended FIN&nbsp;46
in December of 2003. The revised provisions of FIN&nbsp;46 will
be effective for the company in the first quarter of 2004. This
interpretation may be applied prospectively with a
cumulative-effect adjustment as of the date on which it is first
applied or by restating previously issued financial statements
for one or more years with a cumulative-effect adjustment as of
the beginning of the first year restated. The adoption of
FIN&nbsp;46 is not expected to have a material impact on the
Company&#146;s financial position or results of operations.
</FONT>

<P align="center"><FONT size="2">50
</FONT>

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<P align="left">
<B><FONT size="2">Critical Accounting Policies and
Estimates</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations are based on our
consolidated financial statements, which have been prepared in
conformity with accounting principles generally accepted in the
United States of America. These principles require the
appropriate application of certain accounting policies, many of
which require management to make estimates and assumptions about
future events and their impact on amounts reported in our
consolidated financial statements and related notes. Since
future events and their impact cannot be determined with
certainty, the actual results may differ from management&#146;s
estimates. Such differences could be material to the
consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that the application of accounting
policies, and the estimates inherently required therein, are
reasonable. These accounting policies and estimates are
constantly reevaluated, and adjustments are made when facts and
circumstances dictate a change. Historically, the application of
accounting policies has been appropriate, and actual results
have not differed materially from those determined using
necessary estimates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our accounting policies are more fully described
in Note 2 to our audited consolidated financial statements
included elsewhere in this prospectus. Certain critical
accounting policies are described below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Accounts Receivable.</FONT></I><FONT size="2">
We maintain an allowance for doubtful accounts for estimated
losses resulting from the inability of consultants to make
payments. An allowance is calculated based on historical
experience and the age of the outstanding receivables. If the
financial condition of consultants were to deteriorate,
resulting in an impairment of their ability to make payments,
additional allowances may be required.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Inventory
Obsolescence.</FONT></I><FONT size="2"> We write down our
inventory to provide for estimated obsolete or unsalable
inventory based on assumptions about future demand for our
products. If future demand is less favorable than our
assumptions, additional inventory write-downs may be required.
Likewise, favorable future demand and market conditions could
positively impact future operating results if inventory that has
been written-down is sold.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Foreign Currency
Contracts.</FONT></I><FONT size="2"> We enter into foreign
currency forward and option contracts to reduce the effect of
adverse exchange rate fluctuations in the exchange rate of the
Mexican peso to the U.S.&nbsp;dollar. We place forward and
option contracts based on our forecasted cash outflows from
Jafra S.A. over a rolling twelve-month period and do not hedge
transactions that are not included in the twelve-month forecast
on the date the forward or option contract is initiated. As a
matter of policy, we do not hold or issue forward or option
contracts for trading or speculative purposes nor do we enter
into contracts or agreements containing &#147;embedded&#148;
derivative features or involving leveraged derivatives. If the
Mexican peso were to significantly strengthen during the year
compared to the U.S.&nbsp;dollar, we may incur additional losses
on option contracts open as of the balance sheet date. See
&#147;&#151;&nbsp;Interest Rate Risk&#148; and
&#147;&#151;&nbsp;Foreign Currency Risk&#148;.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Contingencies.</FONT></I><FONT size="2"> We
account for contingencies in accordance with Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;5,
&#147;Accounting for Contingencies&#148;. SFAS No.&nbsp;5
requires that we record an estimated loss from a loss
contingency when information available prior to issuance of our
financial statements indicates that it is probable that an asset
has been impaired or a liability has been incurred at the date
of the financial statements and the amount of the loss can be
reasonably estimated. Accounting for contingencies such as legal
and income tax matters requires management to use judgment. Many
of these legal and tax contingencies can take years to be
resolved. Generally, as the time period increases over which the
uncertainties are resolved, the likelihood of changes to the
estimate of the ultimate outcome increases. We believe that the
accruals for these matters are adequate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income Taxes.</FONT></I><FONT size="2">
Deferred income tax assets have been established for net
operating loss carryforwards of certain foreign subsidiaries and
foreign tax credits originating in the United States, which are
reduced by a valuation allowance. The net operating loss
carryforwards expire in varying amounts over a future period of
time. Realization of the income tax carryforwards is dependent
on generating sufficient
</FONT>

<P align="center"><FONT size="2">51
</FONT>

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<DIV align="left">
<FONT size="2">taxable income prior to expiration of the
carryforwards. Although realization is not assured, management
believes it is more likely than not that the net carrying value
of the income tax carryforwards will be realized. The amount of
the income tax carryforwards that is considered realizable,
however, could change if estimates of future taxable income
during the carryforward period are adjusted.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Impairment of Long-Lived Assets and
Goodwill.</FONT></I><FONT size="2"> Long-lived assets are
reviewed for impairment, based on undiscounted cash flows,
whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. If this
review indicates that the carrying amount of the long-lived
assets is not recoverable, we will recognize an impairment loss,
measured by the future discounted cash flow method. Goodwill is
evaluated for impairment based on SFAS&nbsp;No.&nbsp;142,
&#147;Goodwill and Other Intangible Assets&#148;.
SFAS&nbsp;No.&nbsp;142 requires that goodwill not be amortized,
but be tested for impairment annually.
</FONT>

<P align="left">
<B><FONT size="2">Liquidity and Capital Resources</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Overview</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have historically funded expenditures for
operations, administrative expenses, capital expenditures and
debt service obligations with internally generated funds from
operations, with working capital needs being satisfied from time
to time with borrowings under our old credit agreement. We
believe that we will be able to meet our debt service
obligations and fund our operating requirements in the future
with cash flow from operations and borrowings under our senior
credit facilities as put in place in May 2003, although no
assurance can be given in this regard. We continue to focus on
working capital management, including the collection of accounts
receivable, decreasing inventory levels, and management of
accounts payable.
</FONT>

<P align="left">
<B><FONT size="2">The May 2003 Recapitalization</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2003 we recapitalized our Mexican
operations and refinanced our then outstanding indebtedness. In
connection with these transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We formed Jafra Worldwide as a subsidiary of
    Jafra S.A. to act as our intermediate holding company of Jafra
    US, Jafra Mexico and our other businesses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We formed Jafra Distribution (Mexico), an
    affiliate of Jafra Mexico and an indirect wholly-owned
    subsidiary of Jafra Worldwide, to operate our distribution
    business in Mexico and to act as the Mexican borrower under our
    new senior credit facilities and the issuer of the Mexican
    portion of our senior subordinated notes.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Jafra US and Jafra Distribution (Mexico) entered
    into new senior credit facilities, consisting of a
    $50.0&nbsp;million senior secured term loan facility and a
    $40.0&nbsp;million senior revolving credit facility, and
    borrowed the full amount of the term loan. See &#147;Description
    of Our Indebtedness&nbsp;&#151; Senior Credit Facilities&#148;.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Jafra Distribution (Mexico) and Jafra US issued
    $120&nbsp;million and $80&nbsp;million, respectively, in
    aggregate principal amount of our 10&nbsp;3/4% Senior
    Subordinated Notes due 2011, or our &#147;10&nbsp;3/4%
    Notes&#148;, and used a portion of the proceeds from such
    issuance, together with borrowings under the term loan facility
    described above, to repay the indebtedness of Jafra&nbsp;US and
    Jafra Mexico then outstanding and to consummate other corporate
    transactions.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Jafra&nbsp;US and Jafra Mexico made compensating
    payments in an aggregate amount of approximately
    $10.4&nbsp;million to holders of options to acquire the capital
    stock of CDRJ Investments (Lux) S.A. and, through a series of
    inter-company transactions, the remaining proceeds from the
    issuance of our 10&nbsp;3/4% Notes and borrowings under our
    senior credit facilities were paid and distributed to CDRJ
    Investments (Lux) S.A. CDRJ Investments (Lux) S.A. then
    commenced liquidation proceedings and made an initial
    liquidating distribution to our shareholders of approximately
    $157.6&nbsp;million in cash.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">52
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the closing of the sale of the common
stock offered hereby, we expect to make a final liquidating
distribution of up to $20&nbsp;million in cash to the holders of
shares of CDRJ Investments (Lux) S.A. We expect to fund this
distribution by drawing on the revolving portion of our senior
credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the shareholders of CDRJ Investments
(Lux) S.A. will receive one share of our common stock in
exchange for each share of CDRJ Investments (Lux) S.A. held at
this time. Further, upon the completion of the liquidation, each
of the outstanding options to acquire the capital stock of CDRJ
Investments (Lux) S.A. will be converted on a one-for-one basis
into options to acquire capital stock of Jafra S.A. While these
options will generally continue to be governed by the same terms
and conditions as prior to the liquidation, the exercise prices
of the outstanding options have been adjusted downward such that
the ratio of the original exercise price per share of the
options to the market value per share immediately following the
recapitalization transactions described above is identical to
the ratio of the original exercise price per share of the
options to the market value per share of the stock of CDRJ
Investments (Lux) S.A. immediately prior to the commencement of
the liquidation process. As a result of these adjustments, the
exercise prices of our outstanding options were reduced. Prior
to the closing of the sale of common stock offered hereby, CDRJ
Investments (Lux) S.A. will be liquidated.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Liquidity</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;20, 2003, Jafra&nbsp;US and Jafra
Distribution (Mexico) issued $200 million aggregate principal
amount of the 10&nbsp;3/4% Notes pursuant to an indenture dated
May&nbsp;20, 2003, or our &#147;10&nbsp;3/4% Notes
Indenture&#148;, and entered into a $90&nbsp;million senior
credit agreement, or our &#147;Senior Credit Agreement&#148;.
The 10&nbsp;3/4% Notes represent the several obligations of
Jafra&nbsp;US and Jafra Distribution (Mexico) in the amount of
$80&nbsp;million and $120&nbsp;million, respectively. The
10&nbsp;3/4% Notes mature in 2011 and bear a fixed interest rate
of 10&nbsp;3/4% payable semi-annually.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra&nbsp;US is a direct wholly-owned subsidiary
of Jafra Worldwide and Jafra Distribution (Mexico) is an
indirect wholly-owned subsidiary of Jafra Worldwide. Jafra
Worldwide has fully and unconditionally guaranteed the
obligations under the 10&nbsp;3/4% Notes on a senior
subordinated basis on the terms provided in the 10&nbsp;3/4%
Notes Indenture. Each of Jafra&nbsp;US and Jafra Distribution
(Mexico) has fully and unconditionally guaranteed the
obligations of the other under the 10&nbsp;3/4% Notes on a
senior subordinated basis, subject to a 30-day standstill period
prior to enforcement of such guarantees. Each
U.S.&nbsp;subsidiary of Jafra&nbsp;US is required to fully and
unconditionally guarantee the U.S.&nbsp;portion of 10&nbsp;3/4%
Notes jointly and severally, on a senior subordinated basis.
Each Mexican subsidiary of Jafra Distribution (Mexico) is
required to fully and unconditionally guarantee the Mexican
portion of the 10&nbsp;3/4% Notes jointly and severally, on a
senior subordinated basis. Jafra Distribution (Mexico) currently
has no Mexican subsidiaries. Jafra Mexico has also fully and
unconditionally guaranteed the obligation of Jafra Distribution
(Mexico) under the 10&nbsp;3/4% Notes. Each subsidiary of Jafra
Mexico is required to fully and unconditionally guarantee the
Mexican portion of the 10&nbsp;3/4% Notes jointly and severally,
on a senior subordinated basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 10&nbsp;3/4% Notes are unsecured and are
generally not redeemable for four years. Thereafter, the notes
will be redeemable on a pro rata basis at premiums declining to
par in the sixth year. Prior to May&nbsp;16, 2006, Jafra&nbsp;US
and Jafra Distribution (Mexico) at their option may concurrently
redeem the 10&nbsp;3/4% Notes in an aggregate principal amount
equal to up to 35% of the original aggregate principal amount of
the 10&nbsp;3/4% Notes, with funds in an aggregate amount not
exceeding the aggregate cash proceeds of one or more equity
offerings, at a redemption price of 110.75% plus accrued and
unpaid interest. We expect to redeem up to 35% of the
outstanding 10&nbsp;3/4% Notes with the net proceeds of the sale
by us of our common stock offered by us hereby. See &#147;Use of
Proceeds.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Jafra&nbsp;US and Jafra Distribution
(Mexico) entered into the Senior Credit Agreement, which
provides for senior credit facilities in an aggregate principal
amount of $90&nbsp;million, consisting of a $50&nbsp;million
senior secured term loan facility maturing in 2008 and a
$40&nbsp;million senior secured revolving credit facility, also
maturing in 2008, of which a portion is available in the form of
letters of credit. On May&nbsp;20, 2003, Jafra&nbsp;US borrowed
$20&nbsp;million and Jafra Distribution (Mexico) borrowed
$30&nbsp;million of the loans under the term facility. No
amounts were outstanding under the revolving credit facility at
</FONT>

<P align="center"><FONT size="2">53
</FONT>
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<DIV align="left">
<FONT size="2">September&nbsp;30, 2003. Borrowings under the
term loan facility are amortized in quarterly installments.
Amounts outstanding under the senior credit facilities bear
interest at a rate equal to, at our option, (1)&nbsp;an
alternate base rate plus an applicable margin or (2)&nbsp;an
adjusted LIBOR rate plus an applicable margin. As of
September&nbsp;30, 2003, these applicable margins were 3.00% and
4.00% for base rate loans and LIBOR loans, respectively, subject
in each case to periodic adjustment based on certain levels of
financial performance. Borrowings under the Senior Credit
Agreement are secured by substantially all of our assets.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Both the 10&nbsp;3/4% Notes Indenture and the
Senior Credit Agreement contain certain covenants that limit our
ability to incur additional indebtedness, pay cash dividends and
make certain other payments. These covenants also require us to
maintain certain financial ratios including a minimum EBITDA to
cash interest expense coverage ratio and a maximum debt to
EBITDA ratio. As of September&nbsp;30, 2003, we were in
compliance with all debt covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;23, 2003, with proceeds from the
issuance of our 10&nbsp;3/4% Notes and borrowings under the
Senior Credit Agreement, Jafra&nbsp;US and Jafra Mexico redeemed
our old notes in the aggregate outstanding principal amount of
$75.2 million at a premium of approximately $4.4&nbsp;million.
Additionally, Jafra&nbsp;US and Jafra Mexico repaid
$7.4&nbsp;million under the old credit agreement and terminated
the old credit agreement. In connection with the redemption of
our old notes and the termination of our old credit agreement,
we wrote off approximately $2.2&nbsp;million of capitalized
deferred financing fees. Total costs related to the redemption
of our old notes and the repayment of amounts outstanding under
our old credit agreement were $6.6&nbsp;million and were
recorded as a component of net (loss)&nbsp;income on the
accompanying consolidated statements of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the redemption of our old notes and
repayment of all outstanding amounts under our old credit
agreement, the shareholders resolved to liquidate CDRJ
Investments (Lux) S.A. As a result, CDRJ Investments (Lux) S.A.
made an initial liquidating distribution of $157.6&nbsp;million
to its shareholders of record at May&nbsp;20, 2003.
Additionally, we reserved $1.4&nbsp;million to pay expenses
associated with the liquidation, any remaining amounts of which
will be distributed to the shareholders at the conclusion of the
liquidation. Jafra&nbsp;US and Jafra Mexico also made special
payments to the holders of the options and certain members of
management and non-employee directors. Prior to the closing of
the sale of our common stock offered hereby, we expect to make a
final liquidating distribution of up to $20&nbsp;million in cash
to the holders of shares of CDRJ Investments (Lux) S.A. We
expect to fund this distribution by drawing on the revolving
portion of our senior credit facilities. CDRJ Investments (Lux)
S.A. will then be liquidated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We capitalized $14.4&nbsp;million of costs
related to the issuance of the 10&nbsp;3/4% Notes and the Senior
Credit Agreement as deferred financing fees. These capitalized
expenses are being amortized on a basis that approximates the
interest method over the term of the 10&nbsp;3/4% Notes and the
Senior Credit Agreement. As of September&nbsp;30, 2003,
approximately $0.7&nbsp;million of the deferred financing fees
were amortized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to our May 2003 recapitalization, Jafra
Mexico was a party to an unsecured bank loan agreement. As of
September&nbsp;30, 2003, Jafra Mexico had repaid all amounts
outstanding under the bank loan agreement and had terminated the
agreement.
</FONT>

<P align="center"><FONT size="2">54
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Schedule of Debt and Operating Lease
Obligations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following schedules detail the payment
schedule for debt and operating lease obligations as of
September&nbsp;30, 2003 on an actual basis and on a pro forma
basis, assuming the sale of the shares of common stock offered
by us hereby, the application of the net proceeds to us
therefrom as described in &#147;Use of Proceeds&#148; and the
payment of the final liquidating distribution to shareholders of
CDRJ Investments (Lux) S.A. as described in &#147;Certain
Relationships and Related Party Transactions.&#148; had occurred
as of that date:
</FONT>

<P align="center">
<B><FONT size="2">Payments Due by Period</FONT></B>

<DIV align="center">
<B><FONT size="2">As of December&nbsp;31, 2002</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Actual Contractual Obligations</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004-2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006-2007</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(Dollars in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11&nbsp;3/4% Senior Subordinated Notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Old term facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Old revolving credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Old unsecured bank facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">614</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating leases
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">Payments Due by Period</FONT></B>

<DIV align="center">
<B><FONT size="2">(Pro forma as of September&nbsp;30,
2003)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Contractual Obligations</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004-2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006-2007</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(Dollars in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10&nbsp;3/4% Senior Subordinated Notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior secured term facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revolving credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <FONT size="2">Existing unsecured bank facility Operating leases
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    <FONT size="2">Total
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</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe, but no assurance can be given, that
our existing cash, cash flow from operations and availability
under our senior credit facilities will provide sufficient
liquidity to meet our cash requirements and working capital
needs over the next year. In certain foreign markets, we have
seen evidence of reduced ability of our consultants to purchase
our products, which we refer to as reduced consultant liquidity.
Reduced consultant liquidity could result in future reduced cash
flows from operations, which may require us to use available
funds under the senior credit facilities.
</FONT>

<P align="left">
<B><FONT size="2">Outsourcing of Manufacturing
Functions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We entered into a manufacturing agreement, dated
as of June&nbsp;10, 1999, with a third-party contractor. Subject
to the terms and conditions of the manufacturing agreement, the
contractor agreed to manufacture all of our requirements for
certain cosmetic and skin care products for an initial term of
five years expiring July&nbsp;1, 2004. On December&nbsp;8, 2003,
we notified the other party to the agreement that we do not
intend to renew the agreement upon its expiration in 2004. The
manufacturing agreement provides for price renegotiations by the
contractor if our quarterly or annual purchase volume falls
below specified minimums. The manufacturing agreement requires
the contractor to maintain insurance to cover costs associated
with any product liability or product recall caused by the acts
or omissions of the contractor. In
</FONT>

<P align="center"><FONT size="2">55
</FONT>
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<DIV align="left">
<FONT size="2">addition, we are obligated to purchase materials
acquired by the contractor based upon product forecasts provided
by us if the contractor is unable to sell such materials to a
third party. There have been no such purchases to date. The
contractor is responsible for obtaining the inventories,
manufacturing the inventories at its current location in Chino,
California, complying with applicable laws and regulations, and
performing quality assurance functions. As of mid-2004, we
expect that most of the products currently produced by this
third party will be manufactured at our Mexican facility.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the fourth quarter of 2000, the contractor
obtained $1.0&nbsp;million of advances from us in exchange for
an unsecured promissory note. The note bears interest at an
annual rate of 9% and is payable in monthly installments
commencing on February&nbsp;15, 2001. In April 2002, the
unsecured promissory note was amended to advance an additional
$0.3&nbsp;million to the contractor. As of the date of this
prospectus, the note has been paid in full.
</FONT>

<P align="left">
<B><FONT size="2">Restructuring Activities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2000, we paid out approximately
$1.0&nbsp;million in charges related to year 2000 repositioning
activities in Europe consisting primarily of severance costs.
During 2002, the remaining $0.2&nbsp;million was paid out
against the remaining accrual.
</FONT>

<P align="left">
<B><FONT size="2">Cash Flows</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in operating activities was
$2.5&nbsp;million for the nine months ended September&nbsp;30,
2003 compared to net cash provided by operating activities of
$23.2&nbsp;million for the nine months ended September&nbsp;30,
2002, a $25.7&nbsp;million decrease. Net cash used in operating
activities for the nine months ended September&nbsp;30, 2003
consisted of $18.7&nbsp;million provided by net loss plus
depreciation, amortization, and other non-cash items included in
net income, offset by $21.2&nbsp;million used in changes in
operating assets and liabilities. The significant elements of
net cash used in changes in operating assets and liabilities
during the nine months ended September&nbsp;30, 2003 were an
increase in inventories of $11.4&nbsp;million, an increase in
prepaid and other assets of $3.4&nbsp;million and an increase in
income taxes of $5.3&nbsp;million. During the nine months ended
September&nbsp;30, 2003, the Company paid $13.1&nbsp;million in
compensation expense, $6.6&nbsp;million for the extinguishment
of debt and $2.3&nbsp;million of other expenses included within
net income (loss)&nbsp;related to the refinancing of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in investing activities was
$5.6&nbsp;million for the nine months ended September&nbsp;30,
2003, of which $5.0&nbsp;million was used for capital
expenditures. Capital expenditures in 2003 are expected to be
approximately $11.0&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in financing activities was
$9.1&nbsp;million for the nine months ended September&nbsp;30,
2003, and consisted of $200.0&nbsp;million of issuance of new
subordinated notes, $50.0&nbsp;million of new term loan, offset
by $75.2&nbsp;million repurchase of subordinated debt due 2008,
$9.6&nbsp;million repayment under term loan facilities,
$159.0&nbsp;million distribution to shareholders and
$14.4&nbsp;million of capitalized deferred financing fees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of exchange rate changes on cash was
$0.7&nbsp;million for the nine months ended September&nbsp;30,
2003 and related primarily to the weakening of the Mexican peso
and South American currencies, partially offset by the
strengthening of the Euro compared to the U.S. dollar.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash provided by operating activities was
$43.5&nbsp;million for the year ended December&nbsp;31, 2002,
consisting of $48.8&nbsp;million provided by net income adjusted
for depreciation and other non-cash items included in net
income, less $5.3&nbsp;million used in changes in operating
assets and liabilities. The significant elements of the net cash
used in changes in operating assets and liabilities were a
$14.4&nbsp;million increase in accounts receivable, partially
offset by $5.6&nbsp;million increase in prepaid expenses and
other current assets, and $1.8&nbsp;million increase in other
non-current assets. Net cash provided by operating activities
was $29.8&nbsp;million for the year ended December&nbsp;31,
2001, consisting of $36.7&nbsp;million provided by net income
adjusted for depreciation, amortization, and other non-cash
items included in net income, less $6.9&nbsp;million used in
changes in operating assets and liabilities. The significant
elements of the net cash
</FONT>

<P align="center"><FONT size="2">56
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<DIV align="left">
<FONT size="2">used in changes in operating assets and
liabilities in 2001 were a $15.7&nbsp;million increase in
accounts receivable and a $1.0&nbsp;million decrease in accounts
payable and accrued liabilities, partially offset by a reduction
of $2.8&nbsp;million in prepaid expenses and other current
assets and a $7.4&nbsp;million increase in income tax
payable/prepaid.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in investing activities was
$11.3&nbsp;million for the year ended December&nbsp;31, 2002,
compared to $11.7&nbsp;million for the year ended
December&nbsp;31, 2001, a decrease of $0.4&nbsp;million. In
2002, investing activities consisted primarily of capital
expenditures of $11.0&nbsp;million, primarily in our United
States and Mexico subsidiaries. A significant portion of the
2002 capital expenditures related to information technology and
production equipment. In 2001, investing activities consisted
primarily of capital expenditures of $5.1&nbsp;million in Jafra
US, $6.0&nbsp;million in Jafra Mexico, and $0.1&nbsp;million in
other subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in financing activities was
$8.7&nbsp;million for the year ended December&nbsp;31, 2002
compared to $15.9&nbsp;million for the year ended
December&nbsp;31, 2001, a decrease of $7.2&nbsp;million. In
2002, we made net repayments of $6.1&nbsp;million under the term
loan facility, $1.8&nbsp;million under the existing revolving
credit facility and $0.8&nbsp;million of the existing bank debt.
In 2001, we made net repayments of $12.7&nbsp;million under the
existing revolving credit facility and $4.5&nbsp;million under
the existing term loan facility. In 2001, the cash used in
financing activities was partially offset by net proceeds of
$1.3&nbsp;million from an unsecured bank loan agreement at Jafra
Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of exchange rate changes on cash was
$2.4&nbsp;million for the year ended December&nbsp;31, 2002
compared to $1.2&nbsp;million for the year ended
December&nbsp;31, 2001 relating to fluctuations in the exchange
rate of the Mexican peso and South American currencies,
primarily the Brazilian real and the Argentine peso.
</FONT>

<P align="left">
<B><FONT size="2">Foreign Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a group doing more than 76% of our business in
international markets in 2002, we are subject to foreign taxes
and intercompany pricing laws, including those relating to the
flow of funds between our subsidiaries pursuant to, for example,
purchase agreements, licensing agreements or other arrangements.
Regulators in the United States, Mexico and in other foreign
markets may closely monitor our corporate structure and how we
effect intercompany fund transfers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net sales outside of the United States aggregated
approximately 73% and 77% of our total net sales for the nine
months ended September&nbsp;30, 2003 and 2002, respectively. In
addition, as of September&nbsp;30, 2003,
non-U.S.&nbsp;subsidiaries comprised approximately 71% of our
consolidated total assets. Accordingly, we have experienced and
continue to be exposed to foreign exchange risk. In 2002, we
entered into foreign currency forward contracts in Mexican pesos
and in 2002 and 2003, we entered into foreign currency option
contracts in Mexican pesos to reduce the effect of potentially
adverse exchange rate fluctuations in Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net sales outside of the United States aggregated
76%, 78% and 76% of our total net sales for the fiscal years
2002, 2001 and 2000, respectively. In addition, as of
December&nbsp;31, 2002, international subsidiaries comprised
approximately 71% of our consolidated total assets. Accordingly,
we have experienced and continue to be exposed to foreign
exchange risk. We have implemented a hedging program to protect
against potential devaluation of the Mexican peso. See
&#147;&#151;&nbsp;Foreign Currency Risk&#148;.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our subsidiaries in Mexico generated
approximately 62% and 66% of our net sales for the nine months
ended September&nbsp;30, 2003 and 2002, respectively,
substantially all of which were denominated in Mexican pesos. At
September&nbsp;30, 2003, the subsidiaries in Mexico had
$149.3&nbsp;million of U.S.&nbsp;dollar-denominated third party
debt. Gains and losses from remeasuring such debt to the
U.S.&nbsp;dollar from the peso are included as a component of
net loss. The Mexico subsidiaries recognized losses of
$9.3&nbsp;million and $4.6&nbsp;million for the nine months
ended September&nbsp;30, 2003 and 2002, respectively, on the
remeasurement of this U.S.&nbsp;dollar-denominated debt and a
net gain of $0.6&nbsp;million of exchange gains and
</FONT>

<P align="center"><FONT size="2">57
</FONT>

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<DIV align="left">
<FONT size="2">$1.0&nbsp;million of exchange losses on foreign
currency forward and option contracts for the nine months ended
September&nbsp;30, 2003 and 2002, respectively.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Mexican operations generated approximately
66% of our net sales for 2002 compared to 68% for 2001,
substantially all of which was denominated in Mexican pesos.
During 2002, the peso weakened against the U.S.&nbsp;dollar. Net
sales for 2002 would have increased $9.4&nbsp;million, or 3.7%,
from the reported amounts if average exchange rates in 2002
remained the same as in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mexico has experienced periods of high inflation
in the past and has been considered a hyperinflationary economy.
Since January&nbsp;1, 1999, we have accounted for our Mexican
operations using the peso as our functional currency. Because
the functional currency in Mexico is the Mexican peso, gains and
losses of remeasuring such debt to the U.S.&nbsp;dollar from the
peso are included as a component of net income. We recognized a
loss of $9.3&nbsp;million and $4.6&nbsp;million for the nine
months ended September&nbsp;30, 2003 and 2002, respectively, on
the remeasurement of this U.S.&nbsp;dollar-denominated debt and
a net gain of $0.6&nbsp;million and a net loss of
$1.0&nbsp;million on foreign currency forward and option
contracts for the nine months ended September&nbsp;30, 2003 and
2002, respectively. In 2002, the remeasurement of
U.S.&nbsp;dollar-denominated debt resulted in an exchange loss
of $5.2&nbsp;million, most of which was unrealized. Jafra Mexico
had $32.4&nbsp;million of U.S.&nbsp;dollar-denominated
third-party debt and $21.9&nbsp;million of
U.S.&nbsp;dollar-denominated intercompany current payables as of
December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are also exposed to foreign exchange risks due
to our operations in South America. During 2002, most South
American currencies devalued against the U.S.&nbsp;dollar.
Measured in U.S.&nbsp;dollars, South America sales decreased 23%
in 2002 compared to 2001. If currencies had remained stable
between 2002 and 2001, net sales would have increased 27%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective January&nbsp;1, 2002, we adopted the
euro as the functional currency for our European subsidiaries,
except for Switzerland.
</FONT>

<P align="left">
<B><FONT size="2">Off-Balance Sheet Arrangements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The company has no off-balance sheet arrangements.
</FONT>

<P align="left">
<B><FONT size="2">Quantitative and Qualitative Disclosures About
Market Risk</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are exposed to certain market risks arising
from transactions in the normal course of our business, and from
interest obligations on our indebtedness. These risks are
principally associated with interest rate and foreign exchange
fluctuations, as well as changes in our credit standing.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Interest Rate Risk</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have U.S.&nbsp;dollar-denominated debt
obligations in both the United States and Mexico that will have
fixed and variable interest rates and will mature on various
dates through 2011. We also have Mexican peso-denominated debt
obligations in Mexico that have fixed interest rates and mature
on various dates through 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2002, we had
$8.4&nbsp;million of variable interest rate debt outstanding. If
variable interest rates had increased by 10%, we would have
incurred $0.1&nbsp;million of additional interest expense during
2002. As of September&nbsp;30, 2003, we had $48.8&nbsp;million
of variable interest rate outstanding. If variable interest
rates had increased by 10%, we would have incurred approximately
$0.1&nbsp;million additional interest expense during the third
quarter of 2003.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Foreign Currency Risk</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We operate globally, with manufacturing
facilities in Mexico and distribution facilities in various
locations around the world. With the exception of most
intercompany product sales between European subsidiaries, all
intercompany product sales are denominated in U.S. dollars. In
addition, 76% of our 2002 revenue and 73% of our revenue for the
first nine months of 2003 was generated in countries with a
</FONT>

<P align="center"><FONT size="2">58
</FONT>
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<DIV align="left">
<FONT size="2">functional currency other than the
U.S.&nbsp;dollar. As a result, our earnings and cash flows are
exposed to fluctuations in foreign currency exchange rates.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of our overall strategy to reduce the
risk of adverse exchange rate fluctuations in Mexico, we entered
into foreign currency exchange and option contracts. Prior to
March 2002, we purchased forward exchange contracts
(&#147;forward contracts&#148; or &#147;forwards&#148;) to hedge
our foreign currency exposures to the Mexican peso. In March
2002, in accordance with previously approved policies, we
modified our hedging program to include the use of foreign
currency option contracts (&#147;option contracts&#148; or
&#147;options&#148;). In order to offset our current outstanding
forward contracts to sell Mexican pesos, we entered into forward
contracts to buy Mexican pesos. Also, on that date, we entered
into a series of U.S. dollar option contracts. The exchange rate
at which the option contracts may be exercised is based upon the
market rate at the time the contracts are placed. We purchased
exchange rate put options, which give us the right, but not the
obligation, to sell Mexican pesos at a specified
U.S.&nbsp;dollar exchange rate (&#147;strike rate&#148;). These
contracts provide protection in the event the Mexican peso
weakens beyond the option strike rate. In conjunction with the
put options, and as part of a zero-cost option collar structure,
we sold Mexican peso call options, which give the counterparty
the right, but not the obligation, to buy Mexican pesos from us
at a specified strike rate. The effect of these call options
would be to limit the benefit we would otherwise derive from the
strengthening of the Mexican peso beyond the strike rate. As the
volatility of the U.S.&nbsp;dollar/ Mexican peso exchange rate
increased throughout 2002, the scope of our unhedged currency
risk has increased. As of the date of this prospectus, the
hedging contracts we are acquiring, which expire in 2004,
protect us only against 18% or greater devaluation in the
Mexican peso, a range that tends to expand with increased
volatility in the U.S. dollar/ Mexican peso rate such as has
occurred during 2002. Consequently, the existing zero-cost
collars will not protect us against (i)&nbsp;fluctuations in
exchange rates within this expanding range or (ii)&nbsp;against
a prolonged, gradual decline in the value of the Mexican peso
against the U.S.&nbsp;dollar.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We place forward contracts and option contracts
based on forecasted U.S.&nbsp;dollar cash outflows from Jafra
Mexico over a rolling twelve-month period and do not hedge
transactions that are not included in the twelve-month forecast
on the date the forward contract is initiated. As a matter of
policy, we do not hold or issue forward contracts or option
contracts for trading or speculative purposes, nor do we enter
into contracts or agreements containing &#147;embedded&#148;
derivative features nor are we a party to leveraged derivatives.
We regularly monitor our foreign currency exposures and ensure
that contract amounts do not exceed the amounts of the
underlying exposures. In addition, as we generally purchase
hedging instruments on a rolling twelve-month basis, there can
be no assurance that instruments protecting us to the same or a
similar extent will be available in the future on reasonable
terms, if at all. Unprotected declines in the value of the
Mexican peso against the U.S.&nbsp;dollar will adversely affect
our ability to pay our dollar-denominated expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to adoption of SFAS No.&nbsp;133, the
forward contracts we utilized did not qualify for hedge
accounting under the applicable accounting standards, and
accordingly such instruments were marked-to-market with gains
and losses included as a component of exchange loss in the
statements of income for the year ended December&nbsp;31, 2000.
However, under SFAS No.&nbsp;133, our use of forward and option
contracts to hedge certain forecasted transactions does qualify
for hedge accounting. Gains and losses from such derivative
instruments arising subsequent to January&nbsp;1, 2001 are
deferred as a separate component of other comprehensive loss,
and are recognized in income at the same time that the
underlying hedged exposure is recognized in income. This
accounting treatment results in the matching of gains and losses
from such forward and option contracts with the corresponding
gains and losses generated by the underlying hedged
transactions. Under SFAS No.&nbsp;133, certain of our forward
and option contracts do not qualify for hedge accounting and,
therefore, are remeasured based on fair value, with gains and
losses included as a component of net income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The outstanding foreign currency option contracts
have a notional value denominated in Mexican pesos of
743,000,000 and 523,000,000 in put and call positions at
September&nbsp;30, 2003 and December&nbsp;31, 2002,
respectively. The outstanding foreign currency option contracts
at September&nbsp;30, 2003 mature at various dates through
December&nbsp;31, 2004. Notional amounts do not quantify market
or credit exposure or represent assets or liabilities of the
Company, but are used in the calculation of cash settlements
under the contracts.
</FONT>

<P align="center"><FONT size="2">59
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables provide information about
the details of the Company&#146;s option contracts as of
September&nbsp;30, 2003 (in thousands except for average strike
price):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Coverage in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexican</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Strike</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Foreign Currency</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pesos(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S. Dollars(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Maturity Date</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">At September&nbsp;30, 2003:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchased Puts (Company may sell Peso/buy USD)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">229,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.07&#150;12.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Oct.&#150;Dec. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.54&#150;12.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Jan.&#150;Mar. 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">170,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.03&#150;12.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Apr.&#150;Jun. 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.41&#150;12.59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Jul.&#150;Aug. 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.28&#150;12.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Oct.&#150;Dec. 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">743,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Written Calls (Counterparty may buy Peso/sell USD)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">229,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.15&#150;10.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(247</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Oct.&#150;Dec. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.26&#150;10.62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(102</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Jan.&#150;Mar. 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">170,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.19&#150;10.93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(152</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Apr.&#150;Jun. 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.49&#150;10.93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Jul.&#150;Aug. 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.13&#150;11.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Oct.&#150;Dec. 2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">743,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(501</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The outstanding foreign currency option contracts
had a notional value denominated in Mexican pesos of 523,000,000
in put and call positions at December&nbsp;31, 2002 and matured
at various dates through December&nbsp;31, 2003. Notional
amounts do not quantify the Company&#146;s market or credit
exposure or represent the Company&#146;s assets or liabilities,
but are used in the calculation of cash settlements under the
contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table provides information about
the details of our option contracts as of December&nbsp;31, 2002
(in thousands except for average strike price):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Coverage in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexican</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Foreign Currency</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pesos</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Strike Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.&nbsp;Dollars(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Maturity Date</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">At December&nbsp;31, 2002:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchased puts (Company may sell peso/buy USD)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.31-10.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(113</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Jan.-Mar. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.05-12.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Apr.-June 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.76-12.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">July-Aug. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.51-12.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Oct.-Dec. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Written calls (Counterparty may buy peso/sell
    USD) Mexican peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.01-9.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(207</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Jan.-Mar. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.50-9.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(144</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Apr.-June 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.69-10.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">July-Aug. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.15-10.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Oct.-Dec. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(518</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">60
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Fair Value of the option contracts presented
    above, an unrealized gain of $144,000 and $402,000 at
    September&nbsp;30, 2003 and December&nbsp;31, 2002,
    respectively, represents the carrying value and was recorded in
    other receivables in the consolidated balance sheets.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to entering into foreign currency hedging
contracts, we evaluate the counterparties&#146; credit ratings.
Credit risk represents the accounting loss that would be
recognized at the reporting date if counterparties failed to
perform as contracted. We do not currently anticipate
non-performance by such counter parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra Distribution (Mexico) had U.S.
dollar-denominated debt of $149.3&nbsp;million at
September&nbsp;30, 2003 and Jafra Mexico had
U.S.&nbsp;dollar-denominated debt of $32.4&nbsp;million and
$35.6&nbsp;million at December&nbsp;31, 2002 and 2001,
respectively. The value of the peso to the U.S.&nbsp;dollar
decreased by 6.0% and 13.5% during the first nine months of 2003
and during 2002, respectively, and Jafra Mexico incurred
$9.3&nbsp;million and $5.2&nbsp;million foreign currency
transaction losses, respectively, related to the remeasurement
and repayment of U.S.&nbsp;dollar-denominated debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon the $149.3&nbsp;million of Jafra
Distribution (Mexico) pro forma debt as of December&nbsp;31,
2002 and September&nbsp;30, 2003, a 10% decline in the peso to
U.S. dollar exchange rate would result in a $15.0&nbsp;million
exchange loss.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon the $4.2&nbsp;million of net
inter-company payables outstanding at December&nbsp;31, 2002, a
10% decline in the peso to U.S.&nbsp;dollar exchange rate would
result in a $0.4&nbsp;million exchange loss with respect to
these payables. Based upon the $1.0&nbsp;million of net
inter-company payables outstanding at September&nbsp;30, 2003, a
10% decline in the peso to U.S.&nbsp;dollar exchange rate would
result in an insignificant exchange loss with respect to these
payables. These losses or gains would be classified as
unrealized until the inter-company payables are repaid, at which
time they would be realized. The timing of such repayment is
within the discretion of management.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Inflation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business is exposed to risks arising from
Mexico&#146;s history of high levels of inflation, and may
continue to be exposed to such risks in the future. We adjust
the wholesale pricing of our products in local currency to
mitigate these risks. See &#147;Risk Factors&nbsp;&#151; Mexico
may experience high levels of inflation in the future which
could adversely affect our results of operations.&#148;
</FONT>

<P align="center"><FONT size="2">61
</FONT>
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<!-- link1 "BUSINESS" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="center">
<B><FONT size="2">BUSINESS</FONT></B>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a direct seller of skin and body care
products, color cosmetics, fragrances and other personal care
products. We sell our Jafra brand products through a multi-level
direct selling network of over 400,000 independent consultants,
who market and sell our products to their customers. Our largest
markets are Mexico and the United States, which together
contributed approximately 90% of our total net sales in 2002 and
are among the world&#146;s largest direct selling markets. We
have a leading market share as a direct seller of skin care
products, color cosmetics and fragrances in Mexico, where Jafra
is among the most recognized cosmetics brand names. We introduce
new products each year in many of our product categories to
motivate and excite our consultants. In developing and
introducing new products, we employ a &#147;fast follower&#148;
strategy to minimize research costs and focus our development
efforts on products that have proven successful in the
marketplace. Our independent consultant base grew 14% to 401,000
in 2002 over 2001, and 4% during the nine months ended
September&nbsp;30, 2003 over the comparable period in 2002.
During the year ended December&nbsp;31, 2002, we generated net
sales of $382.6&nbsp;million, of which $251.6&nbsp;million
represents sales in Mexico, $92.1&nbsp;million represents sales
in the United States and $38.9&nbsp;million represents sales in
Europe and other markets. We also generated Consolidated EBITDA,
as defined in the indenture governing our 10&nbsp;3/4% Senior
Subordinated Notes due 2011, or our 10&nbsp;3/4% Notes, of
$63.6&nbsp;million for the year ended December&nbsp;31, 2002 and
$45.7&nbsp;million for the nine months ended September&nbsp;30,
2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that the global direct selling market
provides substantial sales opportunity and has robust growth
prospects. The World Federation of Direct Selling Associations
estimates that in 2002, global direct selling was an
$85.6&nbsp;billion industry, as measured by the retail value of
all products and services sold. Globally, direct selling
increased at a compound annual growth rate of approximately 5%
from 1991 to 2002. In 2002, total consumer goods direct sales in
our largest markets, Mexico and the United States, were
$1.2&nbsp;billion and $28.6&nbsp;billion, respectively. These
markets ranked fourth and first, respectively, in terms of
largest markets for total direct sales in 2002. Consumer goods
direct sales in Mexico and the United States increased at a
compound annual growth rate of 9.4% and 5.8%, respectively, from
1998 to 2002. Within the United States direct selling market, we
focus on the Hispanic community, which comprises over 13% of the
entire U.S.&nbsp;population, and which is expected to increase
its buying power at a compound annual growth rate of 9.2% from
2003 through 2008.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business strategy is focused on expanding and
retaining our loyal and motivated consultant base, the growth of
which has been a significant driver of our net sales growth. Our
multi-level direct selling business model is a source of organic
growth that aligns our consultants&#146; income opportunities
with our strategy of continuing to grow our consultant base, net
sales and cash flow. We focus on providing our independent
consultants with a portfolio of premium quality skin care and
beauty products, superior customer service, and excellent
marketing and training support. Our established, cost-effective
distribution infrastructure allows us to generate high levels of
operating profitability and requires relatively low capital
investment and working capital to support and expand our
business. We believe that these strengths of our business model
have given us a competitive advantage in attracting and
retaining a productive consultant base, which in turn has
contributed to our success and positions us well for ongoing
growth in net sales and profitability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We were founded 48&nbsp;years ago in Southern
California and were acquired in April 1998 from The Gillette
Company by an affiliate of Clayton, Dubilier&nbsp;&#38; Rice,
Inc., a New York-based private investment firm, along with a
newly formed management team highly experienced in the direct
selling industry. Since our acquisition, we have grown our
consultant base more than 95% from approximately 205,000 to
approximately 401,000 consultants as of December&nbsp;31, 2002.
Our net sales have grown from $241.9&nbsp;million to
$382.6&nbsp;million from 1998 to 2002 largely as a result of
this growth in our consultant base.
</FONT>

<P align="center"><FONT size="2">62
</FONT>
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<P align="left">
<B><FONT size="2">Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Continue Core Strategy of Expanding and
Retaining Consultant Base.</FONT></I></B><FONT size="2"> We
intend to continue to drive growth in our business by focusing
on sponsoring and retaining loyal consultants. We believe that
the attractive income opportunities offered by our multi-level
compensation structure and our operational and cultural focus on
providing support to our consultants have been instrumental in
achieving robust consultant and net sales growth over the past
five years. We believe the emphasis we place on providing our
consultants with superior customer service, training, effective
sales and marketing materials, brochures, and new product
demonstrations, will continue to differentiate us from our
competitors. Additionally, we intend to continue to stimulate
net sales growth by motivating our consultant base at local
recognition events and by offering travel rewards, gifts and
other incentives to our most productive consultants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Capitalize on Leading Market Position and
Brand Equity in Mexico.</FONT></I></B><FONT size="2"> We believe
our leading market position and the strength of the Jafra brand
in Mexico position us to benefit from favorable demographic
trends and will facilitate our efforts to continue to expand our
consultant base and capture additional market share. Currently,
the average age of a Jafra consultant is 35, while over 50% of
the Mexican population is under the age of 20 and two-thirds are
under the age of 30. As the Mexican population ages and more
adults seek career and income opportunities, we believe that our
brand equity and the scale of our consultant base will position
Jafra as an attractive career opportunity and facilitate
consultant recruitment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Continue Successful U.S.&nbsp;Divisional
Strategy.</FONT></I></B><FONT size="2"> We will continue to
pursue our successful strategy of differentiating ourselves from
other direct selling companies by focusing on demographic
characteristics of our consultants and their target customers.
In late 2000, we bifurcated our operations in the United States
into a Hispanic Division and a General Division. The
establishment of two separate divisions in the United States has
allowed us to customize our marketing efforts. We have focused
on those separate segments of the population and will continue
to provide our U.S.&nbsp;Spanish and non-Spanish speaking
consultants with tailored recruiting programs, training
materials, seminars and product presentations. In particular, we
believe we will continue to benefit from the growth of the
U.S.&nbsp;Hispanic population and its increasing buying power.
We believe these trends will continue to benefit our sales and
recruitment efforts. Our divisional approach to the U.S. market
facilitates the interaction of our consultants with their
customers and contributed to the 16% net sales growth of our
U.S.&nbsp;business during fiscal 2002 and an 11% increase in net
sales during the first nine months of fiscal 2003 as compared
with the comparable fiscal 2002 period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Maintain Strong New Product Pipeline.
</FONT></I></B><FONT size="2">The development and introduction
of new products and line extensions are fundamental to our
direct selling business model in that they serve to motivate our
consultants by providing them with new and exciting products to
demonstrate and market to their customers. As part of each of
our consecutive two-month marketing and promotion cycles, we
regularly introduce line extensions, such as new colors within
our existing color cosmetics lines, and new products that employ
the latest technology and capitalize on the face-to-face
interaction between consultants and their customers. In the
development of new products, we employ a &#147;fast
follower&#148; strategy that minimizes research costs and
focuses development efforts on innovative, efficacious products
that have already proven successful in the marketplace.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Leverage Brand Strength into Complementary
Categories and Markets.</FONT></I></B><FONT size="2"> Since our
acquisition in 1998, we have primarily focused on growing our
loyal consultant base and establishing a cost-effective
distribution infrastructure and superior support structure for
our consultants. We have recently begun to assess incremental
growth opportunities through the development of new products in
complementary categories that leverage the Jafra brand equity
and ultimately could increase our consultants&#146; average
order size. Our measured strategy is to cost-effectively develop
selective products in complementary categories with our
consultants&#146; core customer in mind and that will
specifically lend themselves to the one-on-one meetings and
product demonstrations that are fundamental to our direct
selling business model. We also continue to evaluate the
possibility of expanding into other direct selling markets and
evaluate acquisition opportunities.
</FONT>

<P align="center"><FONT size="2">63
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Continue to Identify Operating Efficiencies
and Benefit from Economies of
Scale.</FONT></I></B><FONT size="2"> From the time of our
acquisition in 1998 to December&nbsp;31, 2002, we have increased
our gross profit margin by approximately 5.3&nbsp;percentage
points from 71.1% to 76.4% and reduced selling, general and
administrative expenses, less one-time charges related to our
May 2003 recapitalization, as a percentage of net sales by
approximately 3.3 percentage points from 64.4% to 61.1%,
primarily by reducing manufacturing and overhead costs,
streamlining our marketing efforts and improving our working
capital management. We intend to continue to pursue additional
opportunities to realize cost savings and operating efficiencies
in order to increase profitability. We recently announced our
intention to relocate our skin care and body care manufacturing
facilities to Mexico. Further, we believe our direct selling
business model will continue to generate significant organic
growth and that the resulting scale will afford us increasing
opportunities to leverage our fixed cost base and increase
efficiencies in our purchasing, manufacturing, marketing,
training and technology functions.
</FONT>

<P align="left">
<B><FONT size="2">Products</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continuously introduce new and revitalized
products based on changes in consumer demand and technological
advances in order to enhance the quality, image and price
positioning of our products. During 2002, we launched 129 new
products, of which 74&nbsp;related to our new color line launch.
Research and development is conducted at the Jafra Skin, Body
and Color Laboratory, located in the Westlake Village,
California facility. Amounts incurred on research activities
relating to the development of new products and improvement of
existing products were $1.5&nbsp;million in the year ended
December&nbsp;31, 2002, $1.8&nbsp;million in the year ended
December&nbsp;31, 2001 and $1.9&nbsp;million in the year ended
December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Employees in the Research and Development
Department formulate products and analyze them for chemical
purity and microbial integrity. A separate, small-scale pilot
batch is produced and tested prior to full scale manufacture. We
continue to invest in the globalization and upgrading of our
product lines by adding new formulations and contemporary
fragrances. Through globalized product development,
manufacturing and packaging, we believe that we have enhanced
the consistency and quality of our products in all geographic
regions and across all product lines.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the net sales of
our principal product lines for the years ended
December&nbsp;31, 2000, 2001 and 2002 (dollar amounts in
millions):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net Sales by</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net Sales by</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net Sales by</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($&nbsp;in&nbsp;millions)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net Sales</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($&nbsp;in&nbsp;millions)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net Sales</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($&nbsp;in&nbsp;millions)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net Sales</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Skin care
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Color cosmetics
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fragrances
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Body care and personal care
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other products(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Subtotal before shipping fees and commissions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">303.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">354.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">370.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shipping fees and commissions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes sales aids (e.g., party hostess gifts,
    demonstration products, etc.) and promotional materials.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">64
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following are some of our most popular
products in our principal markets:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Product Name</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Skin Care:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Royal Jelly Milk Balm Moisture Lotion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Enhances skin texture and encourages cell
    revitalization.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Time Protector
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Daytime moisturizer for mature and prematurely
    aged skin.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Elasticity Recovery Hydrogel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Special care product targeted at enhancing and
    retaining skin elasticity.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Optimeyes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Eye cream to help reduce the appearance of fine
    lines, wrinkles, puffiness and dark circles.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intensive Retinol Treatment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Slow release Retinol treatment designed to
    encourage youthful appearance of skin.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Malibu Miracle Mask
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Combination exfoliating and hydrating facial mask.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Color Cosmetics:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Treatment lipstick
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Moisturizing lipstick with time released
    ceramides available in 38&nbsp;different shades.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Powder eye shadow
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Crease resistant formula in 2 or 3 shade compact
    available in 51 different shades.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mascara
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Eyelash enhancer in moisturizing, volumizing and
    waterproof formulas available in 2 shades.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foundation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Makeup in oil control, moisturizing and
    long-lasting formulas available in 26 different shades.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Powder blush
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jet-milled conditioning formula available in
    17&nbsp;different shades.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Fragrance:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eau d&#146;Aromes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Light daytime fragrance for women.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Private Reserve JF9
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Men&#146;s fragrance of woods, spices and
    aromatic greens.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Navigo
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Complementary men&#146;s and women&#146;s
    fragrances.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reflections
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fresh citrus floral fragrance for the modern
    woman.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pastel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Deep floral fragrance for total body.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Body Care and Personal Care:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Royal Almond Body Oil
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Almond-based fragrance oil for total body
    hydration.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SPF 40 Sunblock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Maximum protection sun block.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tender Moments Baby Massage Cream
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Massage lotion.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Peppermint Foot Balm
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Mint fragranced lotion for softening and
    stimulating tired feet.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stretch Mark Cream
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Product designed to improve the appearance of
    skin striations.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Skin Care. </FONT></I><FONT size="2">We sell
personalized skin programs in a free matrix skincare system that
allows individuals to select a regimen to meet individual needs.
Skin care products include cleansers, skin fresheners, masks,
and moisturizers for day and night. In addition to basic skin
care products, we offer specialty products to enhance skin
texture and encourage cell revitalization, including our premier
product, <I>Royal Jelly Milk Balm Moisture Lotion</I>, and
products for maturing skin <I>(Time Protector </I>and <I>Time
Corrector)</I>, eye care <I>(Optimeyes) </I>and elasticity
<I>(Elasticity Recovery Hydrogel). </I>Many of these special
care products use the most recent advances in ingredient
technology. We are committed to maintaining contemporary
formulas and routinely evaluating and updating our product
offerings. During 2002, we
</FONT>

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<DIV align="left">
<FONT size="2">continued to promote the skin care line and added
a new staple skin care product, <I>Makeup Remover for Eyes and
Lips. </I>Due to consumer demand, <I>Royal Jelly Vitamins
</I>were re-launched to promote health and beauty through
internal wellness. Also, we had continued success with
<I>Intensive Retinol Treatment</I>, capsules that release
measured doses of retinol into the skin. In 2003, we launched
two new products that address skin pigmentation problems: a
pigment fade wand and a skin brightening serum.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Color Cosmetics. </FONT></I><FONT size="2">Our
range of color cosmetics for the face, eyes, lips, cheeks and
nails contribute significantly to our results. We internally
develop lipstick formulas, foundations and mascaras. In 1999, we
implemented a new color palette strategy by introducing seasonal
color products, through innovative fashion color statements in
the spring and fall shade product offerings. This has been a
consistent strategy for 2000, 2001 and 2002, and has continued
to drive the sales of color products. In 2001, we undertook a
major restage of our entire color line.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Fragrances. </FONT></I><FONT size="2">Direct
selling is a significant distribution channel for fragrances,
and our new scents have enabled us to participate on an
increasingly larger scale in this channel. In 1996, we
introduced <I>Adorisse</I>, a contemporary women&#146;s
fragrance, and <I>Fm Force Magnetique</I>, a prestige men&#146;s
fragrance. We further extended our fragrance line in 1997 with
<I>Le Moir&#233; </I>for women and <I>Legend for Men</I>. In
1998, we launched three new fragrances for women: <I>Sensations,
</I>a youthful fragrance, <I>Joie de Vivre</I>, a lifestyle
fragrance, and <I>Reflections</I>, a signature fragrance. One
fragrance was also launched for men in 1998, <I>Epic</I>, an
aspirational fragrance. In 1999, we introduced <I>Chosen</I>, a
prestige fragrance for women, as well as a special 20th
anniversary fragrance for the Mexico market. The fragrance
category includes line extensions such as body lotions, shower
gels, deodorants, after-shave lotions and shave creams for some
of the most popular fragrances. We have a continued strategy of
introducing new fragrances each year. In 2001, <I>Sphera </I>was
introduced for women and <I>Victus </I>was introduced for men.
In 2002, three new fragrances were launched. <I>Navigo </I>was
launched as a master brand and two fragrances were launched
simultaneously for men and women. <I>JF9 Black</I>, a sub brand
of <I>JF9</I>, was launched for a limited time. In 2003, we
launched six fragrance brands: One new men&#146;s fragrance,
<I>J-Sport</I>, was introduced, and we re-launched the
<I>Hamilton </I>fragrance for men, which had been discontinued.
We also introduced an extension of the women&#146;s fragrance
brand <I>Le Moir&#233;</I>, called <I>Le Moir&#233;
(cerisse)</I>. Additionally, two new teen fragrances, <I>Ternura
</I>and <I>Traversura</I>, were launched in Mexico along with a
new baby fragrance called <I>One 2 Four</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Body Care and Personal Care.
</FONT></I><FONT size="2">We market a broad selection of body,
bath, sun and personal care products, including deodorants and
shampoos. Our premier body care product, <I>Royal Jelly Body
Complex</I>, contains &#147;royal jelly&#148; (a substance
produced by queen bees) in an oil-free deep moisturizing formula
with natural botanical extracts and vitamins. Other offerings in
the body care line include sunscreens, hand care lotions,
revitalizing sprays, and bath products. While we vary our
product offerings and continue to develop new products, our
<I>Royal Almond </I>and <I>Precious Protein </I>products have
been top sellers for many years. In 2002, we leveraged the
success of the <I>Royal Almond </I>brand by introducing <I>Royal
Ginger</I>, a scent extension to the body care family. Also, we
launched the <I>Define Your Body </I>line of four products, a
complete line of technologically advanced body treatment
products. We continued to build on the success of the <I>Jafra
Spa </I>line with the launches of the Spa fragrances and the
<I>Scalp Massage and Hair Treatment</I>. The <I>Tender Moments
</I>baby line was enhanced with the launch of
pediatrician-tested <I>Baby Bottom Balm</I>, formulated with
soothing ingredients. In a collaborative effort with Kevin
Charles, founder of the Kevin Charles Salon Spa, we launched a
new hair care line of salon quality products. Developed by us,
tested and perfected by Kevin Charles in his exclusive salon,
these products cleanse, nourish, protect and style hair. In
2003, Jafra continued to promote body and personal care products
with limited life fragrance-driven line extensions, that
leverage successful existing fragrance brands. For women, these
introductions included a soap, body spray mist, for a limited
time, and moisturizing hair fragrance under the <I>Adorisse
</I>name as well as <I>Chosen </I>body spray mist and a <I>Le
Moire </I>body wash. For men, we introduced <I>JF9 Black
</I>soap, after shave, shaving cream and deodorant as well as a
<I>J-Sport</I> soap. In 2003, we also introduced a line of
peppermint scented foot care products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other Products. </FONT></I><FONT size="2">We
are considering expanding our product line to include
nutritional and wellness products. Any decision to offer such
products will include consideration of the attendant risks,
including potential products liability.
</FONT>

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<P align="left">
<B><FONT size="2">Marketing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Strategy and Product Positioning.
</FONT></I><FONT size="2">We position our products to appeal to
a relatively wide range of market categories, demographic groups
and lifestyles. Our products generally price at the higher end
of the mass market category, but slightly below prestige brands.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Product Strategy.
</FONT></I><FONT size="2">Our product strategy is to provide
customers with exciting and prestige quality product lines that
fit into our value-added demonstration sales techniques and
promote the sale of multiple products per home visit. To that
end, we develop integrated products and actively promote
cross-selling among categories, thus encouraging multi-product
sales and repeat purchases. Product variety and modernization
are keys to our success. We continue to look for ways to expand
product offerings and broaden our appeal in the marketplace.
This led to the development of the Retinol capsules and our new
color line.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Marketing Material &#38; Corporate Image.
</FONT></I><FONT size="2">We support our identity and corporate
image through our energetic network of consultants and
word-of-mouth. We use a sophisticated and integrated promotional
approach that includes meetings, marketing literature, and the
Internet to create strong corporate imagery and support
corporate identity.
</FONT>

<P align="left">
<B><FONT size="2">Independent Sales Force</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our self-employed sales force is composed of
approximately 400,000&nbsp;consultants worldwide as of
September&nbsp;30, 2003. Approximately 88,000 of these
consultants are in the United States and the Dominican Republic,
256,000 are in Mexico, 36,000 are in Brazil, 2,000 are in
Argentina and 18,000 are in Europe. Of the
78,000&nbsp;consultants in the United States, 29,000 are in the
General Division and 49,000 are in the Hispanic Division. These
consultants are not agents or employees of Jafra; they are
independent contractors or dealers. They purchase products
directly from us and sell them directly to their customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">More seasoned senior consultants, who have
experience managing their own consultant networks, recruit and
train our field level organization. We sell substantially all of
our products directly to our consultants. Each consultant
conducts her Jafra sales operations as a stand-alone business,
purchasing Jafra goods and reselling them to customers, as well
as offering free personal care consultations. Our independent
sales force constitutes our primary marketing contact with the
general public.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling. </FONT></I><FONT size="2">The primary
role of a Jafra consultant is to sell Jafra products. Although
the majority of our sales occur as a result of person-to-person
sales, we also encourage our consultants to arrange sales
parties at customers&#146; homes. Sales parties permit a more
efficient use of a consultant&#146;s time, allowing the
consultant to offer products and cosmetic advice to multiple
potential customers at the same time, and provide a comfortable
selling environment in which clients can learn about skin care
and sample the Jafra product line. Such parties also provide an
introduction to potential recruits and the opportunity for
referrals to other potential clients, party hostesses and
recruits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not require consultants to maintain any
inventory. We believe that inventory requirements can be onerous
to consultants. Instead, Jafra consultants can wait to purchase
products from us until they have a firm customer order to fill.
Consultants generally personally deliver orders to their
customers. By delivering products directly to the customer, the
Jafra consultant creates an additional sales opportunity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Recruiting. </FONT></I><FONT size="2">We
believe that we enjoy a competitive advantage in recruiting
consultants due to our lower start-up costs and our policy of
providing retail discounts. Other major attractions to
prospective recruits include flexible hours, increased
disposable income, an attractive incentive program (including
international travel, national and regional meetings, awards and
free products), personal and professional recognition, social
interaction, product discounts and career development
opportunities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also emphasize our commitment to
consultants&#146; personal and professional training, thereby
building consultants&#146; management and entrepreneurial skills.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Consultant Management and Training.
</FONT></I><FONT size="2">To become a manager, a consultant must
sponsor a specified number of recruits and meet certain minimum
sales levels. Once a consultant becomes a
</FONT>

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<DIV align="left">
<FONT size="2">manager, she is eligible to earn commissions on
her personal sales plus overrides on the sales of her downline
consultants. A manager continues to gain seniority in the Jafra
sales force by meeting the prescribed recruitment and sales
requirements at each level of management. At more senior levels,
managers may have several junior managers who in turn sponsor
and manage other managers and consultants. The most successful
managers have many such downline managers and consultants, and
earn commissions on their personal sales plus overrides on their
downline group&#146;s sales.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Training for new consultants focuses first on the
personalized selling of the Jafra product line, beginning with
skin care and the administration of a Jafra business. Training
is conducted primarily by our consultant managers. Managers
train their downline consultants at monthly meetings using
materials prepared by us. In training managers, we seek to
improve leadership and management skills, while teaching
managers to motivate downline consultants to higher sales levels.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income Opportunities and Recognition.
</FONT></I><FONT size="2">Consultants earn income by purchasing
products from us at wholesale prices and selling to consumers at
suggested retail prices. Once a consultant becomes a manager,
her compensation also includes overrides, or percentage of the
sales of the consultants they have recruited. The overrides are
paid to motivate and compensate the managers to train, recruit
and develop downline consultants. Additionally, managers often
perform collection efforts on our behalf as the overrides paid
on a consultant&#146;s downline productivity are paid only upon
the collection of our receivables. We believe that our structure
of discounts, commissions and overrides to consultants is
generous.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that public recognition of sales
accomplishments serves the dual purpose of identifying
successful role models and boosting consultant morale. Each year
we sponsor major events in each of our geographic markets to
recognize and reward sales and recruiting achievements and
strengthen the bond between the independent sales force and us.
Consultants and managers must meet certain minimum levels of
sales and new consultant sponsorship in order to receive
invitations to attend these events.
</FONT>

<P align="left">
<B><FONT size="2">International Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our international operations are subject to
certain customary risks inherent in carrying on business abroad,
including the risk of adverse currency fluctuations, the effect
of regulatory and legal restrictions imposed by foreign
governments, and unfavorable economic and political conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to the challenging macroeconomic environment
that has affected our results in selected markets in which we
operate, we recently adopted a strategic plan to focus on the
strengths of our Mexican, U.S. and European markets. We
terminated our operations in certain markets in South America
and Thailand in 2003. These markets recorded losses of
$1.8&nbsp;million, $0.6&nbsp;million, $0.7&nbsp;million and
$0.8&nbsp;million for the years ended December&nbsp;31, 2002,
2001, 2000 and 1999, respectively, and a gain of
$0.2&nbsp;million for the year ended December&nbsp;31, 1998.
During the nine months ended September&nbsp;30, 2003, we ceased
operations in Venezuela, Colombia, Chile and Peru. At the same
time, we reevaluated our strategy relative to Brazil and
Argentina, which are good direct selling markets. During the
fourth quarter of 2003, we completed an aggressive restructuring
in Brazil and Argentina, which includes cost cutting and new
product management strategies. We intend to pursue the continued
development of these markets which present a strategic
opportunity, but we will carefully continue to evaluate the
risks and rewards of doing so.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our most important markets to date are Mexico and
the United States, which represented approximately 66% and 24%,
respectively, of total 2002 consolidated net sales. We have
entered into foreign currency forward exchange and option
contracts to help mitigate the risk that a potential currency
devaluation in Mexico would have on our operations and
liquidity. See &#147;Management&#146;s Discussion and Analysis
of Financial Condition and Results of Operations&nbsp;&#151;
Quantitative and Qualitative Disclosures About Market
Risk&nbsp;&#151; Foreign Currency Risk.&#148;
</FONT>

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<P align="left">
<B><FONT size="2">Manufacturing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We own an approximately 38,000&nbsp;square foot
manufacturing facility in Naucalpan, Mexico, which is near
Mexico City. This facility produces color cosmetics and most of
our fragrances. Until June of 1999, we produced skin care and
personal use products at our Westlake Village, California
manufacturing facility. In June of 1999, we outsourced our U.S.
product manufacturing functions to a third-party contractor.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and the third-party contractor entered into a
manufacturing agreement, dated as of June&nbsp;10, 1999. Subject
to the terms and conditions of the manufacturing agreement, the
contractor has agreed to manufacture all of our requirements for
certain cosmetic and skin care products for an initial term of
five years expiring July&nbsp;1, 2004. On December&nbsp;8, 2003,
we notified the third-party contractor that we do not intend to
renew the contract upon its expiration in 2004. The
manufacturing agreement provides for price renegotiations by the
contractor if our quarterly or annual purchase volume falls
below specified minimums. The manufacturing agreement requires
the contractor to maintain insurance to cover costs associated
with any product liability or product recall caused by the acts
or omissions of the contractor. In addition, we are obligated to
purchase materials acquired by the contractor based upon product
forecasts provided by us if the contractor is unable to sell
such materials to a third-party. The contractor is solely
responsible for obtaining the inventories, manufacturing the
inventories at its current location in Chino, California,
complying with applicable laws and regulations, and performing
quality assurance functions. As of mid-2004, we expect that most
of the products currently produced by this third party will be
manufactured at our Mexican facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We purchase from other third-party suppliers
certain finished goods and raw materials for use in our
manufacturing operations. In general, we do not have written
contracts with our other suppliers. Finished goods and raw
materials used in our products, such as glass, plastics, and
chemicals, generally are available stock items or can be
obtained to our specifications from more than one potential
supplier.
</FONT>

<P align="left">
<B><FONT size="2">Distribution</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2003, we use four
primary distribution centers in the United States, Mexico and
Europe. The U.S. warehouses in Bridgeport, New Jersey and
Westlake Village, California currently stock the entire Jafra
product line. In Mexico, we have historically outsourced
virtually all of our distribution to third-parties. However, in
January 2002, we opened a distribution center in Mexico and
terminated the third-party distribution function. This
distribution center services all consultants in Mexico. In
addition, we have a distribution center in Kaufbeuren, Germany
that services all of our European Markets. Management believes
that its facilities are adequate to meet demand in its existing
markets for the foreseeable future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Typically, owned or leased distribution centers
are located in an area that allows for direct delivery to
consultants by either post or carrier. Maintaining a short
delivery cycle in direct selling is an important competitive
advantage.
</FONT>

<P align="left">
<B><FONT size="2">Competition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We sell all of our products in highly competitive
markets. The principal bases of competition in the cosmetics
direct selling industry are price, quality and range of product
offerings. On the basis of information available to it from
industry sources, management believes that there are a
significant number of companies (including both direct sales and
cosmetic manufacturing companies) that sell products that
compete with our products. Several direct sales companies
compete with us in sales of cosmetic products, and at least two
such competitors, Mary Kay and Avon, are substantially larger
than us in terms of total independent salespersons, sales volume
and resources. In addition, our products compete with cosmetics
and toiletry items manufactured by cosmetic companies that sell
their products in retail or department stores. Several of such
competitors are substantially larger than us in terms of sales
and have substantially more resources. We also face competition
in recruiting independent salespersons from other direct selling
organizations whose product lines may or may not compete with
our products.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our senior management team with a
strong direct selling track record, motivated direct sales
force, prestige quality product lines, product development
capabilities, geographic diversification, short delivery cycle,
and manufacturing technology are significant factors in
establishing and maintaining our competitive position.
</FONT>

<P align="left">
<B><FONT size="2">Patents and Trademarks</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operations do not depend to any significant
extent upon any single trademark other than the <I>Jafra
</I>trademark, and one of our most significant products,
<I>Royal Jelly</I>, is not protected by any registered
trademark. Some of the trademarks we use, however, are
identified with and important to the sale of our products. Some
of our more important trademarks are: <I>Adorisse </I>(a
contemporary women&#146;s fragrance), <I>Eau D&#146;Aromes
</I>(revitalizing fragrance spray), <I>JF9 </I>(a men&#146;s
prestige fragrance), <I>Legend for Men </I>(a men&#146;s premium
fragrance), <I>Le Moir&#233; </I>(a contemporary women&#146;s
fragrance), and <I>Optimeyes </I>(eye treatment lotion). Our
operations do not depend to any significant extent on any single
or related group of patents, although we have applied for or
received patent protection in our major markets for certain skin
creams, dispensers and product containers, nor do they rely upon
any single or related group of licenses, franchises or
concessions. We have in the past licensed know-how from Gillette
relating to the design, development and manufacture of our
products and are permitted to continue to use such know-how in
connection with our products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1998, a former employee of Gillette filed
applications to register the Jafra trademark in Algeria,
Bangladesh, China, Cyprus, Egypt, Gambia, Ghana, Guyana, India,
Kenya, Malawi, Morocco, Nigeria, OAPI, Pakistan, Sierra Leone,
Syria, Sudan, Surinam, Tanzania, Tunisia, Zambia, and Zimbabwe,
jurisdictions in which we do not currently operate. In 1998,
Gillette obtained a court order prohibiting this employee from
transferring or licensing such trademark applications and
registrations and requiring that the trademark applications and
registrations be assigned to Gillette. Gillette has since
completed the relevant documentation relating to the transfer of
these trademarks to us. We have filed the documents obtained
from this former employee in those jurisdictions in which the
documentation will be accepted in order to secure the
abandonment and cancellation of this employee&#146;s
applications and registrations. If we are not able to secure
cancellation or abandonment of the applications and
registrations in these jurisdictions, we may be prohibited from
distributing our products in these jurisdictions.
</FONT>

<P align="left">
<B><FONT size="2">Management Information Systems</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, we redefined our Internet strategy
and continued to develop and implement an expanded e-commerce
system. The expanded e-commerce platform became operational in
the United States during June 2001, with the consultant adoption
rate of 31% of order volume at year end 2002. In Mexico, an
e-commerce platform was launched during the second half of 2001.
We also selected a new platform to run our core operations in
the United States. The U.S. business replaced the order entry,
fulfillment, commission and override processing and financial
system software with Enterprise Resource Planning
(ERP)&nbsp;software from JD Edwards. Wave&nbsp;1 of this
implementation to the financial systems was implemented in April
of 2002. Waves&nbsp;2 and 3, which relate to the order entry and
remaining commercial systems, were implemented in the fourth
quarter of 2003. In Mexico, approximately 26% of orders and 7%
of new consultant contracts in December 2003 were submitted via
e-commerce.
</FONT>

<P align="left">
<B><FONT size="2">Seasonality</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our net sales, as measured in local currencies,
during the fourth quarter of the year are typically slightly
higher than in the other three quarters of the year due to
seasonal holiday purchases.
</FONT>

<P align="left">
<B><FONT size="2">Environmental Matters</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operations are subject to various federal,
state, local and foreign laws and regulations governing
environmental, health and safety matters. Some of our operations
require environmental permits and controls and these permits are
subject to modification, renewal and revocation by issuing
authorities.
</FONT>

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<DIV align="left">
<FONT size="2">Violations of or liabilities under environmental
laws or permits could result in fines or penalties, obligations
to clean up contaminated properties or claims for property
damage or personal injury. We believe that we are in material
compliance with all such laws, regulations and permits, and
under present conditions, we do not foresee that such laws and
regulations will have a material adverse effect on our business,
financial condition or results of operations.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Employees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2003, we had 862
full-time employees, of which 245 were employed in the United
States and 617 in other countries. We also had 282 outside
contract employees.
</FONT>

<P align="left">
<B><FONT size="2">Litigation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject from time to time to various
litigation and claims arising in the ordinary course of our
business. We do not believe that any known litigation or claims
pending against us would, if determined in a manner adverse to
us, have a material adverse effect on our business, financial
condition or results of operations.
</FONT>

<P align="center"><FONT size="2">71
</FONT>

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<!-- link1 "MANAGEMENT" -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="center">
<B><FONT size="2">MANAGEMENT</FONT></B>

<P align="left">
<B><FONT size="2">Directors and Executive Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following chart sets forth certain
information regarding our directors and executive officers:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ronald B. Clark
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">67
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chairman and Chief Executive Officer; Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gonzalo R. Rubio
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">60
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief Operating Officer; Director
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ralph S. Mason, III
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">53
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice Chairman, Executive Vice President and
    General Counsel
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael A. DiGregorio
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">49
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President and Chief Financial Officer
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alan Fearnley
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">53
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President of Strategic Planning and
    Business Development
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eugenio Lopez Barrios
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">62
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President of Mexican Operations
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jose Luis Peco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">59
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President of European Operations
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Beatriz Gutai
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">44
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President of U.S.&nbsp;&#151; Hispanic Division
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dyan Lucero
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">54
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President of U.S.&nbsp;&#151; General Division
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Donald J. Gogel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">54
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven D. Goldstein
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">52
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thomas E. Ireland
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">54
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Siri Marshall
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">55
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David A. Novak
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">35
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ann Reese
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">50
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward H. Rensi
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">59
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Kenneth D. Taylor
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">69
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None of our officers has any family relationship
with any director or other officer. &#147;Family
relationship&#148; for this purpose means any relationship by
blood, marriage or adoption, not more remote than first cousin.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Ronald B. Clark </FONT></I><FONT size="2">has
served as a director and the Chairman and Chief Executive
Officer since joining Jafra in May 1998. From 1997 to 1998,
Mr.&nbsp;Clark served as President of Richmont Europe (Mary Kay
Holding Company). Mr.&nbsp;Clark joined Mary Kay in 1992 as
President, Mary Kay Europe in 1992. Before joining Mary Kay,
Mr.&nbsp;Clark spent 2&nbsp;years as Executive Vice President of
Primerica Corp., 4&nbsp;years as President of Jafra Cosmetics
International, Inc., and 6&nbsp;years as Vice President of Avon
Products, Inc. He joined Avon Products, Inc. in 1959.
Mr.&nbsp;Clark&#146;s employment agreement provides that he
shall be a member of our board of directors during the term of
his employment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gonzalo R. Rubio </FONT></I><FONT size="2">has
served as a director and the President and Chief Operating
Officer since joining Jafra in May 1998. From 1992 to 1997,
Mr.&nbsp;Rubio served first as an Area Vice President and later
President of the European operations of Mary Kay Inc. Before
joining Mary Kay, Mr.&nbsp;Rubio was employed by Avon Products
Inc., where he spent five years as Area Director for Europe, two
years as International Operations Director and five years as
Area Director for Latin America. He joined Avon Products Inc. in
1970. Mr.&nbsp;Rubio&#146;s employment agreement provides that
he shall be a member of our board of directors during the term
of his employment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Ralph S. Mason III
</FONT></I><FONT size="2">has served as our Vice Chairman,
Executive Vice President and General Counsel since joining Jafra
in May 1998. Prior to that, Mr.&nbsp;Mason was the senior and
founding partner at Mason, Taylor&nbsp;&#38; Colicchio, a law
firm in Princeton, New Jersey, which he joined in 1990. Prior to
founding Mason, Taylor &#38; Colicchio, Mr.&nbsp;Mason spent
13&nbsp;years practicing law in New York and New Jersey.
</FONT>

<P align="center"><FONT size="2">72
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Michael A. DiGregorio
</FONT></I><FONT size="2">has served as Senior Vice President
and Chief Financial Officer of Jafra since June of 1999. In his
nine years with Jafra, his previous responsibilities included
Financial Director and General Manager of Jafra Mexico and
President of U.S. Operations. In addition, Mr.&nbsp;DiGregorio
has been the CFO of two other public companies: Atlantis
Plastics, where he was CFO from 1993 to 1995, and The Wackenhut
Corporation, where he was CFO from 1990 to 1993. Between 1978
and 1998, Mr.&nbsp;DiGregorio spent a total of 14&nbsp;years
with The Gillette Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Alan Fearnley </FONT></I><FONT size="2">has
served as Senior Vice President of Strategic Planning and
Business Development of Jafra since July of 2001. From 1998 to
2001, Mr.&nbsp;Fearnley served as Senior Vice President of
Global Marketing of Jafra. From 1997 to 1998, Mr.&nbsp;Fearnley
served as Vice President of Marketing for Dermalogica. Prior to
that, Mr.&nbsp;Fearnley took a year&#146;s sabbatical to attend
the Sloan Fellowship Masters Program at the London Business
School. During this sabbatical, Mr.&nbsp;Fearnley also served as
a consultant to various companies. Before attending the Sloan
Fellowship program, Mr.&nbsp;Fearnley spent eight years with The
Gillette Company, where he held a variety of managerial and
executive positions within Jafra Cosmetics International. From
1975 through 1986, Mr.&nbsp;Fearnley worked for Avon Cosmetics
in its European headquarters.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Eugenio Lopez Barrios
</FONT></I><FONT size="2">has served as President of Mexican
Operations since joining Jafra in June 1998. Prior to joining
Jafra, Mr.&nbsp;Barrios was President of Mary Kay Mexico from
1993 to 1998. Before joining Mary Kay, Mr.&nbsp;Barrios spent
33&nbsp;years with Avon Products Inc., where he served from 1959
to 1989 starting in many different positions and ending as Vice
President of Sales of Avon Mexico and from 1991 to 1993 as
Managing Director of Avon Ecuador.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jose Luis Peco </FONT></I><FONT size="2">has
served as President of European Operations of Jafra since
joining Jafra in June 1998. Prior to joining Jafra,
Mr.&nbsp;Peco spent five&nbsp;years with Mary Kay Cosmetics,
where he served as Vice President of European Operations and as
President of Mary Kay Cosmetics&nbsp;&#151; Iberia. Before
joining Mary Kay, Mr.&nbsp;Peco spent 22&nbsp;years at Avon
Products Inc., where he held a variety of managerial positions
in Europe.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Beatriz Gutai </FONT></I><FONT size="2">has
served as General Manager of the Hispanic Division of United
States Operations since September of 2000. Prior to that time,
Ms.&nbsp;Gutai served as Vice President of Sales for the
Hispanic Division and in various positions in sales management,
programs, and events since joining Jafra in 1982.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Dyan Lucero </FONT></I><FONT size="2">has
served as General Manager of the General Division of United
States Operations since September of 2000. Prior to that time,
Ms.&nbsp;Lucero served as Vice President of Sales for the
General Division and in various positions in sales management
and business development since joining Jafra in 1972.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Donald J. Gogel </FONT></I><FONT size="2">has
been a director of Jafra since January 1998. Since 1998,
Mr.&nbsp;Gogel has served as Chief Executive Officer of
CD&#38;R; since prior to 1997 he has served as President and a
director of CD&#38;R and since 1989 he has been a principal of
CD&#38;R. Mr.&nbsp;Gogel is also a limited partner of CD&#38;R
Associates&nbsp;V Limited Partnership (&#147;Associates
V&#148;), the general partner of CD&#38;R Fund&nbsp;V, and
President and Chief Executive Officer and a shareholder and
director of CD&#38;R Investment Associates&nbsp;II, Inc.
(&#147;Investment Associates&nbsp;II&#148;), a Cayman Islands
exempted company that is the managing general partner of
Associates&nbsp;V. Mr.&nbsp;Gogel is a director of Kinko&#146;s,
Inc., a corporation in which Fund&nbsp;V has an investment, and
a director of Global Decisions Group, LLC, a limited liability
company in which an investment fund managed by CD&#38;R has an
investment, and Turbochef, Inc. Mr.&nbsp;Gogel serves as a
member of the compensation committee of the board of directors
of Turbochef, Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Steven D. Goldstein
</FONT></I><FONT size="2">has been a director of Jafra since
July 1998. Since February of 1998, Mr.&nbsp;Goldstein has served
as President and Chief Executive Officer of Chaycon Inc. From
November of 2000 to July of 2001, Mr.&nbsp;Goldstein served as
Chairman and Chief Executive Officer of More Benefits, Corp.
From December 1997 to November of 2000, Mr.&nbsp;Goldstein
served as Chairman and Chief Executive Officer of Invenet, LLC.
Prior to joining Invenet, LLC, Mr.&nbsp;Goldstein was employed
as President, Credit of Sears, Roebuck&nbsp;&#38; Co. Prior to
1997, Mr. Goldstein was employed by American Express Co.,
serving most recently as the Chairman and Chief Executive
Officer of American Express Bank.
</FONT>

<P align="center"><FONT size="2">73
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Thomas E. Ireland
</FONT></I><FONT size="2">has been a director of Jafra since
March 1998 and is a principal of CD&#38;R, a limited partner of
Associates V and a shareholder and a director of Investment
Associates&nbsp;II. Before joining CD&#38;R in 1997,
Mr.&nbsp;Ireland served as a senior managing director of Alvarez
&#38; Marsal, Inc. Mr.&nbsp;Ireland also serves on the board of
directors of the Maine Coast Heritage Trust. Mr.&nbsp;Ireland is
a director of Remington Arms Company, Inc. and its parent RACI
Holding, Inc., a corporation in which an investment fund managed
by CD&#38;R has an investment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Siri Marshall </FONT></I><FONT size="2">has
been a director of Jafra since July 1999. Ms.&nbsp;Marshall has
been employed by General Mills since prior to 1997 and currently
serves as its Senior Vice President, Corporate Affairs and
General Counsel and Secretary. She is also a director of Snack
Ventures Europe, a joint venture between General Mills and
PepsiCo.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">David A. Novak </FONT></I><FONT size="2">has
been a director of Jafra since January 1998. Mr.&nbsp;Novak is a
principal of CD&#38;R, a limited partner of Associates V, and a
shareholder of Investment Associates&nbsp;II. Prior to joining
CD&#38;R in 1997, Mr.&nbsp;Novak worked in the Private Equity
and Investment Banking Divisions of Morgan Stanley &#38; Co.
Incorporated and for the Central European Development
Corporation. Mr.&nbsp;Novak also serves on the board of
directors of Italtel Holdings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Ann Reese </FONT></I><FONT size="2">has been a
director of Jafra since July 1998. Ms.&nbsp;Reese has been the
Executive Director of Center for Adoption Policy Studies since
October 2000. From 1999 to December 2000, Ms.&nbsp;Reese was a
professional employee of CD&#38;R. From prior to 1997 to March
1998, Ms.&nbsp;Reese was Chief Financial Officer of ITT Corp., a
company in the hotel and gaming businesses and previously in
insurance and manufacturing. Ms.&nbsp;Reese has been nominated
to the board of Xerox.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Edward H. Rensi </FONT></I><FONT size="2">has
been a director of Jafra since July 1998. For more than the
prior five years, Mr.&nbsp;Rensi has been employed by McDonalds
Corp. USA, serving most recently as President and Chief
Executive Officer. Mr.&nbsp;Rensi also serves as a director of
Snap-On Inc. and I.S.C. Corporation, and serves as a member of
the compensation committee of the board of directors of Snap-On
Inc. and I.S.C. Corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Kenneth D. Taylor
</FONT></I><FONT size="2">has been a director of Jafra since
July 1998 and has been the Chairman of Global Public Affairs,
Inc. since prior to 1997.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At present, all directors will hold office until
their successors are elected and qualified, or until their
earlier removal or resignation.
</FONT>

<P align="left">
<B><FONT size="2">Composition of the Board After This
Offering</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business and affairs are managed under the
direction of our board of directors. The board is currently
composed of 10&nbsp;directors, of whom two are officers of our
company, and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of whom are
independent directors under the applicable rules of the New York
Stock Exchange. Prior to the closing of this offering, our board
of directors will be divided into three classes serving
staggered three-year terms. The terms of office of each class
expire at different times in annual succession, with one class
being elected at each year&#146;s annual meeting of
shareholders. We currently anticipate that the classes will be
composed as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;will
    be Class&nbsp;I directors whose terms will expire at the 2005
    annual meeting of stockholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;will
    be Class&nbsp;II directors whose terms will expire at the 2006
    annual meeting of stockholders; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;will
    be Class&nbsp;III directors whose terms will expire at the 2007
    annual meeting of stockholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, in order to ensure compliance with
the independence requirements of the New York Stock Exchange and
applicable law, the composition of the board may change prior to
and following the offering. It is our intention to be in full
and timely compliance with all applicable rules of the New York
</FONT>

<P align="center"><FONT size="2">74
</FONT>

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<DIV align="left">
<FONT size="2">Stock Exchange and applicable law, including with
respect to the independence of directors. We anticipate that we
will be considered a &#147;controlled company&#148; under
applicable New York Stock Exchange rules following the offering.
During the period that we are a &#147;controlled company&#148;
under applicable New York Stock Exchange rules, we may not be
subject to certain New York Stock Exchange rules relating to
director independence.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the closing of this offering, the director
designation, observer and other rights granted to CD&#38;R
Fund&nbsp;V under its Stock Subscription Agreement will
terminate. See &#147;Certain Relationships and Related Party
Transactions.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Certain Committees of the Board of
Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Audit Committee.</FONT></I><FONT size="2"> We
have an audit committee consisting
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
Each member of the audit committee satisfies the requirements
for independence under the applicable New York Stock Exchange
regulations. Our audit committee financial expert
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
The audit committee has responsibility for, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the selection of our independent auditors for
    recommendation to our shareholders,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewing and approving the scope of the
    independent auditors&#146; audit activity and extent of
    non-audit services,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewing with management and the independent
    accountants the adequacy of our basic accounting systems and the
    effectiveness of our internal audit plan and activities,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewing with management and the independent
    accountants our financial statements and exercising general
    oversight of our financial reporting process, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewing litigation and other legal matters that
    may affect our financial condition and monitoring compliance
    with our business ethics and other policies.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Compensation Committee.
</FONT></I><FONT size="2">We have a compensation committee
consisting
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
The compensation committee has responsibility for, among other
things, all compensation arrangements for executive officers and
making awards under our equity compensation plans.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Nominating and Governance
Committee.</FONT></I><FONT size="2"> We have a nominating and
governance committee consisting
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
The nominating and governance committee has responsibility for,
among other things, identifying individuals qualified to become
board members consistent with certain criteria approved by the
board, and selecting, or recommending that the board select, the
director nominees for the next annual meeting of shareholders.
</FONT>

<P align="left">
<B><FONT size="2">Compensation of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2003, each of our non-employee and
non-CD&#38;R directors received a retainer of $40,000, for
serving on our board of directors and was reimbursed for his or
her out-of-pocket expenses incurred in connection with attending
board meetings. In addition, during 2003 each non-employee and
non-CD&#38;R director also received a one time special bonus of
$50,000 as an acknowledgment of his or her efforts in connection
with the May 2003 Recapitalization. Members of our board did not
receive any additional compensation for their services in such
capacity. We pay no additional remuneration to our officers or
the principals or employees of CD&#38;R for serving as directors.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Jafra S.A., Directors Stock Incentive
    Plan</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the completion of the offering, we
expect that our board will adopt and our shareholders will
approve the Jafra S.A. Directors Stock Incentive Plan for the
non-employee and non-CD&#38;R members of our board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the plan, our board of directors will be
able to award an eligible director shares of our common stock or
options to purchase shares of our common stock, which, in each
case, may be fully
</FONT>

<P align="center"><FONT size="2">75
</FONT>
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<DIV align="left">
<FONT size="2">vested at the time of grant or may be subject to
such vesting or other restrictions, and having such other terms
and conditions, as the board deems appropriate.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The director stock incentive plan will permit an
eligible director to elect to defer receipt of all or any part
of his or her annual retainer fee or meeting fees payable with
respect to a calendar year following the year in which the
election is made. A director who elects to defer fees will be
credited with a number of &#147;phantom&#148; shares of common
stock equal to the amount of the deferred fee divided by the
fair market value per share of common stock on the date the fee
would otherwise have been payable (rounded to the nearest 100th
of a share). If any dividends other than stock dividends are
paid on the common stock, the director will be credited with
additional phantom shares of common stock equal to the dividend
that would have been paid on the director&#146;s phantom shares
divided by the fair market value per share of our common stock
on the dividend payment date. The board will adjust the number
of phantom shares credited if there is a change in the number or
kind of outstanding shares of common stock by reason of any
recapitalization, reorganization, merger, consolidation, stock
split or any similar change affecting the common stock
(including a stock dividend).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A director who elects to defer any portion of his
or her fees will also make elections with respect to
(i)&nbsp;whether aggregate amounts credited will be distributed
in cash, shares or a combination thereof, (ii)&nbsp;if
distributions will commence immediately following the date he or
she ceases to be a director or on the first business day of any
calendar year following the calendar year in which he or she
ceases to be a director and (iii)&nbsp;whether the distribution
will be made in one lump sum payment or in installments. A
director may also elect to receive a distribution of all or a
portion of the amounts with which he or she has been credited as
of a date at least one full year after the date when he or she
initially elected to defer fees, but any director who does so
will cease to be eligible to make any additional deferrals for
the two immediately following calendar years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A director to whom phantom shares of common stock
have been credited will have only the rights of a general
unsecured creditor of our company and will have no rights as a
stockholder of our company with respect to phantom shares with
which he or she has been credited until the common stock
underlying the phantom shares is delivered.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A maximum
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
may be issued under the directors stock incentive plan, subject
to appropriate adjustments in the event of certain corporate
transactions, including reorganizations, stock dividends or
stock splits. Options awarded under the directors stock
incentive plan will generally not be assignable or transferable
other than by will or by the laws of descent and distribution,
except for certain transfers to the director&#146;s family
members or to entities of which the director or his or her
family members are the sole beneficiaries or owners, and all
awards and rights will be exercisable during the life of the
director only by the director or his or her legal
representative. The board may permit a director to defer the
receipt of shares he or she might otherwise receive upon
exercise of an option, upon such terms and conditions as the
board determines appropriate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The directors stock incentive plan will not have
a stated term. The plan will be administered, and may be amended
or terminated by, the board of directors; however, no amendment
or termination of the plan may adversely affect the rights of
any director participating in the plan without his or her
consent.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Federal Income Tax
    Consequences</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a brief description of the
material U.S.&nbsp;federal income tax consequences generally
arising with respect to options awarded and the deferral of fees
under the directors stock incentive plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The award of an option will create no tax
consequences for the director receiving the option or for us.
When a director exercises an option, he or she will generally
recognize ordinary income equal to the difference between the
exercise price and the fair market value of the shares acquired
on the date of exercise, and we will generally be entitled to a
tax deduction in the same amount.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A director who defers retainer fees will
generally not recognize ordinary income with respect to the
deferred fees when they are so deferred, but will generally
recognize ordinary income equal to the
</FONT>

<P align="center"><FONT size="2">76
</FONT>

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<DIV align="left">
<FONT size="2">amount of the cash or the fair market value of
the shares distributed in the year in which the cash or shares
are distributed. We will generally be entitled to a deduction in
an amount equal to the ordinary income recognized by the
director.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Compensation of Executive Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the compensation
earned by Jafra&#146;s Chief Executive Officer and the four
additional most highly compensated executive officers of Jafra
(each, a &#147;named executive officer&#148;) for each of the
last three fiscal years.
</FONT>

<P align="center">
<B><FONT size="2">Summary Compensation Table</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus($)(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)(3)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ronald B. Clark
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">699,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,220,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chairman and Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">674,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">370,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,184</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Executive Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">648,729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">391,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gonzalo R. Rubio
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">582,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,149,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,570</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">President and Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">562,358</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">308,591</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">540,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">326,550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ralph S. Mason, III
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">524,556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,618,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice Chairman, Executive
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">506,148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">277,746</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,616</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice President and General Counsel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">486,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">293,910</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jaime Lopez Guirao(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523,503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,201,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">President of Global Operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">505,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">277,190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">484,202</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">293,322</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael A. DiGregorio
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">397,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,041,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior Vice President and Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">337,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185,182</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Financial Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">323,877</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Guirao&#146;s employment with us will
    terminate effective March&nbsp;6, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">2003 bonus includes special one-time bonus
    payments in connection with our recapitalization in May 2003.
    See &#147;Certain Relationships and Related Party
    Transactions&nbsp;&#151; May 2003 Recapitalization.&#148; The
    portion of each named executive officer&#146;s total 2003 bonus
    listed above attributable to this special one-time
    recapitalization bonus is as follows: Mr.&nbsp;Clark,
    $2,796,454; Mr.&nbsp;Rubio, $2,796,454; Mr.&nbsp;Mason,
    $2,300,636; Mr.&nbsp;Guirao, $884,523; and Mr.&nbsp;DiGregorio,
    $786,477.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Amounts shown in this column constitute our
    contributions under our 401(k) and Supplemental Savings Plans
    and in the case of Mr.&nbsp;DiGregorio and Mr.&nbsp;Guirao,
    reimbursement of certain automobile expenses.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">77
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "FISCAL YEAR-END OPTION VALUE TABLE" -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="center">
<B><FONT size="2">FISCAL YEAR-END OPTION VALUE TABLE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information for
each named executive officer with regard to the aggregate value
of options held as of December&nbsp;31, 2003. Such options were
granted to the named executive officers pursuant to the Amended
and Restated Jafra Cosmetics International, Inc. Stock Incentive
Plan. No options were exercised by such named executive officers
during the year ended December&nbsp;31, 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value of Unexercised In-the-</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Underlying Unexercised</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Money Options at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options at December&nbsp;31, 2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2003($)(1)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ronald B. Clark
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,839</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gonzalo R. Rubio
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,839</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ralph S. Mason, III
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,769</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jaime Lopez Guirao
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,857</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael A. DiGregorio
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,945</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Calculated based on a per share price of Jafra
    S.A. common stock of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    equal to the midpoint of the range set forth on the cover page
    of this prospectus, less the per share exercise price.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Employment Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have employment agreements with each of the
named executive officers. The employment agreements have a
continuous &#147;rolling&#148; term of two years. Pursuant to
their respective agreements, as of their 2003 anniversary dates,
Messrs.&nbsp;Clark, Rubio, Mason, Guirao and DiGregorio receive
annual base salaries of $706,350, $588,610, $529,780, $528,715
and $425,000, respectively. Under the employment agreements, the
board will review the base salary annually and, in its sole
discretion, may increase (but not decrease) such base salary
from time to time based upon, among other things, the
performance of the executive and prevailing industry salary
levels; provided that the executives&#146; base salary will be
automatically increased on each anniversary date by an amount
equal to the average increase in the consumer price index during
the immediately preceding twelve month period, as reported in
the Wall Street Journal. The employment agreements provide for a
target annual bonus equal to 60% of annual base salary (50%, in
the case of Mr.&nbsp;DiGregorio) if Jafra achieves the
performance goals established under its annual incentive plan
for executives. The executives may receive a larger bonus if
such goals are exceeded. The employment agreements further
provide that if we terminate any such named executive
officer&#146;s employment without &#147;cause&#148; (as defined
in the employment agreement) or any such executive terminates
his employment for &#147;good reason&#148; (as so defined), the
officer will be entitled to continued payments of his base
salary for the remaining term of his employment agreement and to
payment of a pro rata annual bonus for the year of termination
provided that we achieve the performance objectives established
under our incentive plan applicable for such year. Each of the
employment agreements also contains covenants regarding
nondisclosure of confidential information, noncompetition and
nonsolicitation. The employment agreements for
Messrs.&nbsp;Clark and Rubio each provide that he will be a
member of our board of directors during the term of his
employment. Jafra Worldwide has assumed the obligations of CDRJ
Investment (Lux) S.A. under these employment agreements.
</FONT>

<P align="left">
<B><FONT size="2">Jafra S.A. Annual Incentive Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the completion of this offering, we
expect that our board of directors will adopt and our
shareholders will approve an annual performance incentive plan
that will provide for the award to our officers of incentive
bonuses. Each year the compensation committee will establish
target incentive bonuses for participants in the annual
incentive plan and will select the eligible participants and
performance criteria for that year for a participant or group of
participants.
</FONT>

<P align="center"><FONT size="2">78
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The actual bonus payable to a
participant&nbsp;&#151; which may equal, exceed or be less than
the target bonus&nbsp;&#151; will be determined based on whether
the applicable performance targets are met, exceeded or not met,
and may be decreased or increased based on individual
performance and contributions, or such other factors as the
compensation committee may deem appropriate. The compensation
committee will have the right, in its discretion, to pay to any
participant an annual bonus based on individual performance or
any other criteria that the committee deems appropriate and the
compensation committee may provide for a minimum bonus amount in
any calendar year, regardless of whether performance objectives
are attained.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bonuses will generally be payable as soon as
practicable after the compensation committee certifies that the
applicable performance criteria have been obtained, or, in the
case of bonuses that are not tied to such performance criteria,
at such time as the compensation committee determines.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a participant in the plan dies or becomes
disabled prior to the payment of the bonus with respect to the
year in which he or she dies or becomes disabled, the
compensation committee may award to the participant (or his or
her estate or legal representative) all or such pro rata portion
of the bonus that would otherwise have been payable as it
determines appropriate. In addition, the compensation committee
may require that a portion of a participant&#146;s annual
incentive bonus will be payable in shares or options awarded
under our Omnibus Plan (as described below).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The annual incentive plan will be administered by
our compensation committee, which may delegate its authority
except to the extent that it relates to the compensation of our
chief executive officer, our four other most highly compensated
executive officers or any other individual whose compensation
the board of directors or the compensation committee believes
may become subject to Section&nbsp;162(m) of the Code. The
annual incentive plan will expire one day prior to the date of
the first meeting of our stockholders in 2008 at which directors
will be elected. However, our board of directors or the
compensation committee may at any time amend, suspend,
discontinue or terminate the annual incentive plan. The
determination of the compensation committee on all maters
relating to the annual performance incentive plan will be final
and binding.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal
Income Tax Consequences</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a brief description of the
material U.S.&nbsp;federal income tax consequences generally
arising with respect to the annual incentive plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A participant in the annual incentive plan will
generally recognize ordinary income equal to the cash bonus he
or she receives in the year it is paid or made available, and we
will generally be entitled to a deduction of the same amount in
the year to which the bonus relates. If a portion of a
participant&#146;s annual bonus is paid in shares or options
under the Omnibus Plan, the federal income tax consequences to
us and the participant will generally be as described below
under the description of the Omnibus Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;162(m) of the Internal Revenue Code
generally limits the ability of a public corporation to deduct
compensation greater than $1,000,000 paid with respect to a
particular year to an individual who is, on the last day of that
year, the corporation&#146;s chief executive officer or one of
its four other most highly compensated executive officers, other
than compensation that is &#147;performance-based&#148; within
the meaning of Section&nbsp;162(m). Under a special rule that
applies to corporations that become public through an initial
public offering, this limitation generally will not apply to
compensation that is paid pursuant to the annual performance
incentive plan before the first meeting of our stockholders in
2008 at which directors will be elected.
</FONT>

<P align="left">
<B><FONT size="2">Amended and Restated Jafra Cosmetics
International, Inc. Stock Incentive Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors administers the Amended
and Restated Jafra Cosmetics International, Inc. Stock Incentive
Plan. Under this Plan, shares of our common stock may be offered
and sold and options to purchase shares of our common stock may
be granted to our executive officers and other key employees.
Our board may delegate the authority to administer the plan to a
duly constituted committee of our board.
</FONT>

<P align="center"><FONT size="2">79
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the plan, participants may be offered the
right to purchase shares of our common stock. The purchase price
of the shares will be determined by our board. If a participant
chooses to purchase shares, such participant must agree not to
sell or otherwise dispose of the shares purchased under the
plan, except in compliance with the Securities Act and the
management stock subscription agreement entered into between
such participant and us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The options issued under the plan allow
participants to purchase shares of our common stock. Options
granted under the plan that are canceled without having been
exercised may be reissued under the plan. As of
September&nbsp;30, 2003, 42,121 shares have been issued and
84,242 options were outstanding under the plan. Any shares to be
delivered under the Plan upon exercise of options will be
purchased by Jafra U.S. from us pursuant to the Second Amended
and Restated Stock Purchase Warrant Agreement which will be
approved prior to the consummation of the liquidation of CDRJ
Investments (Lux) S.A.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the plan, two types of options may be
granted: service options and performance options. Service
options become vested and exercisable in equal annual
installments on each of the first three anniversaries of the
date of grant. Performance options generally become vested and
exercisable upon achievement of certain specified cumulative
earnings targets, except that, to the event not vested sooner,
they become vested on the ninth anniversary of the grant date.
In addition, our board of directors may accelerate the
exercisability of any option at any time and from time to time.
All options granted expire after ten years from the grant date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exercise price of the options will be
determined by our board but will not be less than the fair
market value of our common stock at the date of grant. The
exercise price of any options exercised at any time following a
public offering may be paid in full or in part in the form of
shares of our common stock that have been owned by the
participant for at least six months, based on the fair market
value of such shares of common stock on the date of exercise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of a participant&#146;s termination
of service with us or any of our subsidiaries by reason of
death, disability or retirement, vested options shall remain
exercisable until the first to occur of: (i)&nbsp;the day that
is six months after the date of termination of employment or
(ii)&nbsp;the expiration of the term of the options. Unvested
options shall be canceled immediately upon such termination of
service. In the event of the participant&#146;s termination of
service with us or any of our subsidiaries for cause, all vested
and unvested options held by a participant shall be forfeited
and terminated immediately upon such termination of service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event a participant&#146;s service with us
or any of our subsidiaries is terminated for any other reason,
such participant&#146;s vested options shall remain exercisable
solely until the first to occur of: (a)&nbsp;the 30th&nbsp;day
after the earliest of (i)&nbsp;the expiration of CD&#38;R Fund
V&#146;s right to purchase the options, (ii)&nbsp;receipt by the
participant of written notice that CD&#38;R Fund&nbsp;V does not
intend to exercise its right to purchase the options, and
(b)&nbsp;the expiration of the term of such options. Those
options that have not become vested and exercisable prior to the
date of termination of service shall be canceled immediately
upon termination of employment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Note that unless otherwise determined at the time
of grant of an option, each participant&#146;s option agreement
provides that upon a termination of the participant&#146;s
employment for any reason, we and CD&#38;R Fund&nbsp;V have
successive rights to repurchase for cash any vested option (or
shares of common stock) then held by the participant in
accordance with the terms provided in each such option agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise determined at the time of the
grant of an option, upon a &#147;change in control&#148; (as
defined in the plan) of our company, Jafra Worldwide or Jafra
U.S., each vested and unvested service option, all vested
performance options and a proportionate share of the unvested
performance options (determined on the basis of the portion of
the performance target achieved as of the date of such
transaction) will be canceled in exchange for a payment in cash
of an amount equal to the excess, if any, of the price paid in
the change in control transaction over the exercise price. All
remaining unvested performance options will be canceled. Any
payments made in such event will generally be paid within
30&nbsp;days after the change in control and will be made in
cash or in shares of capital stock of the acquirer,
</FONT>

<P align="center"><FONT size="2">80
</FONT>
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<DIV align="left">
<FONT size="2">as determined by our board of directors.
Notwithstanding the foregoing, if our board determines before
the change in control either that:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">all outstanding options will be honored or
    assumed by the acquirer, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">alternative options with equal or better terms
    will be made available,
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">the outstanding options will not be canceled,
their vesting and exercisability will not be accelerated, and
there will be no payment in exchange for the options.
</FONT>

<P align="left">
<FONT size="2">To be approved by our board of directors, any
alternative options must:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">have substantially equivalent economic value to
    the outstanding options, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">must have terms that provide, upon the
    involuntary termination of an optionee&#146;s employment within
    two years following the change in control, for either
    (a)&nbsp;unrestricted exercisability and transferability of the
    alternative options; or (b)&nbsp;a payment in exchange for any
    alternative options that equals the difference between the
    exercise price of such alternative options and the fair market
    value of the stock subject to such alternative options at the
    time of the involuntary termination.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Options cannot be transferred or assigned by a
participant other than by will or by the laws of descent and
distribution, except for certain transfers to the
participant&#146;s family members or to entities of which the
participant or his or her family members are the sole
beneficiaries, or to us or Clayton, Dubilier&nbsp;&#38; Rice
Fund&nbsp;V Limited Partnership under their right to purchase
options on termination of employment. In addition, options can
be exercised only by a participant or a participant&#146;s
estate after death.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal
Income Tax Consequences</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a brief description of the
material U.S.&nbsp;federal income consequences generally arising
with respect to awards issued pursuant to the Jafra Cosmetics
International, Inc. Stock Incentive Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase of shares of our common stock
pursuant to the plan does not normally give rise to any income,
gain or loss to the purchaser. However, where the purchased
stock is transferred to a particular participant in connection
with the performance of services, the purchase and ownership of
this stock may give rise, either at the time of purchase or in
the future, to taxable ordinary income in an amount equal to the
excess, if any, of the fair market value of the property over
the purchase price. This income is recognized, and the fair
market value determined, at the time of purchase. We will be
entitled to a deduction in an amount equal to the income
recognized by the participant in the year the income is so
recognized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The grant of a stock option will generally not
give rise to taxable income to the option holder or entitle us
to a deduction. Upon exercising an option, the option holder
will generally recognize ordinary income in an amount equal to
the excess, if any, of the fair market value of our common stock
on the date of exercise over the exercise price, and we will
generally be entitled to a tax deduction in the same amount in
the year the income is so recognized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;162(m) of the Internal Revenue Code
generally limits the ability of a public corporation to deduct
compensation greater than $1,000,000 paid with respect to a
particular year to an individual who is, on the last day of that
year, the corporation&#146;s chief executive officer or one of
its four other most highly compensated executive officers, other
than compensation that is &#147;performance-based&#148; within
the meaning of section&nbsp;162(m). Under a special rule that
applies to corporations that become public through an initial
public offering, this limitation generally will not apply to
compensation that is paid or equity that is issued pursuant to
the Jafra Cosmetics International, Inc. Stock Incentive Plan
before the first meeting of our stockholders in 2008 at which
directors will be elected.
</FONT>

<P align="center"><FONT size="2">81
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the offering, we expect that
our board will amend the Jafra Cosmetics International, Inc.
Stock Incentive Plan to preclude further grants or purchases
under that plan. All future awards will be made pursuant to the
Jafra S.A. 2004 Omnibus Stock Incentive Plan described below.
</FONT>

<P align="left">
<B><FONT size="2">Jafra S.A. 2004 Omnibus Stock Incentive
Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the completion of the offering, we
expect that our board will adopt and our shareholders will
approve the Jafra S.A. 2004 Omnibus Stock Incentive Plan, or the
Omnibus Plan. The Omnibus Plan will provide for the award to
eligible participants of (i)&nbsp;stock options, including
incentive stock options (within the meaning of Section&nbsp;422
of the Code); (ii)&nbsp;restricted stock and restricted units;
(iii)&nbsp;stock appreciation rights; (iv)&nbsp;incentive stock
and incentive units; and (v)&nbsp;deferred shares and
supplemental units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Awards may be made to any directors, officers or
employees of our company or any of our subsidiaries, including
any prospective employee, and any of our advisors. The number of
employees participating in the Omnibus Plan will vary from year
to year. A total
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock will be available for award under the
Omnibus Plan. The per share exercise price of the options is set
by the compensation committee at the time of grant and may not
be less than (i)&nbsp;fair market value or (ii)&nbsp;par value
$2.00 per share. Shares subject to awards that are forfeited,
canceled or otherwise terminated without the issuance of common
stock under the Omnibus Plan or the Amended and Restated Jafra
Cosmetics International, Inc. Stock Incentive Plan will again be
available for future awards under the Omnibus Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the employment of a participant is terminated
for any reason, all unvested options will be canceled
immediately and vested options must be exercised within a
particular number of days, which number may vary depending on
the reason for the termination. In the event of a
participant&#146;s termination of employment for cause, all
vested and unvested options held by a participant shall be
forfeited and terminated immediately upon such termination of
employment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Awards under the Omnibus Plan will generally not
be assignable or transferable other than by will or by the laws
of decent and distribution, except for certain transfers to the
participant&#146;s family members or to entities of which the
participant or his or her family members are the sole
beneficiaries or owners.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Omnibus Plan will expire on the day prior to
the first meeting of our stockholders in 2008 at which directors
will be elected. However, the board of directors or our
compensation committee may at any time, and from time to time
amend, modify or terminate the Omnibus Plan. The expiration of
the term of the plan, or any amendment, suspension or
termination will not adversely affect any outstanding award held
by a participant without the consent of the participant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of a change in control (as defined
in the Omnibus Plan), all outstanding stock options shall, at
the discretion of the compensation committee, become fully
exercisable or be canceled in exchange for a payment in cash
equal to the product of (i)&nbsp;the excess of the change in
control price over the option exercise price, and (ii)&nbsp;the
number of shares of common stock covered by such stock options.
All other awards granted under the Omnibus Plan will become
vested and shall be immediately transferable or payable.
Notwithstanding the foregoing, if the compensation committee
determines before the change in control either that all
outstanding awards of options, stock appreciation rights,
restricted stock, restricted stock units, deferred stock and
supplemental units will be honored or assumed by the acquirer,
or alternative awards with equal or better terms will be made
available, such outstanding awards of options, stock
appreciation rights, restricted stock, restricted stock units,
deferred stock and supplemental units will not be canceled,
their vesting and exercisability will not be accelerated, and
there will be no payment in exchange for such awards. Any
alternative awards offered must generally satisfy the
requirements for alternative awards described under the heading
&#147;Amended and Restated Jafra Cosmetics International, Inc.
Stock Incentive Plan.&#148; Alternative awards shall not be made
available for incentive stock or incentive units.
</FONT>

<P align="center"><FONT size="2">82
</FONT>

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<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal
Income Tax Consequences</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a brief description of the
material U.S.&nbsp;federal income tax consequences generally
arising with respect to awards issued pursuant to the Omnibus
Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The grant of an option will generally not give
rise to tax consequences for the option holder or entitle us to
a deduction. Upon exercising an option, other than an incentive
stock option, the option holder will generally recognize
ordinary income equal to the excess, if any, of the closing
price of the shares acquired on the date of exercise over the
exercise price, and we generally will be entitled to a tax
deduction in the same amount in the year the income is so
recognized. Generally, upon exercise of an incentive stock
option, the participant would not recognize income upon exercise
if the participant (i)&nbsp;does not dispose of the shares
within two years after the date of grant or one year after the
transfer of shares upon exercise, and (ii)&nbsp;is an employee
of the company or a subsidiary thereof from the date of grant
and through and until three months before the exercise date. Any
gain would be taxed to the participant as long-term capital
gain, the Company would not be entitled to a deduction, and the
participant would potentially be subject to the alternative
minimum tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to the other awards, upon the
payment of cash or the issuance of shares or other property that
is either not restricted as to transferability or not subject to
a substantial risk of forfeiture, the participant will generally
recognize ordinary income equal to the cash or the fair market
value of shares or other property delivered. The fair market
value of the shares delivered will be the product of the number
of shares delivered and the closing price of a share of common
stock on the date of delivery of the shares. We will be entitled
to a deduction in an amount equal to the ordinary income
recognized by the participant in the year the income is so
recognized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;162(m) of the Internal Revenue Code
generally limits the ability of a public corporation to deduct
compensation greater than $1,000,000 paid with respect to a
particular year to an individual who is, on the last day of that
year, the corporation&#146;s chief executive officer or one of
its four other most highly compensated executive officers, other
than compensation that is &#147;performance-based&#148; within
the meaning of section&nbsp;162(m). Under a special rule that
applies to corporations that become public through an initial
public offering, this limitation generally will not apply to
compensation that is paid pursuant to the Omnibus Plan before
the first meeting of our stockholders in 2008 at which directors
will be elected.
</FONT>

<P align="left">
<B><FONT size="2">Other Benefit Plans and Arrangements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We maintain the Jafra Cosmetics International,
Inc. 401(k) Savings Plan, an employee savings plan which permits
participants to make voluntary contributions by salary deferrals
pursuant to section 401(k) of the Internal Revenue Code. This
plan allows employees to defer up to 100% of their total
compensation, subject to statutory limitations. Employee
contributions of up to 10% of compensation are matched by us at
the rate of 50 cents per dollar. Employees do not vest in the
employer contribution until they have reached two years of
service, at which time they become fully vested. Except for
leased employees, employees covered by collective bargaining
agreements, non-resident aliens with no U.S. source income and
independent contractors or foreign employees on temporary
assignment in the U.S., all of our employees are eligible to
participate in the 401(k) Plan as of the first enrollment period
after the commencement of employment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also maintain a supplemental excess benefit
savings plan, which permits participants whose benefits under
the 401(k) plan have been limited by the provisions of the
Internal Revenue Code to make unlimited voluntary contributions.
Employee contributions are matched on the same basis as under
the 401(k) plan, and the vesting provisions are the same.
Employee and employer contributions under such plan are placed
into a &#147;rabbi&#148; trust exclusively for the uses and
purposes of plan participants. We also maintain a special
supplemental savings plan for non-United States source income
pursuant to which certain employees who have non-United States
source income and whose benefits have been limited by provisions
of the Internal Revenue Code may make additional contributions.
Both the supplemental excess benefit savings plan and the
special supplemental savings plan are intended to be unfunded
plans maintained primarily for the purpose of providing deferred
compensation for a select group of management
</FONT>

<P align="center"><FONT size="2">83
</FONT>

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<DIV align="left">
<FONT size="2">or highly compensated employees as described in
Title&nbsp;I of the Employee Retirement Income Security Act of
1974, as amended.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Insider Participation and Compensation
Committee Interlocks</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Ireland is a principal of CD&#38;R, a
limited partner of Associates&nbsp;V (the general partner of
CD&#38;R Fund&nbsp;V), and a shareholder and a director of
Investment Associates&nbsp;II (a general partner of
Associates&nbsp;V). Pursuant to a consulting agreement, CD&#38;R
receives a fee for advisory, management consulting and
monitoring services to Jafra. As a result of an amendment
effective January&nbsp;1, 2001, the annual fee received by
CD&#38;R was $1,000,000 for the years ended December&nbsp;31,
2003, 2002 and 2001. This amendment provides for an annual fee
for ongoing services provided to Jafra. As required by the terms
of our lending arrangements, such fees were determined by
arm&#146;s-length negotiation and we believe them to be
reasonable. In addition, the amendment adds to CD&#38;R&#146;s
services under the agreement financial advisory, investment
banking and similar services with respect to future proposals
for an acquisition, merger, recapitalization, or other similar
transaction directly or indirectly involving Jafra or any of its
subsidiaries. The fee for such additional services in connection
with future transactions would be an amount equal to 1% of the
transaction value for the transaction to which such fee relates.
Such transaction fees may be increased upon approval of a
majority of the members of our board of directors who are not
Jafra employees, employees of CD&#38;R or any affiliate of
CD&#38;R. The amendment also provides that if any employee of
CD&#38;R is appointed to an executive management position (or a
position of comparable responsibility) in Jafra or any of its
subsidiaries, the annual fee will be increased by an amount to
be determined by CD&#38;R, the amount of such increase not to
exceed 100% of the existing annual fee in effect at that time.
We have also agreed to indemnify the members of the board
employed by CD&#38;R and CD&#38;R against liabilities incurred
under securities laws, liabilities to third parties, and
liabilities relating to the provision by CD&#38;R of advisory
management, consulting and monitoring services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to 2000, Jafra engaged an entity, in which
CD&#38;R fund has a minority investment, to develop its
e-commerce business. During 2000, Jafra paid such entity fees of
$1,798,000. Jafra terminated this agreement and entered into a
settlement and release agreement with such entity in 2000,
pursuant to which such entity agreed to pay Jafra $500,000 in
quarterly installments, together with interest at 9.5% per annum
through October 2005. At December&nbsp;31, 2002, the balance was
paid in full.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the consummation of the May
2003 recapitalization transactions CD&#38;R Fund&nbsp;V received
its proportionate share of the aggregate distribution of
approximately $169.0&nbsp;million in cash as a result of its
share holdings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See &#147;Certain Relationships and Related Party
Transactions&#148; for additional information regarding the
transaction described above.
</FONT>

<P align="center"><FONT size="2">84
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND SELLING STOCKHOLDERS" -->
<DIV align="left"><A NAME="017"></A></DIV>

<P align="center">
<B><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS,</FONT></B>

<DIV align="center">
<B><FONT size="2">MANAGEMENT AND SELLING STOCKHOLDERS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table lists all shares of our
common stock that, as of December&nbsp;31, 2003, were
beneficially owned by certain stockholders known to us to
beneficially own more than 5% of the outstanding shares of
common stock, each of our directors, each of the named executive
officers listed in the Summary Compensation Table, all of our
directors and named executive officers as a group, and other
selling stockholders. The selling stockholders are offering a
total
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock in this offering, assuming no exercise of
the over-allotment option held by the underwriters. For purposes
of this table, because the selling stockholders may in fact sell
all, some or none of their shares in the offering, no definitive
estimate as to the number of shares that will be held by the
selling stockholders after the offering can be provided and the
following table has been prepared based on the assumption that
all shares offered under this prospectus will be sold. For more
information regarding the terms of our common stock, see
&#147;Description of Capital Stock&#148;; for a description
regarding the over-allotment option, see
&#147;Underwriting&#148;; and for information regarding
transactions and relationships with the following listed
beneficial owners, see &#147;Certain Relationships and Related
Transactions.&#148;
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares To Be Sold</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Outstanding</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Before the Offering</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">in the Offering</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">After the Offering</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Name and Address of Beneficial
    Owner(1)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Clayton, Dubilier &#38; Rice Fund V Limited
    Partnership(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">769,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92.51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Name of Executive Officers and
    Directors</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Donald J. Gogel(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven D. Goldstein
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thomas E. Ireland(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Siri Marshall
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David A. Novak(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ann Reese
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward H. Rensi
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Kenneth D. Taylor
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ronald B. Clark(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gonzalo R. Rubio(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ralph S. Mason, III(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,037</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jaime Lopez Guirao(9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,857</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael A. DiGregorio(10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All directors and named executive officers as a
    group (13 persons)(11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1%
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In accordance with Rule&nbsp;13d-3 under the
    Securities Exchange Act of 1934, as amended, a person is deemed
    a &#147;beneficial owner&#148; of a security if he or she has or
    shares the power to vote or direct the voting of such security
    or the power to dispose or direct the disposition of such
    security. A person is also deemed to be a beneficial owner of
    any securities which that person has the right to acquire
    beneficial ownership of within 60&nbsp;days. More than one
    person may be deemed to be a beneficial owner of the same
    securities. Each of such stockholders has sole voting and
    investment power as to the shares unless otherwise noted.
    </FONT></TD>
</TR>

</TABLE>

<P align="right">
<I><FONT size="2">(footnotes continued on following
page)</FONT></I>

<P align="center"><FONT size="2">85
</FONT>
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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents shares of common stock beneficially
    owned on December&nbsp;31, 2003. Unless otherwise noted, each
    person has sole voting and investment power with respect to such
    shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based upon 831,888&nbsp;shares of common stock
    outstanding as of December&nbsp;31, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">CD&#38;R Associates&nbsp;V Limited Partnership, a
    Cayman Islands exempted limited partnership, is the general
    partner of Clayton, Dubilier &#38; Rice Fund&nbsp;V Limited
    Partnership and has the power to direct Clayton, Dubilier &#38;
    Rice Fund&nbsp;V Limited Partnership as to the voting and
    disposition of shares held by Clayton, Dubilier &#38; Rice
    Fund&nbsp;V Limited Partnership. CD&#38;R Investment
    Associates&nbsp;II, Inc., a Cayman Island exempted company, is
    the managing general partner of CD&#38;R Associates&nbsp;V
    Limited Partnership and has the power to direct CD&#38;R
    Associates&nbsp;V Limited Partnership as to its direction of
    Clayton, Dubilier &#38; Rice Fund&nbsp;V Limited
    Partnership&#146;s voting and disposition of the shares held by
    Clayton, Dubilier &#38; Rice Fund&nbsp;V Limited Partnership. No
    person controls the voting and disposition of CD&#38;R
    Investment Associates&nbsp;II, Inc. with respect to the shares
    owned by Clayton, Dubilier &#38; Rice Fund&nbsp;V Limited
    Partnership. Each of CD&#38;R Associates&nbsp;V Limited
    Partnership and CD&#38;R Investment Associates&nbsp;II, Inc.
    expressly disclaims beneficial ownership of the shares owned by
    Clayton, Dubilier &#38; Rice Fund&nbsp;V Limited Partnership.
    The business address for each of Clayton, Dubilier &#38; Rice
    Fund&nbsp;V Limited Partnership, CD&#38;R Associates&nbsp;V
    Limited Partnership and CD&#38;R Investment Associates&nbsp;II,
    Inc. is 1403&nbsp;Foulk Road, Suite&nbsp;106, Wilmington,
    Delaware 19803. Three of our directors, Donald J. Gogel, Thomas
    E. Ireland and David A. Novak, are principals of entities
    affiliated with Clayton, Dubilier &#38; Rice Fund V Limited
    Partnership. See &#147;Certain Relationships and Related
    Transactions&nbsp;&#151; Investment Funds Managed by Clayton,
    Dubilier &#38; Rice, Inc.&#148; for a description of
    relationships and transactions with Clayton, Dubilier &#38; Rice
    Fund&nbsp;V Limited Partnership and its affiliates and
    associates.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Does not include shares owned by CD&#38;R
    Fund&nbsp;V.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 14,839&nbsp;shares as to which
    Mr.&nbsp;Clark has a right to acquire through the exercise of
    stock options.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 14,839&nbsp;shares as to which
    Mr.&nbsp;Rubio has a right to acquire through the exercise of
    stock options.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 11,769&nbsp;shares as to which
    Mr.&nbsp;Mason has a right to acquire through the exercise of
    stock options.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 4,857&nbsp;shares as to which
    Mr.&nbsp;Guirao has a right to acquire through the exercise of
    stock options.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(10)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 3,807&nbsp;shares as to which
    Mr.&nbsp;DiGregorio has a right to acquire through the exercise
    of stock options, and excludes 660&nbsp;shares held by the
    trustee of subtrusts established for the benefit of
    Mr.&nbsp;DiGregorio&#146;s children.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(11)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 50,111&nbsp;shares which the named
    executive officers as a group have a right to acquire through
    the exercise of stock options and excludes 660&nbsp;shares held
    by trustee of subtrusts established for the benefit of
    Mr.&nbsp;DiGregorio&#146;s children.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">86
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS" -->
<DIV align="left"><A NAME="018"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS</FONT></B>

<P align="left">
<B><FONT size="2">The May 2003 Recapitalization</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2003 we recapitalized our Mexican
operations and refinanced our then outstanding indebtedness. In
connection with these transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We formed Jafra Worldwide as a subsidiary of
    Jafra to act as our intermediate holding company of Jafra US,
    Jafra Mexico and our other businesses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We formed Jafra Distribution (Mexico), an
    affiliate of Jafra Mexico and an indirect wholly-owned
    subsidiary of Jafra Worldwide, to operate our distribution
    business in Mexico and to act as the Mexican borrower under our
    new senior credit facilities and the issuer of the Mexican
    portion of our senior subordinated notes.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Jafra US and Jafra Distribution (Mexico) entered
    into new senior credit facilities, consisting of a
    $50.0&nbsp;million senior secured term loan facility and a
    $40.0&nbsp;million senior secured revolving credit facility, and
    borrowed the full amount of the term loan. See &#147;Description
    of Our Indebtedness&nbsp;&#151; Senior Credit Facilities&#148;.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Jafra Distribution (Mexico) and Jafra US issued
    our 10&nbsp;3/4% Senior Subordinated Notes due 2011, or our
    &#147;10&nbsp;3/4% Notes&#148;, in the respective aggregate
    principal amounts of $120&nbsp;million and $80&nbsp;million and
    used a portion of the proceeds from such borrowing, together
    with the term loan, to repay the outstanding indebtedness of
    Jafra US and Jafra Mexico and to consummate other corporate
    restructuring transactions.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Jafra US and Jafra Mexico made compensating
    payments in an aggregate amount of approximately
    $10.4&nbsp;million to holders of options to acquire the capital
    stock of CDRJ Investments (Lux) S.A. and, through a series of
    inter-company transactions, the remaining proceeds from the
    issuance of our 10&nbsp;3/4% Notes and borrowings under our
    senior credit facilities were paid and distributed to CDRJ
    Investments (Lux) S.A.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">CDRJ Investments (Lux) S.A. then commenced
    liquidation proceedings and made an initial liquidating
    distribution to our shareholders of approximately
    $157.6&nbsp;million in cash, of which
    approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
    was paid to senior members of our management.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the closing of the sale of shares
offered hereby, we expect to make a final liquidating
distribution of up to $20&nbsp;million in cash to shareholders
of CDRJ Investments (Lux) S.A. We expect to fund this payment by
drawing on the revolving portion of our senior credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the shareholders of CDRJ Investments
(Lux) S.A. will receive one share of our common stock in
exchange for each share of CDRJ Investments (Lux) S.A. held at
this time. Further, each of the outstanding options to acquire
the capital stock of CDRJ Investments (Lux) S.A. has been
converted on a one-for-one basis into options to acquire capital
stock of Jafra. While these options will generally continue to
be governed by the same terms and conditions as prior to the
liquidation, the exercise prices of the outstanding options have
been adjusted downward such that the ratio of the original
exercise price per share of the options to the market value per
share immediately following the May 2003 recapitalization
transactions described above is identical to the ratio of the
original exercise price per share of the options to the market
value per share of the stock of CDRJ Investments (Lux) S.A.
immediately prior to the commencement of the liquidation
process. As a result of these adjustments, the exercise prices
of our outstanding options were reduced from $100, $150 and $210
per share to $39.91, $59.86 and $83.80 per share, respectively.
Prior to the closing of the sale of shares offered hereby, the
liquidation of CDRJ Investments (Lux) S.A. will be completed.
</FONT>

<P align="center"><FONT size="2">87
</FONT>
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<P align="left">
<B><FONT size="2">Investment Funds Managed by Clayton, Dubilier
&#38; Rice, Inc.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Overview.</FONT></I><FONT size="2"> CD&#38;R
Fund V, which is the largest stockholder of CDRJ Investments
(Lux) S.A., is a private investment fund managed by CD&#38;R.
Amounts contributed to CD&#38;R Fund&nbsp;V by its limited
partners are invested at the discretion of the general partner
in equity or equity-related securities of entities formed to
effect leveraged buy-out transactions and in the equity of
corporations where the infusion of capital, coupled with the
provision of managerial assistance by CD&#38;R, can be expected
to generate returns on investments comparable to returns
historically achieved in leveraged buyout transactions. The
general partner of CD&#38;R Fund&nbsp;V is Associates&nbsp;V,
and the general partners of Associates&nbsp;V are Investment
Associates&nbsp;II, CD&#38;R Investment Associates, Inc. and
CD&#38;R Cayman Investment Associates, Inc. Each of
Mr.&nbsp;Gogel, who is President, Chief Executive Officer and a
director of CD&#38;R; President, Chief Executive Officer, and a
shareholder and a director of Investment Associates&nbsp;II; and
a limited partner of Associates&nbsp;V, Mr.&nbsp;Ireland, who is
a principal of CD&#38;R, a limited partner of Associates&nbsp;V
and a shareholder and a director of Investment
Associates&nbsp;II, and Mr.&nbsp;Novak, who is a principal of
CD&#38;R, a limited partner of Associates&nbsp;V, and a
shareholder of Investment Associates&nbsp;II, is a director of
CDRJ Investments (Lux) S.A. See &#147;Management.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CD&#38;R is a private investment firm that is
organized as a Delaware corporation. CD&#38;R is the manager of
a series of investment funds, including CD&#38;R Fund&nbsp;V.
CD&#38;R generally assists in structuring, arranging financing
for and negotiating the transactions in which the funds it
manages invest. After the consummation of such transactions,
CD&#38;R generally provides advisory, management consulting and
monitoring services to the companies in which its investment
funds have invested during the period of such funds&#146;
investments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Consulting
Agreement.</FONT></I><FONT size="2"> Pursuant to a consulting
agreement entered into at the closing of the Acquisition, until
the tenth anniversary of the Acquisition or the date on which
CD&#38;R Fund V no longer has an investment in Jafra or until
the termination by either party with 30&nbsp;days&#146; notice,
CD&#38;R will receive an annual fee (and reimbursement of
out-of-pocket expenses) for providing advisory, management
consulting and monitoring services to the Jafra group. Such
services include, among others, helping Jafra to establish
effective banking, legal and other business relationships and
assisting management in developing and implementing strategies
for improving the operational, marketing and financial
performance of the Jafra group. The annual fee received by
CD&#38;R was $400,000 for the year ended December&nbsp;31, 2000.
As of January&nbsp;1, 2001, the annual fee was increased to
$1.0&nbsp;million based on an amendment to the consulting
agreement. The annual fee received by CD&#38;R for each of the
years ended December&nbsp;31, 2001, 2002 and 2003 was
$1.0&nbsp;million. In addition, the amendment adds to
CD&#38;R&#146;s services provided to the Jafra group under the
agreement, financial advisory, investment banking and similar
services with respect to future proposals for an acquisition,
merger, recapitalization, or other similar transaction directly
or indirectly involving Jafra or any of its subsidiaries. The
fee for such additional services in connection with future
transactions would be an amount equal to 1% of the transaction
value for the transaction to which such fee relates. Such
transaction fees may be increased upon approval of a majority of
the members of our board of directors who are not employees of
the Jafra group, CD&#38;R or any affiliate of CD&#38;R. The
amendment also provides that if any employee of CD&#38;R is
appointed to an executive management position (or a position of
comparable responsibility) in Jafra or any of its subsidiaries,
the annual fee will be increased by an amount to be determined
by CD&#38;R, the amount of such increase not to exceed 100% of
the existing annual fee in effect at that time. We have also
agreed to indemnify the members of the board employed by
CD&#38;R and CD&#38;R against liabilities incurred under
securities laws, liabilities to third parties, and liabilities
relating to the provision by CD&#38;R of advisory management,
consulting and monitoring services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the liquidation of CDRJ
Investments (Lux) S.A., Jafra Worldwide assumed the obligations
of CDRJ Investments (Lux) S.A. under the consulting agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Indemnification
Agreement.</FONT></I><FONT size="2"> CD&#38;R, CD&#38;R Fund V
and CDRJ Investments (Lux) S.A. entered into an indemnification
agreement, pursuant to which CDRJ Investments (Lux) S.A. has
agreed to indemnify the members of its board of directors, as
well as CD&#38;R, CD&#38;R Fund V, Associates V,
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">Investment Associates II and certain of their
members, partners, associates and affiliates to the fullest
extent allowable under applicable law and to indemnify such
persons against any suits, claims, damages or expenses which may
be made against or incurred by them under applicable securities
laws in connection with offerings of securities of Jafra,
liabilities to third parties arising out of any action or
failure to act by Jafra, and, except in cases of gross
negligence or intentional misconduct, the provision by CD&#38;R
of advisory, management consulting and monitoring services.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the liquidation of CDRJ
Investments (Lux) S.A., Jafra Worldwide assumed the obligations
of CDRJ Investments (Lux) S.A. under the indemnification
agreements.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Stock
Subscription Agreement.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stock Subscription
Agreements.</FONT></I><FONT size="2"> Clayton,
Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited Partnership owns
769,600&nbsp;shares of our common stock, which it purchased for
an aggregate purchase price of $76,960,000 pursuant to a Stock
Subscription Agreement, dated as of April&nbsp;30, 1998.
Pursuant to that agreement, Clayton, Dubilier&nbsp;&#38; Rice
Fund&nbsp;V Limited Partnership may designate all of the members
of our board of directors. Clayton, Dubilier&nbsp;&#38; Rice
Fund&nbsp;V Limited Partnership is also entitled to consult with
us with respect to our operations at any time, to have observers
attend meetings of our board of directors and those of our
subsidiaries, and to receive all our quarterly and annual
financial reports and budgets, as well as other documents. In
addition, the stock subscription agreement imposes certain
restrictions on the transfer of the shares of our common stock
owned by Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
Partnership.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have not adopted formal procedures to
specifically protect the interests of our minority stockholders
in relation to future transactions with our principal
stockholders. However, our board of directors has adopted
corporate governance guidelines, which require each director to
avoid taking actions or having interests that might result in a
conflict of interest with our interests. Each director is
required to ethically handle all actual or apparent conflicts of
interest between personal and professional relationships,
including promptly informing the corporate secretary if such a
conflict arises and recusing himself or herself from any
discussion or decision affecting his or her personal interests.
Accordingly, our directors who are employees of Clayton,
Dubilier&nbsp;&#38; Rice Inc., will be required to recuse
themselves from any discussion or decision regarding any
transaction with our principal stockholders. These guidelines do
not, by themselves, prohibit transactions with our principal
stockholders.
</FONT>

<P align="left">
<B><FONT size="2">Agreements with Our Management</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Employment
Agreements.</FONT></I><FONT size="2"> CDRJ Investments (Lux)
S.A. and Jafra U.S. have entered into employment agreements with
various members of management. See &#147;Management&#148;. The
employment agreements of Messrs.&nbsp;Clark and Rubio provide
that each will be a member of our board of directors during the
term of his employment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the liquidation of CDRJ
Investments (Lux) S.A., Jafra Worldwide assumed the obligations
of CDRJ Investments (Lux) S.A. under the employment agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Management Stock Subscription
Agreements.</FONT></I><FONT size="2"> CDRJ Investments (Lux)
S.A. has entered into management stock subscription agreements
with each of our management shareholders. Under the management
stock subscription agreements, participants are not permitted to
transfer shares purchased at any time before an underwritten
public offering of our common stock, led by at least one
underwriter of nationally recognized standing except under
limited circumstances. In addition, any sale or other
disposition must also be made in compliance with any applicable
state and foreign securities laws. Further, if we file a
registration statement under the Securities Act with respect to
an underwritten public offering of the common stock,
participants may not sell or distribute any shares of common
stock to the public during the 20&nbsp;days before and the
180&nbsp;days after the effective date of the registration
statement, other than as part of the public offering. The
restrictions on transfer will not continue following a public
offering of our common stock.
</FONT>

<P align="center"><FONT size="2">89
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to an initial public offering of our common
stock, under certain circumstances, stockholders can require
CDRJ Investments (Lux) S.A. to purchase their shares of common
stock. Management stockholders are subject to a holding period
of at least seven months from the date such shares were
acquired. In May 2001 and June 2001, respectively, CDRJ
Investments (Lux) S.A. purchased all of the common stock of a
former member of management and a director, consisting of an
aggregate of 2,563&nbsp;shares. In September 2001, a former
member of management exercised options to purchase
210&nbsp;shares of common stock, and then requested that CDRJ
Investments (Lux) S.A. purchase all of his common stock,
consisting of 526&nbsp;shares. In July 2000, a former member of
management exercised options to purchase 158&nbsp;shares of
common stock, and then requested that CDRJ Investments (Lux)
S.A. purchase all of his common stock, consisting of
632&nbsp;shares. In November 2000, a former member of management
requested that CDRJ Investments (Lux) S.A. purchase all of his
common stock, consisting of 316&nbsp;shares. CDRJ Investments
(Lux) S.A. repurchased the shares in 2001 at a total cost of
$772,000, or $250 per share, and the shares in 2000 at a total
cost of $199,000, or $210 per share, which represented the
respective estimated fair market values at the time of the
purchases.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of February 2004, Jafra is in negotiations
with a former member of management to repurchase all of his
common stock, consisting of 3,476&nbsp;shares. Simultaneously,
Jafra US is in negotiation to repurchase this former member of
management&#146;s 5,463 vested stock options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the liquidation of CDRJ
Investments (Lux) S.A., Jafra assumed the obligations of CDRJ
Investments (Lux) S.A. under the management stock subscription
agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra Worldwide is acting as liquidator of CDRJ
Investments (Lux) S.A. In that capacity, Jafra Worldwide will
assume all of CDRJ Investments (Lux) S.A.&#146;s contingent and
unknown liabilities that are not satisfied in liquidation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Management Loans.</FONT></I><FONT size="2">
Certain members of management, including named executive
officers, financed a portion of the cash purchase price of the
shares of common stock they acquired through loans from the
Chase Manhattan Bank on market terms. To help members of
management obtain such terms for such financing, CDRJ
Investments (Lux) S.A. fully and unconditionally guaranteed up
to 75% of the purchase price for the shares of common stock
purchased by each such member of management. CDRJ Investments
(Lux) S.A. guaranteed loans for $687,300, $687,300, $545,100,
$225,000 and $230,000 extended to Messrs.&nbsp;Clark, Rubio,
Mason, Guirao, and DiGregorio, respectively. In connection with
our May 2003 recapitalization, management repaid these loans in
full.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Certain Management Stock Purchases and
    Option Grants</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2000, a member of management purchased
316&nbsp;shares of common stock at a purchase price of $150 per
share, which was below the estimated fair value at the time of
purchase of $210 per share. CDRJ Investments (Lux) S.A.
recognized compensation expense of approximately $19,000 at the
time of the purchase. In August 2000, certain members of
management purchased an aggregate of 4,108&nbsp;shares of the
common stock at a purchase price of $210 per share, which
represented the estimated fair value at the time of the
purchase. During 2000, certain members of management were also
granted options to purchase an aggregate of 8,848 shares of
common stock. In February 2001, certain members of management
purchased an aggregate of 474 shares of the common stock at a
purchase price of $210 per share, which represented the
estimated fair value at the time of the purchase. In September
2001, a former member of management purchased 210&nbsp;shares of
common stock at a purchase price of $150 per share, which was
below the estimated fair value at the time of the purchase of
$250 per share. CDRJ Investments (Lux) S.A. recognized
compensation expense of approximately $21,000 at the time of the
purchase. During 2001, certain members of management were also
granted options to purchase an aggregate of 948 shares of common
stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to 2000, Jafra engaged an entity, in which
a CD&#38;R fund has a minority investment, to develop its
e-commerce business. During 2000, Jafra paid such entity fees of
$1,798,000. Jafra terminated this agreement and entered into a
settlement and release agreement with such entity in 2000,
pursuant to
</FONT>

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</FONT>
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<DIV align="left">
<FONT size="2">which such entity agreed to pay Jafra $500,000 in
quarterly installments, together with interest at 9.5% per annum
through October 2005. At December&nbsp;31, 2002, the balance was
paid in full.
</FONT>
</DIV>

<P align="left">
<B><I><FONT size="2">Registration and Participation
Agreement.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of shares of our common stock and
options to purchase shares of our common stock, including
executive officers and key employees, are entitled to the
following registration rights for the shares of common stock
held by them or issuable upon exercise of options to purchase
our common stock under a Registration and Participation
Agreement, dated as of May&nbsp;20, 2003, among CDRJ North
Atlantic (Lux) S.A., Clayton, Dubilier &#38; Rice Fund V Limited
Partnership and the other parties thereto, as amended:
</FONT>
<P>

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<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">holders constituting, at any time prior to our
    initial public offering, at least 50% and thereafter, at least
    20%, of the total shares of these registrable securities may
    request that we use our best efforts to register such securities
    for public resale, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if we register any common stock at any time,
    either for our account or for the account of any stockholder,
    including in connection with this offering, the holders of
    registrable securities are entitled to request that we use our
    best efforts to include the number of their shares of common
    stock, which in the opinion of the underwriters, can be sold.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In most cases, we will bear all registration
expenses (other than underwriting discounts), including the fees
and expenses of counsel to the selling stockholders. Because
only Clayton, Dubilier &#38; Rice Fund&nbsp;V Limited
Partnership holds more than 50% of our outstanding common stock,
it is the only shareholder able to initiate the initial
registration by itself. Further, members of management generally
do not have registration rights under the Registration and
Participation Agreement for shares of our common stock issued
upon exercise of options if we have registered such shares under
the Securities Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we file a registration statement under the
Securities Act with respect to a public offering of our common
stock, no holders of our common stock are permitted to effect
any public sale or distribution of any shares of such stock
during the 20&nbsp;days before and the 180&nbsp;days after the
effective date of the registration statement (other than as part
of this offering).
</FONT>

<P align="center"><FONT size="2">91
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<!-- link1 "DESCRIPTION OF OUR INDEBTEDNESS" -->
<DIV align="left"><A NAME="019"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF OUR INDEBTEDNESS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following description of our indebtedness is
qualified in its entirety by reference to the relevant credit
facility, indenture and related documents governing the relevant
debt described.
</FONT>

<P align="left">
<B><FONT size="2">10&nbsp;3/4% Senior Subordinated Notes due
2011</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General.</FONT></I><FONT size="2"> In May
2003, Jafra US and Jafra Distribution (Mexico) issued the
10&nbsp;3/4% Notes in an aggregate principal amount of
$200.0&nbsp;million. The 10&nbsp;3/4% Notes were issued pursuant
the 10&nbsp;3/4% Notes Indenture among Jafra US, Jafra
Distribution (Mexico), Jafra Worldwide and U.S.&nbsp;Bank
National Association and mature on May&nbsp;15, 2011. Interest
on the 10&nbsp;3/4% Notes is paid semi-annually, on May&nbsp;15
and November&nbsp;15 of each year. As of September&nbsp;30,
2003, $200.0&nbsp;million aggregate principal amount of the
10&nbsp;3/4% Notes were outstanding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Guarantees and
Ranking.</FONT></I><FONT size="2"> The 10&nbsp;3/4% Notes are
the general unsecured obligations of Jafra US and Jafra
Distribution (Mexico). The 10&nbsp;3/4% Notes are guaranteed by
Jafra Worldwide and, in the case of the portion of the
10&nbsp;3/4% Notes issued by Jafra US, by Jafra Distribution
(Mexico), subject to a 30-day standstill and, in the case of the
portion of the 10&nbsp;3/4% Notes issued by Jafra Distribution
(Mexico), by Jafra Mexico and its Mexican subsidiaries and,
subject to a 30-day standstill, Jafra US. The 10&nbsp;3/4% Notes
are subordinated in right of payment to all existing and future
senior debt of Jafra US, Jafra Distribution (Mexico) and Jafra
Worldwide and <I>pari&nbsp;passu</I> in right of payment with
any future senior subordinated indebtedness of Jafra US, Jafra
Distribution (Mexico) and Jafra Worldwide. The 10&nbsp;3/4%
Notes are not entitled to the benefit of any sinking fund.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Optional Redemption.</FONT></I><FONT size="2">
On or after May&nbsp;15, 2007, Jafra US and Jafra Distribution
(Mexico) may, on a pro rata basis, redeem all or a part of the
10&nbsp;3/4% Notes at the redemption prices, expressed as a
percentage of the principal amount, set forth in the table
below, plus accrued and unpaid interest, if redeemed during the
twelve-month period beginning on May&nbsp;15 of the years
indicated below:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="82%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105.375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">102.688</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2009 and thereafter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, at any time prior to May&nbsp;15,
2006, Jafra US and Jafra Distribution (Mexico) may redeem, on a
pro rata basis, up to 35% of the originally issued aggregate
principal amount of 10&nbsp;3/4% Notes at a redemption price of
110.750% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date, with the net cash
proceeds of certain equity offerings of Jafra Worldwide or of
any of its direct or indirect parent corporations, provided that
at least 65% of the originally issued principal amount of the
10&nbsp;3/4% Notes remains outstanding after the occurrence of
such redemption and the redemption occurs within 180&nbsp;days
of the closing of such equity offering. We expect to use the net
proceeds to us of the sale of the shares offered by us hereby to
redeem up to 35% of the outstanding 10&nbsp;3/4% Notes. See
&#147;Use of Proceeds.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Change of Control.</FONT></I><FONT size="2">
In the event of a change of control, which is defined in the
indenture governing the 10&nbsp;3/4% Notes, each holder of the
10&nbsp;3/4% Notes will have the right to require Jafra US and
Jafra Distribution (Mexico) to repurchase all or any part of
such holder&#146;s 10&nbsp;3/4% Notes at a purchase price in
cash equal 101% of the principal amount thereof, plus accrued
and unpaid interest to the date of purchase.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Covenants.</FONT></I><FONT size="2"> The
indenture governing the 10&nbsp;3/4% Notes contains certain
covenants that, among other things, limit Jafra Worldwide&#146;s
ability and the ability of some of Jafra Worldwide&#146;s
subsidiaries to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur indebtedness or issue preferred shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">pay dividends or make distributions in respect of
    capital stock or to make other restricted payments;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">92
</FONT>

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<P>

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<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">make investments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">create liens without securing the 10&nbsp;3/4%
    Notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">consolidate, merge, sell or otherwise dispose of
    all or substantially all of the assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into certain transactions with affiliates;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">designate subsidiaries as unrestricted
    subsidiaries.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Events of Default.</FONT></I><FONT size="2">
The indenture governing the 10&nbsp;3/4% Notes also provides for
events of default which, if any of them occurs, would permit or
require the principal of and accrued interest on such
10&nbsp;3/4% Notes to become or to be declared to be due and
payable.
</FONT>

<P align="left">
<B><FONT size="2">Senior Credit Facilities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General.</FONT></I><FONT size="2"> Our senior
credit facilities consist of a $50.0&nbsp;million senior secured
term loan facility maturing in 2008 and a $40.0&nbsp;million
senior revolving credit facility, also maturing in 2008, of
which a portion of which is available in the form of letters of
credit. We currently have available $40.0&nbsp;million under the
revolving credit facility, which we may borrow subject to
customary conditions precedent. Prior to the closing of this
offering, we expect to borrow up to $20&nbsp;million under the
revolving credit facility to make a final liquidating
distribution to shareholders of CDRJ Investments (Lux) S.A. See
&#147;Certain Relationships and Related Party Transactions.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Guarantees and
Security.</FONT></I><FONT size="2"> Jafra Worldwide guarantees
all of our obligations under the senior credit facilities, and
each of Jafra Distribution (Mexico) and Jafra US guarantees the
obligations of the other borrower, subject to a 30-day cure
period prior to enforcement of such guarantee. In addition, all
present or future domestic subsidiaries of Jafra US guarantee
its obligations under the senior credit facilities and Jafra
Mexico and all present or future subsidiaries of Jafra
Distribution (Mexico) and Jafra Mexico guarantee the obligations
of Jafra Distribution (Mexico). The senior credit facilities are
secured by substantially all of our assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest and Fees.</FONT></I><FONT size="2">
Amounts outstanding under the senior credit facilities bear
interest at a rate equal to, at our option, (1)&nbsp;an
alternate base rate plus an applicable margin or (2)&nbsp;an
adjusted LIBOR rate plus an applicable margin. These applicable
margins are currently 3.00% and 4.00% for base rate loans and
LIBOR loans, respectively, subject in each case to periodic
adjustment based on certain levels of financial performance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also pay (1)&nbsp;commitment fees of 0.50% per
annum (subject to periodic adjustment based on certain levels of
financial performance) on the undrawn amount of the new
revolving credit facility, (2)&nbsp;administrative agent&#146;s
fees and (3)&nbsp;letter of credit fees, and we will be
responsible to pay certain participation fees in connection with
the syndication of the new credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Voluntary
Prepayments.</FONT></I><FONT size="2"> We can voluntarily prepay
the loans and reduce commitments, in whole or in part, without
premium or prepayment penalties except for breakage costs
incurred in connection with prepayment during a LIBOR interest
period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Covenants and Events of
Default.</FONT></I><FONT size="2"> We are subject to covenants
that, among other things, restrict our ability to incur or
guarantee indebtedness, make investments, loans and advances,
dispose of assets, pay dividends, make acquisitions, enter into
mergers, create liens, enter into certain transactions with
affiliates, make fundamental changes to our businesses and amend
the terms of or prepay certain other indebtedness. In addition,
we are required to maintain certain financial covenants,
including to maintain a maximum ratio of total debt to EBITDA,
to maintain a minimum interest expense ratio and not to exceed a
maximum annual amount of capital expenditures. We are also
subject to customary affirmative covenants and events of default.
</FONT>

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<!-- link1 "DESCRIPTION OF CAPITAL STOCK" -->
<DIV align="left"><A NAME="020"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></B>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Set forth below is a summary of certain
information concerning Jafra&#146;s share capital and certain
material provisions of Jafra&#146;s articles of incorporation
and Luxembourg law on commercial companies in effect as of the
date of this prospectus. This summary contains information that
we consider to be material regarding the share capital of Jafra,
but it does not purport to be complete and is qualified in its
entirety by reference to Jafra&#146;s articles of incorporation
and the Luxembourg law on commercial companies.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra has
outstanding &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
with a par value of $2.00, all of which have been paid in full,
representing a subscribed capital amount of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The total authorized capital of Jafra, including
the outstanding subscribed capital, is set at
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
consisting of a total
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares,
par value $2.00. Pursuant to Jafra&#146;s articles of
incorporation, the board of directors has been authorized to
issue further shares so as to bring the total capital of Jafra
up to the total authorized capital in whole or in part from time
to time. The ability of our board of directors to approve the
issuance of further authorized, but unissued, shares of our
common stock will expire on the date which is five years from
the date of publication of our amended articles of incorporation
setting forth Jafra&#146;s authorized share capital. Our
shareholders may vote at an extraordinary shareholder meeting to
renew the authorization to issue additional share capital,
provided that no such renewal can specify a term of
authorization of more than five years. Future issuances of our
common stock may be subject to the payment of a 1% Luxembourg
capital duty. Jafra intends to issue additional shares,
including issuances from authorized capital from time to time to
directors and employees of the Jafra group under Jafra S.A. 2004
Omnibus Stock Incentive Plan. Following completion of this
offering, the issued share capital of Jafra will consist
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
(not including additional shares issuable upon exercise of
options held by our directors and employees).
</FONT>

<P align="left">
<B><FONT size="2">Change of Control Related Provisions of Our
Articles of Incorporation and Luxembourg Law</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A number of provisions in our articles of
incorporation and under Luxembourg law may make it more
difficult to acquire control of us. These provisions may have
the effect of discouraging a future takeover attempt not
approved by our board of directors but which individual
stockholders may deem to be in their best interests or in which
stockholders may receive a substantial premium for their shares
over then current market prices. As a result, stockholders who
might desire to participate in such a transaction may not have
an opportunity to do so. In addition, these provisions may
adversely affect the prevailing market price of the shares.
These provisions are intended to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">enhance the likelihood of continuity and
    stability in the composition of our board of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">discourage some types of transactions that may
    involve an actual or threatened change in control of us;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">discourage certain tactics that may be used in
    proxy fights;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">ensure that our board of directors will have
    sufficient time to act in what the board believes to be in the
    best interests of us and our stockholders; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">encourage persons seeking to acquire control of
    us to consult first with our board to negotiate the terms of any
    proposed business combination or offer.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Meetings of Shareholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Meetings of shareholders may be either ordinary
or extraordinary. At ordinary meetings, shareholders can decide
on most matters, but they cannot decide matters that entail a
modification of the articles. Only at extraordinary meetings,
for which more stringent quorum and majority conditions apply,
can shareholders modify the articles. Among other things, a
merger, liquidation, transformation of Jafra
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">into another form of company, increases (unless
decided by the board of directors within the limits of the
authorized capital) or decreases of share capital or issuance of
a new class of shares would all require modification of the
articles. A quorum of 50% and a vote of two-thirds of the shares
present or represented are required to amend the articles. If
the quorum is not achieved, however, then a second meeting may
be called, at which no quorum is required.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra must hold a general meeting every year at
the place and date indicated in the articles. This annual
general shareholders&#146; meeting is an ordinary meeting.
Annual general shareholders&#146; meetings usually have on their
agenda the approval of the annual accounts and related issues,
such as approval of the management report prepared by the board
and of the report of the statutory auditor, and the use of
profits shown on the balance sheet, including the distribution
of dividends. See &#147;&#151;&nbsp;Dividends&#148; for further
details about Jafra&#146;s dividend policy.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ordinary and extraordinary shareholders&#146;
meetings may be called by the board or by the statutory auditor.
The board and the statutory auditor must convene a meeting if
requested in writing by shareholders representing at least 20%
of the subscribed capital of Jafra.
</FONT>

<P align="left">
<B><FONT size="2">Voting and Quorum Requirements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Matters brought before ordinary
shareholders&#146; meetings must receive a majority of the votes
cast to pass. Extraordinary meetings, which are required to
amend the articles, require a quorum of at least half of the
outstanding shares and may only act with a vote of two-thirds of
the shares present. If the quorum condition is not fulfilled,
however, a second meeting with the same agenda may be called,
for which the same two-thirds majority condition applies but for
which no quorum is required.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A &#147;change of nationality,&#148; for purposes
of Luxembourg law, of Jafra would require approval by all the
shareholders. Such a &#147;change of nationality&#148; would
typically consist of a permanent transfer of its registered
office outside of Luxembourg, but would not include a merger
with a non-Luxembourg company in which the non-Luxembourg
company survives. An increase of any obligations of shareholders
set forth in the articles would also require approval of all
shareholders affected.
</FONT>

<P align="left">
<B><FONT size="2">Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Limitations on Liability and Indemnification
of Directors.</FONT></I><FONT size="2"> Under Luxembourg law,
civil liability of directors both to the company and to third
parties is generally considered to be a matter of public policy.
It is possible that Luxembourg courts would declare void an
explicit or even implicit contractual limitation on
directors&#146; liability to Jafra. Jafra, however, can validly
agree to indemnify the directors against the consequences of
liability actions brought by third parties (including
shareholders if such shareholders have personally suffered a
damage which is independent of and distinct from the damage
caused to Jafra). The articles contain such an agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Classified Board of Directors, Vacancies and
Removal of Directors.</FONT></I><FONT size="2"> Our articles of
incorporation provide that our board of directors will be
divided into three classes of even number or nearly even number,
with each class elected for staggered three-year terms expiring
in successive years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are no restrictions in the articles or
under Luxembourg law as to nationality, residence or
professional qualifications for directors. There is no age limit
nor are directors required to retire by rotation. Directors may
be removed, at any time with or without cause, at any
shareholders&#146; meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Casual vacancies in our board of directors may be
filled only by our board of directors, provided that any
replacement director appointed by the board shall be approved by
vote of the shareholders at the next shareholder meeting to
occur after such replacement director&#146;s appointment. Any
director so appointed and approved to fill such a vacancy will
hold office for the remainder of the full term of the class of
directors in which the vacancy occurred (including a vacancy
created by increasing the size of the board) and until such
director&#146;s successor shall have been duly elected and
qualified. No decrease in the number of directors will shorten
the term of any incumbent director.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Powers of the Board.
</FONT></I><FONT size="2">The board has wide powers to perform
all acts necessary or desirable for accomplishing Jafra&#146;s
aims, subject to the powers reserved to shareholders by
Luxembourg law. The board may delegate daily management to one
or more directors, officers, executives, employees or other
persons, provided that any delegation to a member of the board
has been previously authorized by the shareholders at a general
meeting.
</FONT>

<P align="left">
<B><FONT size="2">Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Luxembourg law, an employee of Jafra can
only be liable to Jafra for damages brought about by his or her
willful acts or gross negligence. Any arrangement providing for
the indemnification of officers against claims of Jafra would be
contrary to public policy. Employees are liable to third parties
under general tort law and may enter into arrangements with
Jafra providing for indemnification against third party claims.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An indemnification arrangement can never cover a
willful act or gross negligence.
</FONT>

<P align="left">
<B><FONT size="2">Dividends</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends may only be paid out of the
distributable profits and unrestricted reserves of Jafra as
shown in its audited accounts for the most recently completed
financial year, which would consist of the profit (if any) for
such year and retained earnings from prior years after deduction
for losses carried over from prior years and reserves required
by law or the articles. The Luxembourg law on companies requires
Jafra to set up a reserve equal to 10% of the subscribed capital
by allocating yearly at least 5% of its profits to the reserve
account until it reaches the 10% threshold.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Luxembourg law, our board of directors may
pay interim dividends because the articles of incorporation
contain a specific provision to that effect. However, formal and
substantive requirements have to be met in order for Jafra to
pay interim dividends. These include a requirement that we
prepare financial statements showing that funds are available
for distribution. The amount of such distribution may not exceed
the profits earned by Jafra since the end of the last financial
year for which the annual accounts have been approved by the
general shareholders&#146; meeting plus retained earnings and
withdrawals from unrestricted reserves and minus carried-forward
losses and amounts to be mandatorily paid to a reserve account.
No interim dividends may be paid out during the first six months
of the company&#146;s accounting year nor before the approval of
the annual accounts of the previous accounting year by a general
shareholders&#146; meeting. The board of directors may not make
a decision to pay an interim dividend at any time more than two
months after the date on which the interim accounts referred to
above have been drawn up.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Luxembourg statutory auditor must verify
whether the conditions for the payment of interim dividends are
fulfilled.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If an interim dividend exceeds the dividend set
by the shareholders at the annual ordinary shareholders&#146;
meeting, the excess is deemed an advance payment of the next
dividend.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends may be paid in U.S.&nbsp;dollars or in
shares or otherwise as the board may determine in accordance
with Luxembourg law. Payment of any dividends will be made to
holders of common stock at their addresses in the register
maintained by or on behalf of Jafra. We do not expect to pay
dividends for the foreseeable future. See &#147;Dividend
Policy.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Nonresidents of Luxembourg who hold shares may be
subject to Luxembourg statutory withholding tax in respect of
any cash dividends paid. See &#147;Taxation&nbsp;&#151; Certain
Luxembourg Tax Considerations.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Capital Increases; Preemptive Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The subscribed capital and the authorized capital
of Jafra may be increased or reduced by the shareholders at a
shareholders&#146; meeting under the same quorum and majority
requirements applicable to
</FONT>

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<DIV align="left">
<FONT size="2">an amendment of the articles. The board may issue
shares (up to the amount authorized by the articles) without
shareholder approval, and, if so decided by the board,
shareholders will have no pre-emptive rights in connection with
such issuance.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that preemptive rights are not
disallowed by the board, all shareholders will be notified of
the period during which preemptive rights may be exercised, as
determined by the board. Under Luxembourg law, this period must
be at least 30&nbsp;days. Preemptive rights are transferable and
may be sold, prior to exercise.
</FONT>

<P align="left">
<B><FONT size="2">Liquidation Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shareholders of Jafra may dissolve Jafra
under the conditions prescribed for modification of the
articles. If such dissolution were to occur, Jafra would then be
liquidated, and after payment of its debts or consignment of the
sums necessary to pay such debts, the shareholders would be
entitled to the remaining assets of Jafra, in proportion to
their holdings.
</FONT>

<P align="left">
<B><FONT size="2">Form and Transfer of Shares</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shares may be issued in registered or bearer
form, at the option of the shareholder. Shares which have not
been fully paid up must be in registered form. Shares may be
evidenced at the holder&#146;s option in certificates
representing two or more shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Title to shares in bearer form passes by delivery
of the certificates evidencing the shares. Transfers of
registered shares require either (i)&nbsp;an inscription of the
transfer in the share register of Jafra signed by the transferor
and the transferee or their respective agents or (ii)&nbsp;a
notification of the transfer by the transferor or the transferee
to Jafra which in turn must record such transfer in the share
register maintained by it or on its behalf. Jafra or its
registrar may also enter the transfer in the register on the
basis of correspondence or other documents that establish the
existence of an agreement between the transferor and the
transferee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is generally held that contractual
restrictions on the transfer of shares are legal provided they
do not render the shares inalienable for a prolonged period of
time. Currently, the articles provide that, if the board
determines that a proposed transfer of shares would violate a
restriction on transfer agreed to by the owner of such shares or
its predecessor in interest and brought to the attention of the
board, the board may refuse to record such transfer in the share
register of Jafra (with a provision that such refusal will not
result in a situation where a shareholder is forced to continue
to hold shares for an extended period of time).
</FONT>

<P align="center"><FONT size="2">97
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<DIV align="left"><A NAME="021"></A></DIV>

<P align="center">
<B><FONT size="2">SHARES ELIGIBLE FOR FUTURE SALE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering, there was no public
market for our common stock.
</FONT>

<P align="left">
<B><FONT size="2">Sale of Restricted Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After this
offering, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock will be outstanding. Of these shares, all of the
shares sold in this offering will be freely tradable without
restriction under the Securities Act, unless purchased by our
&#147;affiliates&#148; as that term is defined in Rule&nbsp;144
under the Securities Act. The remaining shares of common stock
that will be outstanding after this offering are
&#147;restricted securities&#148; within the meaning of
Rule&nbsp;144 and Rule&nbsp;701 under the Securities Act.
Restricted securities may be sold in the public market only if
they are registered under the Securities Act or are sold
pursuant to an exemption from registration under Rule&nbsp;144
or Rule&nbsp;701 under the Securities Act, which are summarized
below. Subject to the lockup agreements described below, shares
held by our affiliates that are not restricted securities or
that have been owned for more than one year may be sold subject
to compliance with Rule&nbsp;144 of the Securities Act without
regard to the prescribed one-year holding period under
Rule&nbsp;144.
</FONT>

<P align="left">
<B><FONT size="2">Stock Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of this offering, we intend to
file one or more registration statements under the Securities
Act to register shares of common stock to be issued under our
stock option plans and, as a result, all shares acquired upon
exercise of stock options and other equity-based awards granted
under these plans will also be freely tradable under the
Securities Act unless purchased by our affiliates. A total
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock are reserved for issuance under our benefit
plans.
</FONT>

<P align="left">
<B><FONT size="2">Lock-Up Arrangements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and our executive officers and directors, and
each of our existing shareholders prior to this offering, have
agreed with the underwriters, subject to exceptions, not to
(1)&nbsp;offer, sell, contract to sell, pledge, hypothecate,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to
purchase, lend, make any short sale or otherwise transfer or
dispose of, directly or indirectly, any shares of common stock,
any options, rights or warrants to purchase any shares of common
stock or any securities convertible into, exercisable or
exchangeable for or that represent the right to receive shares
of common stock or (2)&nbsp;enter into any swap or other
arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of the shares of
common stock or other securities described in&nbsp;(1), for
180&nbsp;days after the date of this prospectus, except with the
prior written consent of Merrill Lynch, Pierce,
Fenner&nbsp;&#38; Smith Incorporated and Credit Suisse First
Boston LLC. This lock-up provision also applies to common stock
owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later
acquires the power of disposition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the lock-up periods, substantially all
of the shares of our common stock that are restricted securities
or are held by our affiliates as of the date of this prospectus
will be eligible for sale in the public market in compliance
with Rule&nbsp;144 or Rule&nbsp;701 under the Securities Act.
</FONT>

<P align="left">
<B><FONT size="2">Registration and Participation
Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders currently representing substantially
all of the shares of our common stock will have the right to
require us to register shares of common stock for resale in some
circumstances. See &#147;Certain Relationships and Related Party
Transactions.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Rule&nbsp;144</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, under Rule&nbsp;144, as currently in
effect, beginning 90&nbsp;days after the date of this
prospectus, any person or persons whose shares are aggregated,
including an affiliate, who has beneficially
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<DIV align="left">
<FONT size="2">owned shares of our common stock for a period of
at least one year is entitled to sell, within any three-month
period, a number of shares that does not exceed the greater of:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">1% of the then-outstanding shares of common
    stock; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the average weekly trading volume in the shares
    on the New York Stock Exchange during the four calendar weeks
    preceding the date on which the notice of the sale is filed with
    the Securities and Exchange Commission.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales under Rule&nbsp;144 are also subject to
provisions relating to notice, manner of sale, and the
availability of current public information about us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Rule&nbsp;144(k), a person who is not
deemed to have been one of our affiliates at any time during the
90&nbsp;days preceding a sale, and who has beneficially owned
the shares for at least two years, including the holding period
of any prior owner other than an &#147;affiliate,&#148; is
entitled to sell the shares without complying with the manner of
sale, public information, volume limitation or notice provisions
of Rule&nbsp;144.
</FONT>

<P align="left">
<B><FONT size="2">Rule&nbsp;701</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, Rule&nbsp;701 under the Securities
Act may be relied upon for the resale of our common stock
originally issued by us before our initial public offering to
our employees, directors, officers, consultants or advisers
under written compensatory benefit plans, including our stock
option plans, or contracts relating to the compensation of these
persons. Shares of our common stock issued in reliance on
Rule&nbsp;701 are &#147;restricted securities&#148; and,
beginning 90&nbsp;days after the date of this prospectus, may be
sold by non-affiliates subject only to the manner of sale
provisions of Rule&nbsp;144 and by affiliates under
Rule&nbsp;144 without compliance with the one-year holding
period, in each case subject to the lockup agreements.
</FONT>

<P align="center"><FONT size="2">99
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<DIV align="left"><A NAME="022"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN MATERIAL U.S. FEDERAL INCOME TAX
CONSIDERATIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general discussion of the
principal United States federal income tax considerations
relating to the purchase, ownership and disposition of our
common stock by US&nbsp;Holders (as defined below) that purchase
our common stock in this offering and hold our common stock as
capital assets. This discussion is based on the US-Luxembourg
tax treaty, the Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;), Treasury regulations promulgated thereunder
and administrative and judicial interpretations thereof, all as
in effect and available on the date hereof and all of which are
subject to change, possibly with retroactive effect, or to
different interpretation. This discussion is for general
information only and does not address all of the US&nbsp;federal
income tax considerations that may be relevant to specific
US&nbsp;Holders in light of their particular circumstances or to
US Holders subject to special treatment under US federal income
tax law (such as banks, other financial institutions, insurance
companies, tax-exempt entities, retirement plans, regulated
investment companies, real estate investment trusts,
S&nbsp;corporations, partnerships and other pass-through
entities, persons that received our common stock as compensation
for the performance of services, traders or dealers in
securities or currencies, expatriates subject to
Section&nbsp;877 of the Code, persons subject to the alternative
minimum tax, persons that hold our common stock as part of a
straddle, hedge or conversion transaction, persons that have a
&#147;functional currency&#148; other than the US dollar or
persons that own (or are deemed to own) 10% or more (by voting
power or value) of our stock). This discussion does not address
any US state or local tax considerations or any US federal
estate, gift or alternative minimum tax considerations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As used in this discussion, the term &#147;US
Holder&#148; means a beneficial owner of our common stock that
is, for US federal income tax purposes, (i)&nbsp;an individual
who is a citizen or resident of the United States, (ii)&nbsp;a
corporation created or organized in or under the laws of the
United States or of any state or political subdivision thereof
or therein, including the District of Columbia, (iii)&nbsp;an
estate the income of which is subject to US&nbsp;federal income
tax regardless of the source thereof or (iv)&nbsp;a trust with
respect to which a court within the United States is able to
exercise primary supervision over its administration and one or
more US&nbsp;persons have the authority to control all of its
substantial decisions, or certain electing trusts that were in
existence on August&nbsp;19, 1996 and were treated as domestic
trusts on that date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSIDERATIONS
APPLICABLE TO THEM RELATING TO THE PURCHASE, OWNERSHIP AND
DISPOSITION OF OUR COMMON STOCK, INCLUDING THE APPLICABILITY OF
US FEDERAL, STATE AND LOCAL TAX LAWS OR NON-US TAX LAWS, ANY
CHANGES IN APPLICABLE TAX LAWS AND ANY PENDING OR PROPOSED
LEGISLATION OR REGULATIONS.
</FONT>

<P align="left">
<B><FONT size="2">Distributions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the discussion below under
&#147;&#151;&nbsp;Passive Foreign Investment Company
Considerations,&#148; the following rules generally will apply
to any cash distribution made by us on our common stock,
including any Luxembourg taxes withheld from such distribution
as described below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any cash distribution made by us on our common
stock will be treated as a dividend includible in the gross
income of a US&nbsp;Holder as ordinary income to the extent of
our current and accumulated earnings and profits, as determined
under US&nbsp;federal income tax principles. To the extent the
amount of such distribution exceeds our current and accumulated
earnings and profits as so computed, it will be treated first as
a non-taxable return of capital to the extent of such US
Holder&#146;s adjusted tax basis in such common stock and, to
the extent the amount of such distribution exceeds such adjusted
tax basis, will be treated as gain from the sale or exchange of
such common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Legislation enacted in 2003 (the &#147;2003 Tax
Legislation&#148;) reduces to 15% the maximum tax rate for
certain dividends received by certain noncorporate taxpayers
through taxable years beginning on or before December&nbsp;31,
2008, so long as specified holding period requirements are met.
Dividends received from &#147;qualified foreign
corporations&#148; generally qualify for the reduced rate. A
non-US corporation (other than a foreign personal holding
company, foreign investment company or passive foreign investment
</FONT>

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<DIV align="left">
<FONT size="2">company) generally will be treated as a qualified
foreign corporation with respect to any dividend paid by such
corporation if the stock with respect to which such dividend is
paid is readily tradable on an established securities market in
the United States. Such markets include the NYSE. Accordingly,
unless we are classified as a foreign personal holding company,
a foreign investment company or a passive foreign investment
company, recipients of dividends with respect to shares of our
common stock that are readily tradable on an established
securities market in the United States should be eligible for
the reduced rate prescribed by the 2003 Tax Legislation.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Special rules apply for purposes of determining
the recipient&#146;s investment income (which limits deductions
for investment interest) and foreign income (which may affect
the amount of foreign tax credit) and to certain extraordinary
dividends. Each US Holder that is a noncorporate taxpayer is
urged to consult its own tax advisor regarding the possible
applicability of the reduced rate under the 2003 Tax Legislation
and the related restrictions and special rules.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends paid on our common stock will not be
eligible for the &#147;dividends received&#148; deduction
generally allowed to corporate shareholders with respect to
dividends received from US corporations. A US&nbsp;Holder will
be entitled to claim a foreign tax credit only for foreign taxes
(such as withholding taxes), if any, imposed on dividends paid
to such US Holder, and not for taxes, if any, imposed on us or
on any entity in which we have made an investment. We currently
anticipate that after this offering we will be a &#147;United
States-owned foreign corporation.&#148; For so long as we are a
United States-owned foreign corporation, distributions with
respect to shares that are taxable as dividends generally will
be treated as foreign source passive income (or, for
US&nbsp;Holders that are &#147;financial service entities&#148;
as defined in the Treasury Regulations, financial service
income) or US source income for U.S.&nbsp;foreign tax credit
purposes, in proportion to our earnings and profits in the year
of such distribution allocable to foreign and US sources,
respectively. For this purpose, we will be treated as a United
States-owned foreign corporation so long as stock representing
50% or more of our voting power or equity value is owned,
directly, or indirectly, by &#147;United States persons.&#148;
The rules relating to foreign tax credits are extremely complex,
and US Holders should consult their own tax advisors with regard
to the availability of a foreign tax credit and the application
of the foreign tax credit to their particular situation. A
US&nbsp;Holder that does not elect to claim a US&nbsp;foreign
tax credit may instead claim a deduction for Luxembourg income
tax withheld, but only for a taxable year in which the
US&nbsp;Holder elects to do so with respect to all foreign
income taxes paid or accrued in such taxable year. Each
US&nbsp;Holder is urged to consult its own tax advisor regarding
whether it should elect to claim US&nbsp;foreign tax credits or
deductions with respect to foreign income taxes paid or accrued
and whether and to what extent it is entitled to claim any
US&nbsp;foreign tax credit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The US&nbsp;dollar value of any distribution made
by us in a non-US currency should be calculated by reference to
the exchange rate in effect on the date of receipt of such
distribution by the US&nbsp;Holder, regardless of whether the
non-US currency is in fact converted into US&nbsp;dollars. If
the non-US currency so received is converted into US dollars on
the date of receipt, such US&nbsp;Holder generally should not
recognize foreign currency gain or loss on such conversion. If
the non-US currency so received is not converted into
US&nbsp;dollars on the date of receipt, such US Holder will have
a basis in the non-US currency equal to its US&nbsp;dollar value
on the date of receipt. Any gain or loss on a subsequent
conversion or other disposition of the non-US currency generally
will be treated as ordinary income or loss to such
US&nbsp;Holder.
</FONT>

<P align="left">
<B><FONT size="2">Sale, Exchange or Other Disposition of Our
Common stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the discussion below under
&#147;&#151;&nbsp;Passive Foreign Investment Company
Considerations,&#148; the following rules generally will apply
to any gain or loss upon a sale, exchange or other disposition
of our common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A US&nbsp;Holder generally will recognize gain or
loss for US&nbsp;federal income tax purposes upon a sale,
exchange or other disposition of our common stock in an amount
equal to the difference between the amount realized from such
sale, exchange or disposition and the US&nbsp;Holder&#146;s
adjusted tax basis in such common stock. Such gain or loss
generally will be a capital gain or loss and will be long-term
capital gain (generally taxable at a reduced rate for
noncorporate taxpayers) or loss if, on the date of such sale,
</FONT>

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<DIV align="left">
<FONT size="2">exchange or disposition, such common stock was
held by such US Holder for more than one year. The deductibility
of capital losses by a US Holder is subject to limitations. In
general, gain or loss recognized by a US Holder on the sale,
exchange or other disposition of our common stock will
constitute gain or loss from sources within the United States
for foreign tax credit limitation purposes.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Passive Foreign Investment Company
Considerations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that we are not currently, and we do
not expect to become, a passive foreign investment company
(&#147;PFIC&#148;) for US federal income tax purposes. However,
because this determination is made annually at the end of each
of our taxable years and is dependent upon a number of factors,
some of which are beyond our control, including the value of our
assets and the amount and type of our income, there can be no
assurance that we will not become a PFIC or that the
US&nbsp;Internal Revenue Service will agree with our conclusion
regarding our current PFIC status. If we are a PFIC in any year,
US Holders could suffer adverse consequences as discussed below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, a corporation organized outside the
United States will be treated as a PFIC for US federal income
tax purposes in any taxable year in which either (i)&nbsp;at
least 75% of its gross income is &#147;passive income&#148; or
(ii)&nbsp;on average at least 50% of the value of its assets is
attributable to assets that produce passive income or are held
for the production of passive income. Passive income for this
purpose generally includes, among other things, dividends,
interest, royalties, rents and gains from commodities and
securities transactions. In determining whether a foreign
corporation is a PFIC, a pro rata portion of the income and
assets of each corporation in which it owns, directly or
indirectly, at least a 25% interest (by value) is taken into
account.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we are a PFIC in any year during which a US
Holder owns our common stock, such US Holder could be liable for
additional taxes and interest charges upon certain distributions
by us or upon a sale, exchange or other disposition of our
common stock at a gain, whether or not we continue to be a PFIC.
The tax will be determined by allocating such distributions or
gain ratably to each day of the US&nbsp;Holder&#146;s holding
period. The amount allocated to the current taxable year and any
taxable year with respect to which we were not a PFIC will be
taxed as ordinary income (rather than capital gain) earned in
the current taxable year. The amount allocated to other taxable
years will be taxed at the highest marginal rates applicable to
ordinary income for such taxable years and, in addition, an
interest charge will be imposed on the amount of such taxes. In
addition, if we are a PFIC, a person who acquires our common
stock from a decedent will be denied the step-up of the tax
basis for US&nbsp;federal income tax purposes for such common
stock to fair market value at the date of such decedent&#146;s
death which would otherwise be available with respect to a
decedent dying in any year other than 2010, and, instead, such
person will have a tax basis equal to the lower of the fair
market value or such decedent&#146;s tax basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The above rules do not apply if a
&#147;mark-to-market&#148; election is available and a
US&nbsp;Holder validly makes such an election. If such election
is made, such US&nbsp;Holder generally will be required to take
into account the difference, if any, between the fair market
value and its adjusted tax basis in our common stock at the end
of each taxable year as ordinary income or ordinary loss (to the
extent of any net mark-to market gains previously included in
income). In addition, any gain from a sale, exchange or other
disposition of our common stock will be treated as ordinary
income, and any loss will be treated as ordinary loss (to the
extent of any net mark-to-market gains previously included in
income). A mark-to-market election is available to a
US&nbsp;Holder only if our common stock are considered
&#147;marketable stock&#148; for these purposes. Generally,
stock will be considered marketable stock if it is
&#147;regularly traded&#148; on a &#147;qualified exchange&#148;
within the meaning of applicable US Treasury regulations. A
class of stock is regularly traded during any calendar year
during which such class of stock is traded, other than in de
minimis quantities, on at least 15&nbsp;days during each
calendar quarter. The NYSE is a qualified exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The above rules also would not apply if a
US&nbsp;Holder is eligible for and timely makes a valid
&#147;QEF election.&#148; If a QEF election is made, such
US&nbsp;Holder generally will be required to include in income
on a current basis its pro rata share of the ordinary income and
net capital gains of the PFIC. In order for a US&nbsp;Holder to
be able to make a QEF election, we would be required to provide
such
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">US&nbsp;Holder with certain information. We have
not determined whether we will provide US&nbsp;Holders with the
required information, so no assurance can be given that a QEF
election will be available.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prospective investors should consult their own
tax advisors regarding the US&nbsp;federal income tax
consequences of an investment in a PFIC.
</FONT>

<P align="left">
<B><FONT size="2">Reportable Transaction Reporting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under certain US&nbsp;Treasury regulations,
US&nbsp;Holders that participate in &#147;reportable
transactions&#148; (as defined in the regulations) must attach
to their US&nbsp;federal income tax returns a disclosure
statement on Form&nbsp;8886. US&nbsp;Holders should consult
their own tax advisors as to the possible obligation to file
Form&nbsp;8886 with respect to the purchase, ownership or
disposition of our common stock, or any related transaction,
including without limitation, the disposition of any non-US
currency received as a dividend or as proceeds from the sale of
our common stock.
</FONT>

<P align="left">
<B><FONT size="2">Backup Withholding Tax and Information
Reporting Requirements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A US&nbsp;Holder of common stock may be subject
to US&nbsp;federal backup withholding tax at applicable rates
(currently, at a rate of 28%) with respect to payments made on,
or proceeds from the sale, exchange or other disposition of, our
common stock, unless the holder (i)&nbsp;is an entity (including
corporations, tax-exempt corporations and certain qualified
nominees) that is exempt from withholding and, when required,
demonstrates this fact, or (ii)&nbsp;provides its taxpayer
information number (&#147;TIN&#148;) (which for an individual
would generally be the holder&#146;s Social Security number),
certifies that the TIN provided is correct and that the holder
has not been notified by the IRS that it is subject to backup
withholding due to underreporting of interest or dividends, and
otherwise complies with applicable requirements of the backup
withholding rules. In addition, such payments received by US
Holders that are not corporations, tax-exempt organizations or
qualified nominees may be subject to information reporting
requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each US&nbsp;Holder is urged to consult its own
tax advisors regarding the possible applicability of
US&nbsp;federal backup withholding tax and information reporting
rules with respect to payments made on, or proceeds from the
sale, exchange or other disposition of, our common stock.
</FONT>

<P align="center"><FONT size="2">103
</FONT>

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<!-- link1 "CERTAIN MATERIAL LUXEMBOURG TAX CONSIDERATIONS" -->
<DIV align="left"><A NAME="023"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN MATERIAL LUXEMBOURG TAX
CONSIDERATIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion is for general
information only. Each purchaser is strongly urged to consult
with its own tax advisors to determine possible Luxembourg tax
consequences of a purchase of common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary outlines certain Luxembourg
tax consequences to a person who has never been a resident of
Luxembourg, who does not have a permanent establishment in
Luxembourg, will not hold the common stock in connection with
the conduct of a business in Luxembourg and who at no time has a
&#147;significant interest&#148; in Jafra within the meaning of
applicable Luxembourg tax laws (generally greater than 10%
equity ownership, including stock held by certain family
members) (a &#147;Non-Resident Holder&#148;) with respect to the
ownership and disposition of common stock. It does not examine
tax consequences to Luxembourg residents or, to some extent,
former residents.
</FONT>

<P align="left">
<B><FONT size="2">Sale or Other Disposition of Common
Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Non-Resident Holders will not be subject to
income or other taxes imposed by Luxembourg in respect of gains
realized on the sale, exchange or other disposition of common
stock.
</FONT>

<P align="left">
<B><FONT size="2">Payment of Dividends</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends paid on common stock to Non-Resident
Holders are subject to a withholding tax of 20%. Under certain
circumstances, European Union Non-Resident Holders may benefit
from an exemption of withholding tax. Reductions of the
withholding rate may also be provided by tax treaties. The
current income tax treaty between the United States and
Luxembourg generally reduces the rate of withholding for certain
eligible holders to 15%, provided that the holder is entitled to
claim treaty benefits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tax must initially be withheld at the non-treaty
rate (currently 20%) and Non-Resident Holders must then submit a
claim for a refund of tax representing the difference between
the tax actually withheld and that due by applying the lower
treaty rate. Certain tax treaties (including the US-Luxembourg
tax treaty), however, provide for a reduced rate of withholding
at the applicable treaty rate. Refund claims must be submitted
within two years of the dividend payment date and are generally
processed within three months. Claims for application of the
lower treaty rate or refund of withholding tax must be made on
an appropriate claim form and be certified by the tax
authorities in the Non-Resident Holder&#146;s country of
residence.
</FONT>

<P align="left">
<B><FONT size="2">Inheritance and Other Taxes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No inheritance tax is payable by a Non-Resident
Holder of common stock except if the deceased holder was a
resident of Luxembourg at the time of death.
</FONT>

<P align="center">
<B><FONT size="2">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The above description is not intended to
constitute a complete analysis of all tax consequences relating
to acquisition, ownership and disposition of common stock.
Prospective purchasers should consult their tax advisors
concerning the tax consequences of their particular situations.
</FONT>

<P align="center"><FONT size="2">104
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "UNDERWRITING" -->
<DIV align="left"><A NAME="024"></A></DIV>

<P align="center">
<B><FONT size="2">UNDERWRITING</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to offer the shares in the United
States through the underwriters. Merrill Lynch, Pierce, Fenner
&#38; Smith Incorporated and Credit Suisse First Boston LLC are
acting as representatives for the underwriters named below.
Subject to the terms and conditions described in a purchase
agreement among us, the selling stockholders and the
underwriters, we and the selling stockholders have agreed to
sell to the underwriters, and the underwriters severally have
agreed to purchase from us and the selling stockholders, the
number of shares listed opposite their names below.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Underwriter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <FONT size="2">Merrill Lynch, Pierce, Fenner &#38; Smith<BR>
    Incorporated
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Credit Suisse First Boston LLC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Banc of America Securities LLC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters have agreed to purchase all of
the shares sold under the purchase agreement if any of these
shares are purchased, other than those shares covered by the
over-allotment option described below. If an underwriter
defaults, the purchase agreement provides that the purchase
commitments of the non-defaulting underwriters may be increased
or the purchase agreement may be terminated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and the selling stockholders have agreed to
indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, and to
contribute to payments the underwriters may be required to make
in respect of those liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters are offering the shares, subject
to prior sale, when, as and if issued to and accepted by them,
subject to approval of legal matters by their counsel, including
the validity of the shares, and other conditions contained in
the purchase agreement, such as the receipt by the underwriters
of officer&#146;s certificates and legal opinions. The
underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
</FONT>

<P align="left">
<B><FONT size="2">Commissions and Discounts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The representatives have advised us and the
selling stockholders that the underwriters propose initially to
offer the shares to the public at the initial public offering
price listed on the cover page of this prospectus, and to
dealers at that price less a concession not in excess of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. The representatives may allow, and the dealers may
reallow, a discount not in excess of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows the public offering
price, underwriting discount and proceeds before expenses to
Jafra and the selling stockholders. The information assumes
either no exercise or full exercise by the underwriters of their
over-allotment options.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Without Option</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">With Option</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Public offering price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Underwriting discount
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds, before expenses, to Jafra S.A.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds, before expenses, to the selling
    stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The expenses of the offering, not including the
underwriting discount, are estimated at
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
are payable by Jafra S.A.
</FONT>

<P align="center"><FONT size="2">105
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Over-allotment Option</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The selling stockholders have granted options to
the underwriters to purchase up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares at the public offering price less the underwriting
discount. The underwriters may exercise these options for
30&nbsp;days from the date of this prospectus solely to cover
any over-allotments. If the underwriters exercise these options,
each underwriter will be obligated, subject to conditions
contained in the purchase agreement, to purchase a number of
additional shares proportionate to that underwriter&#146;s
initial amount reflected in the above table.
</FONT>

<P align="left">
<B><FONT size="2">Reserved Shares</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At our request, the underwriters have reserved
for sale, at the initial public offering price, up
to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
offered by this prospectus for sale to some of our directors,
officers, employees, consultants and related persons. If these
persons purchase reserved shares, this will reduce the number of
shares available for sale to the general public. Any reserved
shares that are not orally confirmed for purchase within one day
of the pricing of the offering will be offered by the
underwriters to the general public on the same terms as the
other shares offered by this prospectus.
</FONT>

<P align="left">
<B><FONT size="2">No Sales of Similar Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and the selling stockholders and our officers
and directors have agreed, with exceptions, not to sell or
transfer any common stock for 180&nbsp;days after the date of
this prospectus without first obtaining the written consent of
the representatives. Specifically, we and these other
individuals have agreed not to directly or indirectly
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">offer, pledge, sell, or contract to sell any
    common stock,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell any option or contract to purchase any
    common stock,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">purchase any option or contract to sell any
    common stock,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">grant any option, right or warrant for the sale
    of any common stock,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">lend or otherwise dispose of or transfer any
    common stock,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">request or demand that we file a registration
    statement related to the common stock, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any swap or other agreement that
    transfers, in whole or in part, the economic consequence of
    ownership of any common stock whether any such swap or
    transaction is to be settled by delivery of shares or other
    securities, in cash or otherwise.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This lockup provision applies to common stock and
to securities convertible into or exchangeable or exercisable
for or repayable with common stock. It also applies to common
stock owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later
acquires the power of disposition.
</FONT>

<P align="left">
<B><FONT size="2">New York Stock Exchange Listing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to apply to list the shares on the New
York Stock Exchange under the symbol &#147;JFA&#148;. In order
to meet the requirements for listing the shares on that
exchange, the underwriters have undertaken to sell a minimum
number of shares to a minimum number of beneficial owners.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Before this offering, there has been no public
market for our common stock. The initial public offering price
will be determined through negotiations among us, the selling
stockholders and the representatives. In addition to prevailing
market conditions, the factors to be considered in determining
the initial public offering price are:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the valuation multiples of publicly traded
    companies that the representatives believe to be comparable to
    us,
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">106
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our financial information,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the history of, and the prospects for, our
    company and the industry in which we compete,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">an assessment of our management, its past and
    present operations, and the prospects for, and timing of, our
    future revenues,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the present state of our development, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the above factors in relation to market values
    and various valuation measures of other companies engaged in
    activities similar to ours.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An active trading market for the shares may not
develop. It is also possible that after the offering the shares
will not trade in the public market at or above the initial
public offering price.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters do not expect to sell more than
5% of the shares in the aggregate to accounts over which they
exercise discretionary authority.
</FONT>

<P align="left">
<B><FONT size="2">Price Stabilization, Short Positions and
Penalty Bids</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Until the distribution of the shares is
completed, SEC rules may limit underwriters and selling group
members from bidding for and purchasing our common stock.
However, the representatives may engage in transactions that
stabilize the price of the common stock, such as bids or
purchases to peg, fix or maintain that price. These transactions
may be effected on the New York Stock Exchange or otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the underwriters create a short position in
the common stock in connection with the offering, i.e., if they
sell more shares than are listed on the cover of this
prospectus, the representatives may reduce that short position
by purchasing shares in the open market. The representatives may
also elect to reduce any short position by exercising all or
part of the over-allotment option described above. Purchases of
the common stock to stabilize its price or to reduce a short
position may cause the price of the common stock to be higher
than it might be in the absence of such purchases.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The representatives may also impose a penalty bid
on underwriters and selling group members. This means that if
the representatives purchase shares in the open market to reduce
the underwriter&#146;s short position or to stabilize the price
of such shares, they may reclaim the amount of the selling
concession from the underwriters and selling group members who
sold those shares. The imposition of a penalty bid may also
affect the price of the shares in that it discourages resales of
those shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither we nor any of the underwriters makes any
representation or prediction as to the direction or magnitude of
any effect that the transactions described above may have on the
price of the common stock. In addition, neither we nor any of
the underwriters makes any representation that the
representatives will engage in these transactions or that these
transactions, once commenced, will not be discontinued without
notice.
</FONT>

<P align="left">
<B><FONT size="2">No Public Offering Outside of the United
States</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No action has been or will be taken in any
jurisdiction (except in the United States) that would permit a
public offering of the shares of common stock, or the
possession, circulation or distribution of this prospectus or
any other material relating to our company, the selling
stockholders or shares of our common stock in any jurisdiction
where action for that purpose is required. Accordingly, the
shares of our common stock may not be offered or sold, directly
or indirectly, and neither this prospectus nor any other
offering material or advertisements in connection with the
shares of common stock may be distributed or published, in or
from any country or jurisdiction except in compliance with any
applicable rules and regulations of any such country or
jurisdiction.
</FONT>

<P align="left">
<B><FONT size="2">Other Relationships</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain of the underwriters and their affiliates
have engaged in, and may in the future engage in, investment
banking and other commercial dealings in the ordinary course of
business with us. They have received customary fees and
commissions for these transactions. In particular, Merrill
Lynch, Pierce,
</FONT>

<P align="center"><FONT size="2">107
</FONT>

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<DIV align="left">
<FONT size="2">Fenner&nbsp;&#38; Smith Incorporated and Credit
Suisse First Boston LLC served as the initial purchasers of our
10&nbsp;3/4% Notes in connection with the May 2003
recapitalization. In addition, an affiliate of Merrill Lynch,
Pierce, Fenner&nbsp;&#38; Smith Incorporated serves as joint
lead arranger and syndication agent, and an affiliate of Credit
Suisse First Boston LLC serves as joint lead arranger and
administrative agent, under our existing senior credit
facilities. Each such affiliate is currently a lender under such
facilities. Also, an affiliate of Banc of America Securities LLC
provides certain credit services to us, including in respect of
foreign currency transactions.
</FONT>
</DIV>

<P align="center"><FONT size="2">108
</FONT>

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<!-- link1 "NOTICE TO CANADIAN RESIDENTS" -->
<DIV align="left"><A NAME="025"></A></DIV>

<P align="center">
<B><FONT size="2">NOTICE TO CANADIAN RESIDENTS</FONT></B>

<P align="left">
<B><FONT size="2">Resale Restrictions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The distribution of the common stock in Canada is
being made only on a private placement basis exempt from the
requirement that we and the selling stockholders prepare and
file a prospectus with the securities regulatory authorities in
each province where trades of common stock are made. Any resale
of the common stock in Canada must be made under applicable
securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made under
available statutory exemptions or under a discretionary
exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the common stock.
</FONT>

<P align="left">
<B><FONT size="2">Representations of Purchasers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">By purchasing the common stock in Canada and
accepting a purchase confirmation, a purchaser is representing
to us, the selling stockholders and the dealer from whom the
purchase confirmation is received that
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="7%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the purchaser is entitled under applicable
    provincial securities laws to purchase the common stock without
    the benefit of a prospectus qualified under those securities
    laws,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">where required by law, that the purchaser is
    purchasing as principal and not as agent, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the purchaser has reviewed the text above under
    Resale Restrictions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Rights of Action&nbsp;&#151; Ontario
Purchasers Only</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Ontario securities legislation, a purchaser
who purchases a security offered by this prospectus during the
period of distribution will have a statutory right of action for
damages, or while still the owner of the shares, for rescission
against us and the selling stockholders in the event that this
prospectus contains a misrepresentation. A purchaser will be
deemed to have relied on the misrepresentation. The right of
action for damages is exercisable not later than the earlier of
180&nbsp;days from the date the purchaser first had knowledge of
the facts giving rise to the cause of action and three years
from the date on which payment is made for the shares. The right
of action for rescission is exercisable not later than
180&nbsp;days from the date on which payment is made for the
shares. If a purchaser elects to exercise the right of action
for rescission, the purchaser will have no right of action for
damages against us or the selling stockholders. In no case will
the amount recoverable in any action exceed the price at which
the shares were offered to the purchaser and if the purchaser is
shown to have purchased the securities with knowledge of the
misrepresentation, we and the selling stockholders will have no
liability. In the case of an action for damages, we and the
selling stockholders will not be liable for all or any portion
of the damages that are proven to not represent the depreciation
in value of the shares as a result of the misrepresentation
relied upon. These rights are in addition to, and without
derogation from, any other rights or remedies available at law
to an Ontario purchaser. The foregoing is a summary of the
rights available to an Ontario purchaser. Ontario purchasers
should refer to the complete text of the relevant statutory
provisions.
</FONT>

<P align="left">
<B><FONT size="2">Enforcement of Legal Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of our directors and officers as well as the
experts named herein and the selling stockholders may be located
outside of Canada and, as a result, it may not be possible for
Canadian purchasers to effect service of process within Canada
upon us or those persons. All or a substantial portion of our
assets and the assets of those persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a
judgment against us or those persons in Canada or to enforce a
judgment obtained in Canadian courts against us or those persons
outside of Canada.
</FONT>

<P align="left">
<B><FONT size="2">Taxation and Eligibility for
Investment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Canadian purchasers of common stock should
consult their own legal and tax advisors with respect to the tax
consequences of an investment in the common stock in their
particular circumstances and about the eligibility of the common
stock for investment by the purchaser under relevant Canadian
legislation.
</FONT>

<P align="center"><FONT size="2">109
</FONT>

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<!-- link1 "LEGAL MATTERS" -->
<DIV align="left"><A NAME="026"></A></DIV>

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The validity of the issuance of the shares
offered by this prospectus will be passed upon for us by
Debevoise &#38; Plimpton LLP, New York, New York and certain
other matters will be passed upon for us by Bonn Schmitt
Steichen, Luxembourg. Franci&nbsp;J. Blassberg, Esq., a member
of Debevoise &#38; Plimpton LLP, is married to Joseph&nbsp;L.
Rice,&nbsp;III, who is a principal of CD&#38;R. The underwriters
have been represented by Cravath, Swaine &#38; Moore LLP.
</FONT>

<!-- link1 "EXPERTS" -->
<DIV align="left"><A NAME="027"></A></DIV>

<P align="center">
<B><FONT size="2">EXPERTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements of CDRJ
North Atlantic (Lux) S.&#224;r.l. and subsidiaries as of
December&nbsp;31, 2002 and for the year then ended appearing in
this prospectus and the related financial statement schedule
appearing elsewhere in this registration statement have been
audited by Ernst &#38; Young LLP, independent auditors, as set
forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of CDRJ North Atlantic
(Lux) S.&#224;r.l. and subsidiaries as of December&nbsp;31, 2001
and for each of the two years in the period ended
December&nbsp;31, 2001 included in this prospectus and the
related financial statement schedule included elsewhere in this
registration statement have been audited by Deloitte &#38;
Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports
of such firm given upon their authority as experts in accounting
and auditing.
</FONT>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->
<DIV align="left"><A NAME="028"></A></DIV>

<P align="center">
<B><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have filed with the SEC a registration
statement on Form&nbsp;S-1 under the Securities Act for the
registration of the common stock represented by the shares
offered by this prospectus. This prospectus, which is a part of
the registration statement, does not contain all of the
information included in the registration statement. Any
statement made in this prospectus concerning the contents of any
contract, agreement or other document is not necessarily
complete. For further information regarding our company and the
common stock offered by this prospectus, please refer to the
registration statement, including its exhibits. If we have filed
any contract, agreement or other document as an exhibit to the
registration statement, you should read the exhibit for a more
complete understanding of the documents or other matters
involved.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon consummation of this offering, we will be
required to file annual and quarterly reports with the SEC. Our
former parent, CDRJ Investments (Lux) S.A., filed annual and
quarterly reports and other information with the SEC from
January 1999 through the fiscal quarter ended March&nbsp;31,
2003, and our subsidiary, Jafra Worldwide Holdings (Lux)
S.&#224;r.l., files annual and quarterly reports and other
information with the SEC. The public may read and copy any
reports or other information that we or Jafra Worldwide file
with the SEC or that CDRJ Investments (Lux) S.A. filed with the
SEC at the SEC&#146;s public reference room, Room&nbsp;1024 at
Judiciary Plaza, 450&nbsp;Fifth Street, N.W., Washington D.C.
20549, or at the SEC&#146;s regional offices located at
233&nbsp;Broadway, New York, New York 10279, and
Suite&nbsp;1400, 500&nbsp;West Madison Street, Chicago, Illinois
60661. The public may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330.
These documents are also available to the public at the web site
maintained by the SEC at http://www.sec.gov. You may also obtain
a copy of the registration statement at no cost by writing or
telephoning us at the following address:
</FONT>

<P align="center">
<FONT size="2">Jafra S.A.
</FONT>

<DIV align="center">
<FONT size="2">c/o Jafra Cosmetics International, Inc.
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">2451 Townsgate Road
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Westlake Village, CA 91361
</FONT>
</DIV>

<P align="center">
<FONT size="2">(805)&nbsp;449-3000
</FONT>

<P align="center"><FONT size="2">110
</FONT>
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<P align="center">
<B><FONT size="2">INDEX TO FINANCIAL STATEMENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Audited Financial Statements</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Consolidated Financial Statements&nbsp;&#151;
    CDRJ North Atlantic (Lux) S.&#224;r.l. and
    Subsidiaries</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Independent Auditors&#146; Reports
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Balance Sheets&nbsp;&#151; As of
    December&nbsp;31, 2001 and 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Income&nbsp;&#151; For
    the years ended December&nbsp;31, 2000, 2001 and 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Stockholder&#146;s
    Equity&nbsp;&#151; For the years ended December&nbsp;31, 2000,
    2001 and 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Cash Flows&nbsp;&#151;
    For the years ended December&nbsp;31, 2000, 2001 and 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes to Consolidated Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Unaudited Financial Statements</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Consolidated Financial Statements&nbsp;&#151;
    CDRJ North Atlantic (Lux) S.&#224;r.l. and
    Subsidiaries</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Balance Sheets&nbsp;&#151; As of
    December&nbsp;31, 2002 and September&nbsp;30, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Operations&nbsp;&#151;
    For nine months ended September&nbsp;30, 2002 and 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Cash Flows&nbsp;&#151;
    For nine months ended September&nbsp;30, 2002 and 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes to Consolidated Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-1
</FONT>
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<P align="center">
<B><FONT size="2">INDEPENDENT AUDITORS&#146; REPORT</FONT></B>

<P align="left">
<FONT size="2">To the Board of Directors and Stockholders of
</FONT>

<DIV align="left">
<FONT size="2">CDRJ North Atlantic (Lux) S.&#224;r.l.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Luxembourg
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying consolidated
balance sheet of CDRJ North Atlantic (Lux) S.&#224;r.l. and
subsidiaries (the &#147;Company&#148;) as of December&nbsp;31,
2002, and the related consolidated statements of income,
stockholder&#146;s equity, and cash flows for the year then
ended. These financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audit in accordance with
auditing standards generally accepted in the United States.
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 audit
provides a reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, such consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of CDRJ North Atlantic (Lux)
S.&#224;r.l. and subsidiaries as of December&nbsp;31, 2002, and
the results of their operations and their cash flows for the
year then ended, in conformity with accounting principles
generally accepted in the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note 2 to the consolidated
financial statements, effective January&nbsp;1, 2002, the
Company adopted Statement of Financial Accounting Standards
No.&nbsp;142.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">/s/ ERNST &#38; YOUNG, LLP
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Los Angeles, California
</FONT>

<DIV align="left">
<FONT size="2">February&nbsp;11, 2004
</FONT>
</DIV>

<P align="center"><FONT size="2">F-2
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">INDEPENDENT AUDITORS&#146; REPORT</FONT></B>

<P align="left">
<FONT size="2">To the Board of Directors and Stockholder of
</FONT>

<DIV align="left">
<FONT size="2">CDRJ North Atlantic (Lux) S.&#224;r.1.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Luxembourg
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying consolidated
balance sheet of CDRJ North Atlantic (Lux) S.&#224;r.1. and
subsidiaries (the &#147;Company&#148;) as of December&nbsp;31,
2001, and the related consolidated statements of income,
stockholder&#146;s equity, and cash flows for each of the two
years in the period ended December&nbsp;31, 2001. These
financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. 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.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, such consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of CDRJ North Atlantic (Lux)
S.&#224;r.1. and subsidiaries as of December&nbsp;31, 2001 and
the results of their operations and their cash flows for each of
the two years in the period ended December&nbsp;31, 2001, in
conformity with accounting principles generally accepted in the
United States of America.
</FONT>

<P align="left">
<FONT size="2">/s/ DELOITTE &#38; TOUCHE LLP
</FONT>

<P align="left">
<FONT size="2">Los Angeles, California
</FONT>

<DIV align="left">
<FONT size="2">February&nbsp;12, 2004
</FONT>
</DIV>

<P align="center"><FONT size="2">F-3
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="11" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables, less allowances for doubtful
    accounts of $7,133 in 2001 and $8,213 in 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,578</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables from affiliate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">822</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,846</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,865</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trademarks
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,560</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,570</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred financing fees and other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,736</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,796</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">291,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="11" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND STOCKHOLDER&#146;S
    EQUITY</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,480</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,099</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,094</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,073</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities from discounted operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">992</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,901</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-current payable to affiliate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,088</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">195,144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">179,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commitments and contingencies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholder&#146;s equity:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Quotas par value $100; 150 shares authorized,
    issued and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retained earnings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,984</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,966</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,268</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholder&#146;s equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">291,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">F-4
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF INCOME</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365,429</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382,644</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233,822</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281,170</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">224,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restructuring and impairment charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,626</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,389</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other income (expense):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exchange loss, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,647</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,554</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,576</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,705</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,351</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,452</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on early extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(510</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(102</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from continuing operations before income
    taxes and cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,398</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from continuing operations before
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,055</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on discontinued operations, net of income
    tax expense of $26 in 2000, $77 in 2001 and $65 in 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(185</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,442</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before cumulative effect of accounting
    change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of
    income tax expense of $82 in 2001 and $0 in 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(244</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF STOCKHOLDER&#146;S
EQUITY</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except for shares)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Quotas:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Additional Paid-in Capital:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82,717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Contribution of equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">901</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Retained Earnings:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,364</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,988</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,984</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,988</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,984</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Accumulated Other Comprehensive
    Loss:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,855</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,572</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,966</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net unrealized and deferred realized losses on
    derivatives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,746</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(264</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax benefit on unrealized and deferred realized
    losses on derivatives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Currency translation adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,717</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,130</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,572</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,966</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,268</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total Stockholder&#146;s Equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81,049</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Comprehensive Income:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized and deferred realized losses on
    derivatives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,504</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,192</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reclassified to exchange loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">797</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reclassified to cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax benefit on unrealized and deferred realized
    losses on derivatives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Currency translation adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,717</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,130</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total Comprehensive Income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,635</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">F-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash flows from operating
    activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of
    taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(126</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">244</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from continuing operations before
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,055</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss (gain)&nbsp;on sale of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(76</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for uncollectible accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,936</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,323</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of deferred financing fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset impairment charge
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,019</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized foreign exchange and derivative losses
    (gains)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,918</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(683</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred realized foreign exchange gains (losses)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(827</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,913</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in operating assets and liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,509</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,578</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,404</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,727</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(933</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,569</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,777</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,586</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(844</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable and accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(967</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,683</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes payable/prepaid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,138</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">722</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">699</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivable from affiliate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(776</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net operating activities of discontinued
    operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(554</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">193</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(618</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash flows from investing
    activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from sale of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,712</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,171</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,980</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(760</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(408</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(531</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net investing activities of discontinued
    operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(393</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(201</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,190</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,687</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,286</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash flows from financing
    activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Repurchase of subordinated notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,597</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Repayments under term loan facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,125</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net repayments under revolving credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,700</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,800</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (repayments)&nbsp;borrowings of bank debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(781</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Contribution of capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">901</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash used in financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23,350</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,937</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,706</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of exchange rate changes on cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(848</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,185</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,355</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net increase in cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,168</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Supplemental disclosures of cash flow
    information</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash paid (received)&nbsp;during the year for:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,615</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, the Company had
deferred losses of $2.9&nbsp;million on foreign currency forward
contracts recorded in accrued liabilities and other
comprehensive income. Additionally, the related deferred income
tax benefit of $1.3&nbsp;million related to the deferred losses
was recorded as a component of the net deferred income tax
liability and other comprehensive income. At December&nbsp;31,
2002, the Company had deferred net gains of $0.4&nbsp;million on
foreign currency option contracts recorded as other
comprehensive loss and other receivables.
</FONT>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">F-7
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(1)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Basis of Presentation and Description of
    Business</FONT></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Basis of Presentation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CDRJ North Atlantic (Lux) S.&#224;r.l., a
Luxembourg <I>soci&#233;t&#233; &#224; responsabilit&#233;
limit&#233;e </I>(the &#147;Parent&#148;), a wholly-owned
subsidiary of CDRJ Investments (Lux) S.A., a Luxembourg
<I>soci&#233;t&#233; anonyme</I> (&#147;CDRJ&#148;), Jafra
Cosmetics International, Inc., a Delaware corporation
(&#147;JCI&#148;), Jafra Cosmetics International, S.A. de C.V.,
a <I>sociedad anonima de capital variable </I>organized under
the laws of the United Mexican States (&#147;Jafra S.A.&#148;)
and certain other subsidiaries of the Parent were organized by
Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
Partnership, a Cayman Islands exempted limited partnership
managed by Clayton, Dubilier &#38; Rice, Inc.
(&#147;CD&#38;R&#148;) to acquire (the &#147;Acquisition&#148;)
the worldwide Jafra Cosmetics business (the &#147;Jafra
Business&#148;) of The Gillette Company (&#147;Gillette&#148;).
JCI and Jafra S.A. are indirect, wholly owned subsidiaries of
the Parent. The Parent is a holding company that conducts all
its operations through its subsidiaries. The Parent and its
subsidiaries are collectively referred to as the
&#147;Company.&#148; The Acquisition was completed on
April&nbsp;30, 1998. CDRJ North Atlantic (Lux) S.&#224;r.l. is
to be renamed Jafra S.A.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying consolidated financial
statements for the years ended December&nbsp;31, 2000, 2001 and
2002 reflect the operations of the Parent and its subsidiaries.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Description of Business</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is an international manufacturer and
marketer of premium skin and body care products, color
cosmetics, fragrances, and other personal care products. The
Company markets its products primarily in 11&nbsp;countries,
10&nbsp;outside the United States, and a number of additional
countries through distributors, through a direct selling,
multilevel distribution system comprised of self-employed
salespersons (known as &#147;consultants&#148;).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(2)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Summary of Significant Accounting
    Policies</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Use of Estimates.
</FONT></I><FONT size="2">The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cash and Cash Equivalents.
</FONT></I><FONT size="2">Cash and cash equivalents include
cash, time deposits and all highly liquid debt instruments
purchased with a maturity of three months or less.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Inventories.
</FONT></I><FONT size="2">Inventories are stated at the lower of
cost, as determined by the first-in, first-out basis, or market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Property and Equipment.
</FONT></I><FONT size="2">Property and equipment are stated at
cost. Depreciation of property and equipment is provided for
over the estimated useful lives of the respective assets using
the straight-line method. Estimated useful lives are 20 or
40&nbsp;years for buildings, the lesser of 20 or 40&nbsp;years
or the term of the lease for improvements, 5 to 15&nbsp;years
for machinery and equipment and 3 to 8&nbsp;years for hardware
and software. Maintenance and repairs, including cost of minor
replacements, are charged to operations as incurred. Costs of
additions and betterments are added to property and equipment
accounts provided that such expenditures increase the useful
life or the value of the asset.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Intangible Assets.
</FONT></I><FONT size="2">Intangible assets principally consist
of goodwill and trademarks. On January&nbsp;1, 2002, the Company
adopted Statement of Financial Accounting Standards
(&#147;SFAS&#148;) No.&nbsp;142, &#147;Goodwill and other
Intangible Assets&#148; which requires the Company to not
amortize goodwill and certain other
</FONT>

<P align="center"><FONT size="2">F-8
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">indefinite life intangible assets, but to test
those intangible assets for impairment at least annually. Prior
to adoption of SFAS No.&nbsp;142, goodwill and other intangible
assets were amortized using the straight-line method over a
period of 40&nbsp;years. Goodwill of $77.9&nbsp;million and
trademarks of $53.8&nbsp;million, resulted from the
Company&#146;s acquisition of the Jafra Business from Gillette.
The book value of goodwill and trademarks was $66,108,000 and
$44,570,000 at December&nbsp;31, 2002, respectively. (See
&#147;New Accounting Standards&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Deferred Financing
Costs.</FONT></I><FONT size="2"> In connection with the
acquisition of the Jafra Business, the Company incurred
approximately $12.0&nbsp;million of costs related to the 11.75%
Senior Subordinated Notes due 2008 (the &#147;Notes&#148;), the
revolving credit facility and the term loan facility (see
Note&nbsp;6). Such costs are being amortized on a basis that
approximates the interest method over the expected term of the
related debt. Accumulated amortization at December&nbsp;31, 2001
and 2002 was $5,566,000 and $6,554,000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Impairment of Long-Lived Assets and Goodwill.
</FONT></I><FONT size="2">Long-lived assets are reviewed for
impairment, based on undiscounted cash flows, whenever events or
changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. If this review indicates
that the carrying amount of the long-lived assets is not
recoverable, the Company will recognize an impairment loss,
measured by the future discounted cash flow method. Goodwill is
tested for impairment annually, or whenever events or changes in
circumstances indicate that the carrying amount of goodwill may
not be recoverable based on the provisions of SFAS No.&nbsp;142.
(see &#147;New Accounting Standards&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Foreign Currency Forward and Option Contracts.
</FONT></I><FONT size="2">During 2001 and 2002, the Company
entered into foreign currency forward contracts. In 2002, the
Company entered into forward currency option contracts. The
Company enters into these contracts to reduce the effect of
potentially adverse exchange rate fluctuations in the exchange
rate of the Mexican peso to the U.S.&nbsp;dollar. Effective
January&nbsp;1, 2001, the Company adopted SFAS No.&nbsp;133,
&#147;Accounting for Derivative Instruments and Hedging
Activities.&#148; SFAS No.&nbsp;133, as amended and interpreted,
establishes accounting and reporting standards for derivative
instruments and hedging activities and requires that all
derivative instruments be recorded based on fair value. In
connection with the adoption of SFAS No.&nbsp;133, at
January&nbsp;1, 2001, the Company recorded a net gain of
$126,000 (net of a tax effect of $82,000) as a cumulative
transition adjustment to earnings. This adjustment relates to
derivatives not designated as hedges prior to adoption of SFAS
No.&nbsp;133, and represents the difference between the carrying
value and the fair value of such instruments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a matter of policy, the Company does not hold
or issue foreign currency forward contracts or foreign currency
option contracts for trading or speculative purposes. The
forward contracts utilized by the Company did not qualify for
hedge accounting under the applicable accounting standards prior
to adoption of SFAS No.&nbsp;133 on January&nbsp;1, 2001, and
accordingly such instruments were marked-to-market each month
based upon the change in the spot rate from the date of contract
inception to the balance sheet date. The premium on such
contracts was amortized to expense over the life of the
contracts. However, under SFAS No.&nbsp;133, the Company&#146;s
use of forward contracts and option contracts to hedge certain
forecasted transactions qualifies for hedge accounting. Gains
and losses from qualifying hedged derivative instruments are
deferred as a separate component of other comprehensive loss,
and are recognized in income at the same time that the
underlying hedged exposure is recognized in income. This
accounting treatment results in the matching of gains and losses
from such forward contracts and option contracts with the
corresponding gains and losses generated by the underlying
hedged transactions. Under SFAS No.&nbsp;133, certain of the
Company&#146;s foreign currency forward contracts and option
contracts do not qualify for hedge accounting and therefore, are
remeasured based on fair value, with gains and losses included
as a component of net income. At December&nbsp;31, 2001, the
carrying value of the forward contracts was $5,540,000 and was
included in accrued liabilities in the accompanying consolidated
balance sheets. At December&nbsp;31, 2002, the carrying value of
the option contracts was $402,000 and was included in other
receivables in the accompanying consolidated balance sheets.
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Fair Value of Financial Instruments.
</FONT></I><FONT size="2">The carrying amounts of cash and cash
equivalents, accounts receivable, and accounts payable
approximate fair value because of the short-term maturities of
these instruments. The fair value of the Notes and other fixed
rate long-term debt at December&nbsp;31, 2001 and 2002 was
$82,052,000 and $77,888,000, respectively, based upon
discussions with one of the Company&#146;s largest bondholders
and an analysis of current market interest rates and the
Company&#146;s credit rating. As the Company&#146;s revolving
credit facility and the term loan are variable rate debt, and
the interest rate spread paid by the Company is adjusted for
changes in certain financial ratios of the Company, the fair
value of the revolving credit facility and the term loan
approximated their carrying amounts at December&nbsp;31, 2001
and 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenue Recognition.
</FONT></I><FONT size="2">The Company recognizes revenue when
title passes at shipment in accordance with its shipping terms.
Amounts billed to consultants for shipping and handling costs
are included in net sales. Sales are reduced by commissions paid
to consultants on their personal sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Shipping and Handling Costs.
</FONT></I><FONT size="2">Shipping and handling costs of
$23,951,000, $27,946,000 and $31,618,000 for the years ended
December&nbsp;31, 2000, 2001 and 2002, respectively, are
included in selling, general and administrative expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Research and Development.
</FONT></I><FONT size="2">Research and development costs are
expensed as incurred. Total research and development expense
aggregated $1,901,000, $1,842,000 and $1,469,000 for the years
ended December&nbsp;31, 2000, 2001 and 2002, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income Taxes. </FONT></I><FONT size="2">The
Company accounts for income taxes under the balance sheet
approach that requires the recognition of deferred income tax
assets and liabilities for the expected future consequences of
events that have been recognized in the Company&#146;s financial
statements or income tax returns. Management provides a
valuation allowance for deferred income tax assets when it is
more likely than not that a portion of such deferred income tax
assets will not be realized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Foreign Currency Translation.
</FONT></I><FONT size="2">The functional currency for foreign
subsidiaries is generally the local currency. Assets and
liabilities of such foreign subsidiaries are translated into
U.S. dollars at current exchange rates, and related revenues and
expenses are translated at average exchange rates in effect
during the period. Resulting translation adjustments are
recorded as a component of other comprehensive loss.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approximately 76%, 78% and 76% of the
Company&#146;s net sales for the years ended December&nbsp;31,
2000, 2001 and 2002, respectively, were generated by operations
located outside of the United States. Mexico is the
Company&#146;s largest foreign operation, accounting for 64%,
68% and 66% of the Company&#146;s net sales for the years ended
December&nbsp;31, 2000, 2001 and 2002, respectively. As such,
the Company&#146;s results of operations are subject to
fluctuations in the exchange rate of the Mexican peso to the
U.S.&nbsp;dollar.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, Jafra S.A. had outstanding
U.S.&nbsp;dollar-denominated debt of $35,572,000 and $32,447,000
at December&nbsp;31, 2001 and 2002, respectively. This debt is
remeasured at each reporting date, subjecting the Company to
additional foreign exchange risk.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">New Accounting Standards.
</FONT></I><FONT size="2">Effective January&nbsp;1, 2001, the
Company adopted SFAS No.&nbsp;133, &#147;Accounting for
Derivative Instruments and Hedging Activities.&#148; SFAS
No.&nbsp;133, as amended and interpreted, established accounting
and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and
for hedging activities. All derivatives, whether designated in
hedging relationships or not, are required to be recorded on the
balance sheet at fair value. If the derivative is designated in
a fair-value hedge, the changes in the fair value of the
derivative and the underlying hedged item are recognized
concurrently in earnings. If the derivative is designated in a
cash-flow hedge, changes in the fair value of the derivative are
recorded in other comprehensive income (loss) (&#147;OCI&#148;)
and are recognized in the statement of operations when the
hedged item affects earnings. SFAS
</FONT>

<P align="center"><FONT size="2">F-10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">No.&nbsp;133 defined new requirements for
designation and documentation of hedging relationships as well
as ongoing effectiveness assessments in order to use hedge
accounting. For a derivative that does not qualify as a hedge,
changes in fair value are recognized concurrently in earnings.
As of January&nbsp;1, 2001, the Company recorded a net gain of
$126,000 (net of a tax effect of $82,000) as a cumulative
transition adjustment to earnings. This adjustment relates to
derivatives not designated as hedges prior to adoption of SFAS
No.&nbsp;133, and represents the difference between the carrying
value as measured by the difference in the spot rate to the
forward rate and the fair value as determined by forward rates
of such instruments at January&nbsp;1, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, the Financial Accounting Standards
Board (&#147;FASB&#148;) approved two new statements: SFAS
No.&nbsp;141, &#147;Business Combinations&#148; and SFAS
No.&nbsp;142, &#147;Goodwill and Other Intangible Assets.&#148;
SFAS No.&nbsp;141 requires business combinations entered into
after June&nbsp;30, 2001 to be accounted for using the purchase
method of accounting. SFAS No.&nbsp;142 requires that goodwill
not be amortized, but be tested for impairment at least
annually. SFAS No.&nbsp;142 was effective for fiscal years
beginning after December&nbsp;15, 2001 to all goodwill and other
intangible assets recognized in an entity&#146;s statement of
financial position at that date, regardless of when those assets
were initially recognized. The Company adopted SFAS No.&nbsp;142
on January&nbsp;1, 2002. In accordance with such adoption, the
Company identified all reporting units in conjunction with the
provisions of SFAS No.&nbsp;142 and allocated all goodwill
accordingly. Prior to June&nbsp;30, 2002, the Company completed
the transitional goodwill impairment test required by SFAS
No.&nbsp;142. Due to general market uncertainty in Colombia, the
Company revised its projections and recorded an impairment loss
of $244,000 associated with its Colombia reporting unit. The
impairment loss has been recorded as a cumulative effect of
accounting change in the accompanying consolidated statements of
income. No other impairment was identified in connection with
the annual impairment test. The changes in the carrying amount
of goodwill for the year ended December&nbsp;31, 2002 are as
follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consolidated</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Goodwill</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexico</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Others</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,401</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Translation effect
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,853</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(637</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,301</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment losses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(244</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(244</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s other intangible assets
consist of trademarks. During the year ended December&nbsp;31,
2002, the Company determined trademarks to have an indefinite
life and performed the transitional and annual impairment test
as required under SFAS No.&nbsp;142. Based upon the transitional
and annual test, the Company determined that there was no
impairment of trademarks. The carrying value of trademarks was
$44,570,000 as of December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with SFAS No.&nbsp;142, the Company
discontinued amortization of goodwill and other intangible
assets with an indefinite life. A reconciliation of previously
reported net income to amounts adjusted for the exclusion of
goodwill and trademark amortization, net of the related income
tax effects, where applicable, is as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill amortization, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,706</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trademark amortization, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">822</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjusted net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,524</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 2001, the Emerging Issues Task Force
(&#147;EITF&#148;) issued EITF Issue No.&nbsp;01-9,
&#147;Accounting for Consideration Given by a Vendor to a
Customer or a Reseller of the Vendor&#146;s Products.&#148; This
new guidance provides that consideration from a vendor to a
reseller is generally presumed to be a reduction of the selling
prices of the vendor&#146;s products, and, therefore, should be
characterized as a reduction of revenue when recognized in the
vendor&#146;s income statement. On January&nbsp;1, 2002, the
Company adopted EITF Issue No.&nbsp;01-9 and reclassified
commissions paid to consultants of $3,320,000 and $3,778,000 on
their personal sales, previously reported as a component of
selling, general and administrative expenses, as a reduction in
net sales and selling, general and administrative expenses for
the years ended December&nbsp;31, 2000 and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2002, the Company adopted SFAS
No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets.&#148; SFAS No.&nbsp;144 supersedes SFAS
No.&nbsp;121, &#147;Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of.&#148; SFAS
No.&nbsp;144 retains substantially all of the requirements of
SFAS No.&nbsp;121, while resolving certain implementation issues
and addressing the accounting for a component of a business
accounted for as a discontinued operation. SFAS No.&nbsp;144 was
adopted with no significant impact on the financial position or
results of operations of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2002, the FASB issued SFAS No.&nbsp;145,
&#147;Rescission of FASB Statements No.&nbsp;4, 44, and 64,
Amendment of FASB Statement No.&nbsp;13, and Technical
Corrections.&#148; This Statement rescinds or modifies existing
authoritative pronouncements including SFAS No.&nbsp;4
&#147;Reporting Gains and Losses from Extinguishment of
Debt.&#148; As a result of the issuance of SFAS No.&nbsp;145,
gains and losses from extinguishment of debt should be
classified as extraordinary items only if they meet the criteria
in Accounting Principles Board (&#147;APB&#148;)
Opinion&nbsp;30, &#147;Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions.&#148; Applying the provisions of APB
Opinion&nbsp;30 will distinguish transactions that are part of
an entity&#146;s recurring operations from those that are
unusual or infrequent or that meet the criteria for
classification as an extraordinary item. The provisions of this
Statement related to the rescission of SFAS No.&nbsp;4 shall be
applied in fiscal years beginning after May&nbsp;15, 2002. Any
gain or loss on extinguishment of debt that was classified as an
extraordinary item in prior periods presented that does not meet
the criteria in APB Opinion 30 for classification as an
extraordinary item shall be reclassified. The Company adopted
SFAS No.&nbsp;145 on January&nbsp;1, 2003 and reclassified items
previously reported as extraordinary items as a component of
operating income in the accompanying statements of income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2002, the FASB approved SFAS
No.&nbsp;146, &#147;Accounting for Costs Associated with Exit or
Disposal Activities.&#148; This statement addresses financial
accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No.&nbsp;94-3,
&#147;Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity.&#148; The
provisions of this statement are effective for exit or disposal
activities that are initiated after December&nbsp;31, 2002, with
early application encouraged. The Company is currently
evaluating the impact that this statement may have on any
potential future exit or disposal activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, the FASB issued SFAS No.&nbsp;148,
&#147;Accounting for Stock Based Compensation&nbsp;&#151;
Transaction and Disclosure, an amendment to FASB Statement
No.&nbsp;123.&#148; This Statement requires more extensive
disclosure, including interim disclosure, related to stock based
compensation for all companies and permits additional transition
methods for companies that elect to use the fair value method
for employee stock compensation. This statement is effective for
fiscal years ending after December&nbsp;15, 2002, with early
adoption regarding annual disclosures encouraged. The Company
adopted the disclosure requirements of SFAS No.&nbsp;148. (See
Note&nbsp;13).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2003, the FASB issued SFAS No.&nbsp;150,
<I>Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity.</I> SFAS
No.&nbsp;150 establishes standards for how an issuer
</FONT>

<P align="center"><FONT size="2">F-12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">classifies and measures certain financial
instruments with characteristics of both liabilities and equity.
It requires that an issuer classify a financial instrument that
is within its scope as a liability (or an asset in some
circumstances). SFAS No.&nbsp;150 is effective for financial
instruments entered into or modified after May&nbsp;31, 2003,
and otherwise is effective at the beginning of the first interim
period beginning after June&nbsp;15, 2003. The adoption of SFAS
No.&nbsp;150 on July&nbsp;1, 2003 did not have a material impact
on the Company&#146;s financial position or results of
operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2003, the FASB issued Interpretation
No.&nbsp;46, <I>Consolidation of Variable Interest Entities, an
Interpretation of ARB No.&nbsp;51, Consolidated Financial
Statements.</I> FIN&nbsp;46 requires the consolidation of
variable interest entities by the party considered to be the
primary beneficiary of that entity. The FASB amended FIN&nbsp;46
in December of 2003. The revised provisions of FIN&nbsp;46 will
be effective for the company in the first quarter of 2004. This
interpretation may be applied prospectively with a
cumulative-effect adjustment as of the date on which it is first
applied or by restating previously issued financial statements
for one or more years with a cumulative-effect adjustment as of
the beginning of the first year restated. The adoption of
FIN&nbsp;46 is not expected to have a material impact on the
Company&#146;s financial position or results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(3)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Inventories</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inventories consist of the following at
December&nbsp;31, 2001 and 2002 (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="74%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Raw materials and supplies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Finished goods
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">(4)&nbsp;Property and Equipment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and equipment consist of the following
at December&nbsp;31, 2001 and 2002 (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Land
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings and improvements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,523</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,452</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Machinery equipment and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,539</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less accumulated depreciation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-13
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(5)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Accrued Liabilities</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Accrued liabilities consist of the following at
December&nbsp;31, 2001 and 2002 (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales promotions, commissions and overrides
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,212</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,094</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued restructuring charges (Note 10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Compensation and other benefit accruals
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,507</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State and local sales taxes and other taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,812</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized losses on forward contracts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,480</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(6)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Debt</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Debt consists of the following at
December&nbsp;31, 2001 and 2002 (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="74%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Subordinated Notes, unsecured, interest payable
    semi-annually at 11.75% due in 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Term loan, secured, principal and interest due in
    quarterly installments through April&nbsp;30, 2004, interest
    rates at 4.3% and 3.1% at December&nbsp;31, 2001 and 2002,
    respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revolving loan, secured, due April&nbsp;30, 2004,
    weighted average interest rates of 5.4% at December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unsecured foreign bank loan agreement, principal
    and interest due in monthly installments through January 25,
    2005, weighted average interest rates of 18.7% and 18.5% at
    December&nbsp;31, 2001 and 2002, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,609</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less current maturities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,901</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s long-term debt matures as
follows (in thousands): $6,489 in 2003, $2,714 in 2004, $0 in
2005, 2006 and 2007, and $75,180 thereafter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;30, 1998, JCI and Jafra S.A.
borrowed $125&nbsp;million by issuing $100&nbsp;million
aggregate principal amount of 11.75% Subordinated Notes due 2008
(the &#147;Notes&#148;) pursuant to an Indenture dated
April&nbsp;30, 1998 (the &#147;Indenture&#148;) and
$25&nbsp;million under a senior credit agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the date of issuance, the Notes represented
the several obligations of JCI and Jafra S.A. in the amount of
$60&nbsp;million and $40&nbsp;million, respectively, with each
participating on a pro rata basis upon redemption. The Notes
mature in 2008 and bear a fixed interest rate of 11.75% payable
semi-annually.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of JCI and Jafra S.A. is an indirect, wholly
owned subsidiary of the Parent and has fully and unconditionally
guaranteed the obligations under the Notes of the other on a
senior subordinated basis, subject to a 30-day standstill period
prior to enforcement of such guarantees. In addition, CDRJ has
fully and unconditionally guaranteed the Notes on a senior
subordinated basis. JCI currently has no U.S.&nbsp;subsidiaries.
Each acquired or organized U.S.&nbsp;subsidiary of JCI will also
be required to fully and
</FONT>

<P align="center"><FONT size="2">F-14
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">unconditionally guarantee the Notes jointly and
severally, on a senior subordinated basis. Each existing
subsidiary of Jafra S.A. fully and unconditionally guarantees
the Notes jointly and severally, on a senior subordinated basis,
and each subsequently acquired or organized subsidiary of Jafra
S.A. will fully and unconditionally guarantee the Notes jointly
and severally, on a senior subordinated basis. The nonguarantor
entities are the Parent&#146;s indirect European subsidiaries in
Austria, Germany, Italy, the Netherlands, Poland, and
Switzerland; its indirect South American subsidiaries in
Argentina, Brazil, Chile, Colombia, Peru, and Venezuela; and its
indirect subsidiaries in the Dominican Republic and Thailand.
All guarantor and nonguarantor entities are either direct or
indirect wholly owned subsidiaries of the Parent. The Notes were
registered in a registered exchange offer, effective as of
January&nbsp;25, 1999, under the Securities Act of 1933, as
amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Notes are unsecured and are generally
non-callable for five years. Thereafter, the Notes will be
callable at premiums declining to par in the eighth year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Consents and waivers, dated June&nbsp;30, 2001
and November&nbsp;19, 1999, to the senior credit agreement, as
described below, allow the Company to repurchase the Notes in
the open market from time to time, with the aggregate purchase
price for all such Notes repurchased not to exceed
$50&nbsp;million. Aggregate repurchases as of December&nbsp;31,
2002 were $24.8&nbsp;million. During 2000, the Company retired
Notes of JCI and Jafra S.A., prior to maturity, with a face
value of $6.5&nbsp;million and $4.3&nbsp;million, respectively.
The debt repurchases in 2000 resulted in a loss on early
extinguishment of debt of $510,000. In connection with the early
extinguishment of the Notes, $733,000 of the unamortized
deferred financing costs was written off and included in the
determination of the loss on early extinguishment of debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, JCI and Jafra S.A. entered into a
senior credit agreement that provides for senior secured credit
facilities in an aggregate principal amount of $90&nbsp;million,
consisting of a multicurrency revolving credit facility of
$65&nbsp;million and a term loan facility of $25&nbsp;million.
Borrowings under the term loan facility are payable in quarterly
installments of principal and interest over six years through
April&nbsp;30, 2004. Borrowings under the revolving credit
facility mature on April&nbsp;30, 2004. Borrowings under the
senior credit agreement currently bear interest at an annual
rate of LIBOR plus a margin of 1.625% or an alternate base rate
(the higher of the prime rate or federal funds rate plus 0.5%,
plus an applicable margin of 0.625%). The interest rate in
effect at December&nbsp;31, 2002 was approximately 3.1% for the
LIBOR-based borrowings. Borrowings under the senior credit
agreement are secured by substantially all of the assets of JCI
and Jafra S.A. No amounts were outstanding under the revolving
credit facility at December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Both the Indenture and the senior credit
agreement contain certain covenants that limit the
Company&#146;s ability to incur additional indebtedness, pay
cash dividends and make certain other payments. These debt
agreements also require the Company to maintain certain
financial ratios including a minimum EBITDA to cash interest
expense coverage ratio and a maximum debt to EBITDA ratio.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the year ended December&nbsp;31, 2001,
Jafra S.A. repaid the balance remaining under a one-year term
loan originally due on August&nbsp;16, 2001, and entered into an
unsecured foreign bank loan agreement. Under this agreement,
Jafra S.A. had the peso equivalent of $828,000 outstanding at
December&nbsp;31, 2002 at a weighted average fixed interest rate
of 18.5%. Principal and interest payments are due monthly
through January&nbsp;25, 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2002, the Company had
irrevocable standby letters of credit outstanding totaling
$2.8&nbsp;million. These letters of credit, expiring on various
dates through February&nbsp;17, 2003, collateralize the
Company&#146;s obligation to a third-party in connection with
certain lease agreements.
</FONT>

<P align="center"><FONT size="2">F-15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">(7)&nbsp;Income Taxes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s income before income taxes
consists of the following (amounts in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from continuing operations before income
    taxes and cumulative effect of accounting change:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">United States
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,530</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,381</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,868</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,831</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,398</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Actual income tax expense differs from the
&#147;expected&#148; tax expense (computed by applying the
U.S.&nbsp;Federal corporate rate of 35% to income before income
taxes) as a result of the following:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for income taxes at federal statutory
    rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,643</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign income subject to tax other than at
    federal statutory rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,339</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign tax and other credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,724</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,230</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,312</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">544</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance&nbsp;&#151; domestic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(616</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">944</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance&nbsp;&#151; foreign
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(64</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-16
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of the provision for income taxes
are as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Federal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">178</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexico
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,177</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Europe
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(297</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,088</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">544</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred&nbsp;&#151; foreign
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,539</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(646</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred&nbsp;&#151; domestic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,407</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign deferred allocated to other comprehensive
    income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,311</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(783</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total deferred
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total income taxes on income before income taxes
    and cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense on cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,269</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-17
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of deferred income tax assets and
deferred income tax liabilities at December&nbsp;31, 2001 and
2002 are as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,733</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net operating loss carryforward
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Disallowed interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued bonuses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign tax and other credit carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,193</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued sales promotions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,977</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,776</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,738</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total deferred income tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,687</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,966</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less valuation allowance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,114</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,804</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net deferred income tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Transaction and deferred financing costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(494</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(235</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,194</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,406</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trademark and goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,272</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,129</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,399</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,914</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(564</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,737</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total deferred income tax liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(38,923</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(34,421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net deferred income tax liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,350</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23,259</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company records a valuation allowance on the
deferred income tax assets to reduce the total to an amount that
management believes is more likely than not to be realized. The
valuation allowances at December&nbsp;31, 2001 and 2002 were
based upon the Company&#146;s estimates of the future
realization of deferred income tax assets. Valuation allowances
at December&nbsp;31, 2001 and 2002 were provided principally to
offset operating loss carryforwards and, foreign tax credit
carryforwards of the Company&#146;s U.S., European and South
American subsidiaries. Valuation allowances at December&nbsp;31,
2002 were also provided to offset certain pretax expenses at the
company&#146;s U.S. subsidiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, the Company&#146;s
deferred income tax assets for carryforwards totaled
$17,615,000, comprised of U.S. foreign and foreign asset tax
credits of $4,775,000, alternative minimum tax and research and
development credits of $558,000 and tax loss carryforwards of
certain foreign subsidiaries of $12,282,000. At
December&nbsp;31, 2002, the Company&#146;s deferred income tax
assets for carryforwards totaled $14,531,000 comprised of
foreign asset and other credit carryforwards of $2,193,000 and
net operating loss carryforwards of $12,338,000. These deferred
income tax assets were reduced by a valuation allowance of
$14,114,000 and $14,804,000 as December&nbsp;31, 2001 and 2002,
respectively. The tax loss and certain credit carryforwards
expire in varying amounts between 2003 and 2012. Realization of
the income tax carryforwards is dependent on generating
sufficient taxable income prior to expiration of the
carryforwards. Although realization is not assured, management
believes it is more likely than not that the net carrying value
of the income tax carryforwards will be realized.
</FONT>

<P align="center"><FONT size="2">F-18
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income tax expense for the year ended
December&nbsp;31, 2002 was reduced by $1,169,000 as the result
of the enactment of changes in the Mexico corporate statutory
tax rate and the related impact on Jafra&nbsp;S.A.&#146;s net
deferred income tax liabilities. The enactment in Mexico will
reduce the Mexico corporate income tax rate annually in
one-percent increments from 35% to 32% beginning January&nbsp;1,
2003 through 2005.
</FONT>

<P align="left">
<B><FONT size="2">(8)&nbsp;Benefit Plans</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain employees of the Company&#146;s German
subsidiary participate in a defined benefit pension plan
covering key employees (the &#147;Germany Plan&#148;). Benefits
are based on age, years of service and the level of compensation
during the final years of employment. The Company&#146;s funding
policy is to contribute annually to the Germany Plan the amount
necessary to meet the minimum funding standards. The Company
recognized pension income of $18,000 for the year ended
December&nbsp;31, 2000 due to the departure of certain employees
and recognized pension expense of $278,000 and $48,000 for the
years ended December&nbsp;31, 2001 and 2002, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican labor laws, employees of Jafra S.A.
and its subsidiaries are entitled to a payment when they leave
the Company if they have fifteen or more years of service. In
addition, the Company makes government mandated employee profit
sharing distributions equal to ten percent of the taxable income
of the subsidiary in which they are employed. Total expense
under these programs was $345,000, $995,000 and $1,222,000 for
the years ended December&nbsp;31, 2000, 2001 and 2002,
respectively. The total liability was approximately $1,010,000
and $1,724,000 at December&nbsp;31, 2001 and 2002, respectively,
and is classified as a noncurrent liability in the accompanying
consolidated balance sheets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s U.S. subsidiary has an
employee savings plan which permits participants to make
voluntary contributions by salary deferrals pursuant to section
401(k) of the Internal Revenue Code, which allows employees to
defer up to 20% of their total compensation, subject to
statutory limitations. Employee contributions of up to 10% of
compensation are matched by the Company at the rate of 50 cents
per dollar. Employees do not vest in the Company contribution
until they have reached two years of service, at which time they
become fully vested. The Company&#146;s expense under this
program was $620,000, $600,000 and $618,000 for the years ended
December&nbsp;31, 2000, 2001 and 2002, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s U.S. subsidiary also has a
supplemental excess benefit savings plan, which permits
participants to make unlimited voluntary contributions. Employee
contributions are matched on the same basis as under the
employee savings plan, and the vesting provisions are the same.
The Company&#146;s expense under this program was $213,000,
$177,000 and $207,000 for the years ended December&nbsp;31,
2000, 2001 and 2002, respectively. Employee and employer
contributions under such plan are placed into a
&#147;rabbi&#148; trust exclusively for the uses and purposes of
plan participants and general creditors of the Company. The
Company has recorded an asset and the related liability in the
accompanying consolidated balance sheets of $1,880,000 and
$2,411,000 at December&nbsp;31, 2001 and 2002, respectively.
</FONT>

<P align="left">
<B><FONT size="2">(9)&nbsp;Related Party Transactions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to a consulting agreement entered into
following the Acquisition, until the 10th anniversary of the
Acquisition or the date on which CD&#38;R Fund&nbsp;V no longer
has a direct or indirect investment in the Company or until the
termination by either party with 30&nbsp;days notice, CD&#38;R
will receive an annual fee (and reimbursement of out-of-pocket
expenses) for providing advisory, management consulting and
monitoring services to the Company. On January&nbsp;1, 2000, the
annual fee was $400,000. As of January&nbsp;1, 2001, the annual
fee was increased to $1,000,000. As required by the terms of the
Company&#146;s lending arrangements, such fees are determined by
arm&#146;s-length negotiation and are believed by the Company to
be reasonable. The amendment, effective January&nbsp;1, 2001,
adds to CD&#38;R&#146;s services under the agreement financial
advisory, investment banking and similar services with respect
to future
</FONT>

<P align="center"><FONT size="2">F-19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">proposals for an acquisition, merger,
recapitalization, or other similar transaction directly or
indirectly involving the Company or any of its subsidiaries. The
fee for such additional services in connection with future
transactions would be an amount equal to 1% of the transaction
value for the transaction to which such fee relates. Such
transaction fees may be increased upon approval of a majority of
the members of the Company&#146;s Board of Directors who are not
employees of the Company, CD&#38;R or any affiliate of CD&#38;R.
The amendment also provides that if any employee of CD&#38;R is
appointed to an executive management position (or a position of
comparable responsibility) in the Company or any of its
subsidiaries, the annual fee will be increased by an amount to
be determined by CD&#38;R, the amount of such increase not to
exceed 100% of the existing annual fee in effect at that time.
The CD&#38;R fees incurred during the years ended
December&nbsp;31, 2000, 2001 and 2002 were $400,000, $1,000,000
and $1,000,000, respectively. In addition, certain officers and
directors of CD&#38;R or its affiliates serve as directors of
the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to 2000, the Company engaged Guidance
Solutions (&#147;Guidance&#148;), a corporation in which an
investment fund managed by CD&#38;R has an investment, to
develop its e-commerce systems. Under the agreement entered into
by the Company and Guidance, the Company agreed to pay fees of
approximately $2.0&nbsp;million to Guidance in connection with
planning, defining, designing and consulting services performed
related to the Company&#146;s e-commerce initiative. During the
year ended December&nbsp;31, 2000, the Company paid fees to
Guidance of $1,798,000. The Company terminated its agreement
with Guidance and executed a settlement and mutual release
agreement effective September&nbsp;30, 2000. Upon execution of
this agreement in October of 2000, Guidance paid the Company
$25,000 and agreed to pay the Company an aggregate additional
sum of $475,000, payable in quarterly installments plus interest
at 9.5% per annum, beginning in January 2001 through October
2005. At December&nbsp;31, 2002, the balance was paid in full.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members of management financed a portion of the
cash purchase price of the shares of CDRJ common stock they
acquired through loans from the Chase Manhattan Bank on market
terms. To help members of management obtain such terms for such
financing, CDRJ fully and unconditionally guaranteed up to 75%
of the purchase price for the shares of Company common stock
purchased by each such member of management in 1998 and 2000. As
of December&nbsp;31, 2002, the outstanding guarantee was
$2,145,000.
</FONT>

<P align="left">
<B><FONT size="2">(10)&nbsp;Restructuring and Impairment Charges
and Related Accruals</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Prior Years Restructuring and Impairment
Charges. </FONT></I><FONT size="2">During 2001, the Company
wrote-off $0.2&nbsp;million of intangible assets as the Company
determined that the undiscounted cash flows were less than the
carrying amount of the assets due to a downturn in the political
and economic environment in Argentina. The amount was classified
in selling, general and administration in the accompanying
consolidated statements of income. In 2000, the Company recorded
approximately $1.6&nbsp;million of restructuring charges and
approximately $1.0&nbsp;million of asset impairment charges. The
restructuring charges of approximately $1.6&nbsp;million related
to the Company&#146;s repositioning activities in Europe,
primarily severance costs, of which $1.4&nbsp;million was paid
in 2000 and 2001 and the remaining $0.2&nbsp;million was paid in
2002. The asset impairment charges of $1.0&nbsp;million
consisted of approximately $0.3&nbsp;million related to the
Company&#146;s repositioning activities in Europe and
approximately $0.7&nbsp;million relating to the write-down of
certain capitalized computer software costs in the United States.
</FONT>

<P align="center"><FONT size="2">F-20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of the additions and/or
adjustments to the aforementioned accruals include severance,
lease costs, fixed asset disposals, and other exit costs, and
are summarized as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Years&nbsp;Ended&nbsp;December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additions&nbsp;&#151; charges to income:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Severance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lease costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total additions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A rollforward of the activity of the
restructuring accruals is summarized as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opening balance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">699</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charges against reserves
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,013</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(498</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(201</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ending balance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">699</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The remaining costs at each year-end included in
the restructuring accrual are summarized as follows (in
thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Severance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lease costs and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">314</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">699</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal component of the restructuring
accruals was severance. A summary of the severance activity is
as follows (dollar amounts in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1"># of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1"># of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Employees</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Employees</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opening balance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Planned terminations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustment to planned terminations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Actual terminations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,930</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(301</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ending balance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(11)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Financial Reporting for Business
    Segments</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Segment information has been prepared in
accordance with SFAS&nbsp;No.&nbsp;131, &#147;Disclosure about
Segments of an Enterprise and Related Information&#148;
(&#147;SFAS&nbsp;131&#148;). SFAS&nbsp;No.&nbsp;131 requires
disclosure of certain information regarding operating segments,
products and services, geographic areas of operations and major
customers.
</FONT>

<P align="center"><FONT size="2">F-21
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s business is comprised of one
industry segment, direct selling, with worldwide operations. The
Company is organized into geographical business units that each
sell the full line of Jafra cosmetics, skin care, body care,
fragrances, and other products. The Company has three reportable
business segments: Mexico, the United States, and Europe.
Business results for subsidiaries in South America, excluding
certain discontinued operations (see Note&nbsp;17), the
Dominican Republic, and Thailand are combined and included in
the following table under the caption &#147;All Others.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accounting policies used to prepare the
information reviewed by the Company&#146;s chief operating
decision makers are the same as those described in the summary
of significant accounting policies. The Company evaluates
performance based on segment operating income, excluding
reorganization and restructuring charges, unusual gains and
losses, and amortization of goodwill and intangibles. Consistent
with the information reviewed by the Company&#146;s chief
operating decision makers, corporate costs, foreign exchange
gains and losses, interest expense, other nonoperating income or
expense, and income taxes are not allocated to operating
segments. The effects of intersegment sales (net sales and
related gross profit) are excluded from the computation of
segment operating income.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Corporate,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unallocated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consolidated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexico</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Others</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Segments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(Dollars in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Year ended December&nbsp;31, 2000</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">199,777</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,709</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,987</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26,944</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,389</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">905</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,262</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,662</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,712</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,712</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Year ended December&nbsp;31, 2001</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247,514</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79,611</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,975</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365,429</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365,429</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,861</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,803</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22,398</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,908</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,709</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">610</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,529</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">193,379</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67,792</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,788</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">286,571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(360</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">286,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Year ended December&nbsp;31, 2002</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">251,546</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92,143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,932</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382,644</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382,644</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,224</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,579</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,864</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,631</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">384</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">178,629</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82,532</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,673</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(657</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-22
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additional business segment information regarding
product lines is as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sales by</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sales by</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sales by</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($ in millions)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Sales</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($ in millions)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Sales</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($ in millions)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Sales</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Skin care
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Color cosmetics
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fragrances
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Body care and personal care
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Subtotal before shipping and other fees less
    commissions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">303.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">354.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">370.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shipping and other fees less commissions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="5%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes sales aids (e.g., party hostess gifts,
    demonstration products, etc.) and training materials, which
    typically do not qualify for commissions or overrides.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(12)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Commitments and Contingencies</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company leases office and warehouse
facilities as well as manufacturing, transportation and data
processing equipment under operating leases which expire at
various dates through 2008. The leases contain certain renewal
options and require payment of property taxes, utilities, common
area maintenance and insurance and contain rent escalation
clauses based on consumer price indices. Future minimum lease
payments under noncancelable operating leases as of
December&nbsp;31, 2002 are (in thousands):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,553</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Rental expense was $5,629,000, $3,149,000 and
$3,398,000 for the years ended December&nbsp;31, 2000, 2001 and
2002, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other income for 2000 included approximately
$1.4&nbsp;million of income related to a recovery of the effect
of inflation from a receivable due from the Mexican government
related to taxes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, the Company initiated product
replacement for a certain product sold in 2001 and 2002. The
total cost of the product replacement is approximately $400,000.
However, management believes
</FONT>

<P align="center"><FONT size="2">F-23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">that the majority of the cost will be recovered
pursuant to contractual obligations with the third-party
manufacturer. (See Note&nbsp;14).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has implemented a structure in a
certain foreign jurisdiction to minimize import taxes. While
management believes this structure adequately protects and
minimizes the Company&#146;s exposure to import taxes, the
Company may be adversely impacted if this structure does not
withstand challenges by local tax authorities. Management
believes that the resolution of a tax authority challenge, if
any, will not have a material adverse effect on the
Company&#146;s business, financial condition or results of
operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is involved from time to time in
routine legal matters incidental to its business. The Company
believes that the resolution of such matters will not have a
material adverse effect on the Company&#146;s business,
financial condition or results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(13)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Management Incentive Arrangements</FONT></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Company Plan</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective 1998, CDRJ adopted a stock incentive
plan (the &#147;Stock Incentive Plan&#148;), which provides for
the sale to members of senior management of up to
52,141&nbsp;shares of common stock of CDRJ and the issuance of
options to purchase up to 104,282 additional shares of common
stock. CDRJ reserved 156,423&nbsp;shares for issuance under the
Stock Incentive Plan, and as of December&nbsp;31, 2002,
42,121&nbsp;shares and 84,242&nbsp;options were outstanding. A
summary of the status and activity of shares purchased under the
Stock Incentive Plan is as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price Per</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Share</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares outstanding at December&nbsp;31, 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,392</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares issued in 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options exercised in 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares repurchased in 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(948</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares outstanding at December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares issued in 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">474</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options exercised in 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares repurchased in 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(589</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares outstanding at December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares issued in 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options exercised in 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares repurchased in 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares outstanding at December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase price of shares issued in 2000 and
2001 and options exercised in 2000 and 2001 represented the
estimated fair value at the respective dates of issuance and
exercise, except as discussed below. In 2000, 316&nbsp;shares
were issued at a price below fair value, and the Company
recognized compensation expense of approximately $19,000. In
2001, 210 shares were issued at a price below fair value, and
the Company recognized compensation expense of approximately
$21,000. Under certain circumstances, the management
stockholders can require CDRJ to repurchase their shares,
subject to a holding period of at least seven months from the
date such shares were acquired, for an amount not to exceed fair
value.
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the purchase of common stock
of CDRJ, certain members of senior management were granted
options to purchase two additional shares of common stock for
each share purchased at an exercise price equal to the fair
value at the date of grant under the Stock Incentive Plan. The
options have a life of ten years from the date of grant. Fifty
percent of the options granted are expected to vest in three
equal installments on each of the first three anniversaries of
the date of grant, subject to the continuous employment of the
grantee (&#147;Option Type&nbsp;1&#148;). The remaining fifty
percent of the options become vested as follows, subject to the
continuous employment of the grantee: (a)&nbsp;up to one-third
of the options become vested as of each of the first three
anniversaries of the date of grant if the Company achieves at
least 85% of its EBITDA target for the immediately preceding
fiscal year, (b)&nbsp;if less than one-third of the total number
of options shall have become vested as provided in
clause&nbsp;(a) above, the portion that has not become so vested
shall become vested as of the first day of the fiscal year
following the fiscal year, if any, that the Company achieves its
cumulative EBITDA target, and (c)&nbsp;any options that do not
become vested as provided above will become vested on the ninth
anniversary of the date of grant (&#147;Option
Type&nbsp;2&#148;). A summary of the status and activity of the
options under the Stock Incentive Plan is as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111.69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">948</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercised
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(158</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(210</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Canceled
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,422</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(548</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding at year-end
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111.69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options exercisable at year-end
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,655</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,615</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options available for grant
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,493</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,093</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,093</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes information about
options outstanding as of December&nbsp;31, 2002:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining Contractual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Life (Yrs.)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$100.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,256</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$150.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">948</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$210.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,615</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company applies Accounting Principles Board
Opinion No.&nbsp;25, &#147;Accounting for Stock Issued to
Employees&#148;, and related Interpretations in accounting for
these options. As the options were granted with exercise prices
equal to the fair value at the date of grant, no compensation
cost was recognized by the Company upon issuance of such
options. The fair value of each option granted by the Company was
</FONT>

<P align="center"><FONT size="2">F-25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">estimated using the minimum value option pricing
model. The assumptions used in this pricing model and the
weighted average fair value of options granted during 2001 and
2000 are summarized as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Option</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Option</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Option</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Option</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Type 1</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Type 2</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Type 1</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Type 2</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risk-free interest rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expected option life (in years)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expected volatility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expected dividend yield
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average fair value per option
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73.97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Pro Forma Compensation Cost</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Had the Company recorded compensation cost based
on the fair value of options granted at the grant date, as
prescribed by FASB Statement No.&nbsp;123 &#147;Accounting for
Stock Based Compensation,&#148; pro forma net income would have
been as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income, as reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma compensation cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Employment Agreements</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain senior executive officers have employment
agreements which provide for annual bonuses if the Company
achieves the performance goals established under its annual
incentive plan for executives. The Company has a bonus plan for
U.S. based employees which provides that 50% of the bonus earned
by any Vice President or Director shall be deferred and shall
vest in three equal annual installments. As of December&nbsp;31,
2001 and 2002, $372,000 and $415,000 of bonuses were deferred,
respectively. The Company recognizes compensation expense as the
vesting requirements are met.
</FONT>

<P align="left">
<B><FONT size="2">(14)&nbsp;Manufacturing Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company and a third-party contractor (the
&#147;Contractor&#148;) entered into a manufacturing agreement,
dated as of June&nbsp;10, 1999, (the &#147;Manufacturing
Agreement&#148;). Subject to the terms and conditions of the
Manufacturing Agreement, the Contractor has agreed to
manufacture all of the Company&#146;s requirements for certain
cosmetic and skin care products for an initial term of five
years. Following the expiration of the initial five-year term,
the Manufacturing Agreement will be automatically extended for
additional one-year terms unless terminated by six months&#146;
prior written notice by either party. The Manufacturing
Agreement provides for price renegotiations by the Contractor if
the Company&#146;s quarterly or annual purchase volume falls
below specified minimums. The Manufacturing Agreement requires
the Contractor to maintain insurance to cover costs associated
with any product liability or product recall caused by the acts
or omissions of the Contractor. In addition, the Company is
obligated to purchase materials acquired by the contractor based
upon product forecasts provided by the Company if the Contractor
is unable to sell such materials to a third-party. There have
been no such repurchases to date. The Contractor is solely
responsible for obtaining the inventories, manufacturing the
inventories at its current location in Chino, California,
complying with applicable laws and regulations, and performing
quality assurance functions.
</FONT>

<P align="center"><FONT size="2">F-26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the fourth quarter of 2000, the Contractor
obtained $1,000,000 of advances from the Company in exchange for
an unsecured promissory note. The note bears interest at an
annual rate of 9% and is payable in monthly installments
commencing on February&nbsp;15, 2001. On April&nbsp;15, 2002,
the unsecured promissory note was amended to advance an
additional $320,000 to the contractor. At December&nbsp;31, 2001
and 2002, approximately $349,000 and $101,000, of the note was
outstanding and was included in receivables in the accompanying
consolidated balance sheets, respectively.
</FONT>

<P align="left">
<B><FONT size="2">(15)&nbsp;Foreign Currency Forward and Option
Contracts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is exposed to currency risk relating
to its forecasted U.S.&nbsp;dollar-denominated expenditures at
Jafra S.A. As part of its overall strategy to reduce the risk of
adverse potential exchange rate fluctuations in Mexico, the
Company enters into foreign currency exchange contracts. Prior
to March 2002, the Company purchased forward exchange contracts
(&#147;forward contracts&#148; or &#147;forwards&#148;) to hedge
its foreign currency exposures to the Mexican peso. In March
2002, in accordance with previously approved policies, the
Company modified its hedging program to include the use of
foreign currency option contracts (&#147;option
contracts&#148;). The Company places forward contracts or option
contracts based on its forecasted U.S. dollar cash outflows from
Jafra S.A. over a rolling 12&nbsp;month period and does not
hedge transactions that are not included in the 12&nbsp;month
forecast on the date the forward contract is initiated. As a
matter of policy, the Company does not hold or issue forward
contracts for trading or speculative purposes nor does it enter
into contracts or agreements containing &#147;embedded&#148;
derivative features. Prior to entering into forward contracts or
option contracts, the Company evaluates the counter
parties&#146; credit ratings. Credit risk represents the
accounting loss that would be recognized at the reporting date
if counter parties failed to perform as contracted. The Company
does not currently anticipate non-performance by such counter
parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective January&nbsp;1, 2001, the Company
adopted SFAS No.&nbsp;133, &#147;Accounting for Derivative
Instruments and Hedging Activities.&#148; SFAS No.&nbsp;133, as
amended and interpreted, establishes accounting and reporting
standards for derivative instruments and hedging activities and
requires that all derivative instruments be recorded based on
fair value. In connection with the adoption of SFAS
No.&nbsp;133, at January&nbsp;1, 2001, the Company recorded a
net gain of $126,000 (net of a tax effect of $82,000) as a
cumulative transition adjustment to earnings. This adjustment
relates to derivatives not designated as hedges prior to
adoption of SFAS No.&nbsp;133, and represents the difference
between the carrying value and the fair value of such
instruments. Under SFAS No.&nbsp;133, the Company&#146;s use of
forward contracts or option contracts to hedge certain
forecasted transactions does qualify for hedge accounting. Gains
and losses from such derivatives are deferred as a separate
component of other comprehensive loss, and are recognized in
income at the same time that the underlying hedged exposure is
recognized in income. This accounting treatment results in the
matching of gains and losses from such forward contracts or
option contracts with the corresponding gains and losses
generated by the underlying hedged transactions. Contracts that
do not qualify for hedge accounting under SFAS No.&nbsp;133 are
remeasured based on fair value and the gains and losses are
included as a component of net income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The forward contracts utilized by the Company did
not qualify for hedge accounting under the applicable accounting
standards prior to adoption of SFAS No.&nbsp;133 on
January&nbsp;1, 2001, and accordingly such instruments were
marked-to-market with gains and losses included as a component
of exchange loss in the statements of income for the year ended
December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company currently designates certain of its
forward contracts and option contacts as cash flow hedges of
forecasted U.S.&nbsp;dollar-denominated inventory purchases,
forecasted U.S.&nbsp;dollar-denominated intercompany charges
from JCI to Jafra S.A., forecasted management fee charges from
JCI to Jafra S.A., and U.S.&nbsp;dollar-denominated interest
payments. On the date the Company enters into a derivative
contract, management designates the derivative as a hedge of the
identified exposure. The Company
</FONT>

<P align="center"><FONT size="2">F-27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">formally documents all relationships between
hedging instruments and hedged items, as well as its
risk-management objective and strategy for undertaking various
hedge transactions. In this documentation, the Company
specifically identifies the forecasted transaction that has been
designated as a hedged item and states how the hedging
instrument is expected to hedge the risks related to the hedged
item. The Company formally measures effectiveness of its hedging
relationships both at the hedge inception and on an ongoing
basis in accordance with its risk management policy. For all
qualifying and highly effective cash flow hedges, the changes in
the fair value of the derivative are deferred as a component of
other comprehensive loss. Such amounts will be reclassified from
other comprehensive loss into net income when the underlying
hedged exposure is recognized in income. For U.S.
dollar-denominated inventory purchases, this will occur upon
sale to an outside party of the related inventory. For
intercompany charges and interest, this will occur at the date
such charges are recorded by Jafra S.A.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the year ended December&nbsp;31, 2002, the
Company recognized losses of approximately $2,605,000 on forward
contracts and gains of approximately $886,000 on option
contracts (including reclassification of other comprehensive
loss) as a component of exchange loss in the accompanying
consolidated statements of income. During the year ended
December&nbsp;31, 2001, the Company recognized approximately
$12,188,000 of losses on forward contracts as a component of
exchange loss in the accompanying consolidated statements of
income. During the year ended December&nbsp;31, 2000, the
Company recognized approximately $10,050,000 of losses as a
component of exchange loss on forward contracts that did not
qualify for hedge accounting under accounting standards prior to
the adoption of SFAS No.&nbsp;133.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, during the year ended
December&nbsp;31, 2001, the Company deferred as a component of
other comprehensive loss $5,504,000 of losses on forward
contracts qualifying for hedge accounting under SFAS
No.&nbsp;133. Of this amount, approximately $797,000 was
reclassified as exchange loss and $961,000 was reclassified as
cost of sales upon recognition of the underlying hedged exposure
prior to December&nbsp;31, 2001. As of December&nbsp;31, 2001,
the Company had deferred as a component of other comprehensive
income (loss) $3,746,000 of losses on forward contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the year ended December&nbsp;31, 2002, the
Company deferred approximately an additional $1,782,000 of
losses on forward contracts qualifying for hedge accounting
under SFAS No.&nbsp;133. Of the total amount deferred, during
the year ended December&nbsp;31, 2002, approximately $1,650,000
of other comprehensive loss was reclassified into exchange loss
and approximately $3,139,000 was reclassified into cost of sales
upon the recognition of the underlying hedged exposure. The
Company expects that substantially all of the remaining loss of
$739,000, deferred as a component of other comprehensive loss,
will be recognized into income within the next twelve months.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the year ended December&nbsp;31, 2002, the
Company deferred as a component of other comprehensive loss
$1,336,000 of gains on option contracts qualifying for hedge
accounting under SFAS No.&nbsp;133. Of this amount,
approximately $483,000 of other comprehensive loss was
reclassified to exchange loss and approximately $378,000 was
reclassified as a cost of sales offset upon the recognition of
the underlying hedged exposure. The Company expects
substantially all of the remaining gain of approximately
$475,000, deferred as a component of other comprehensive loss,
to be recognized into income within the next twelve months.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of the forward contacts at
December&nbsp;31, 2001 represented an unrealized loss of
$5,540,000 consisting of $2,920,000 of unrealized losses
recorded as a component of other comprehensive loss for
qualifying hedges and $2,620,000 of unrealized losses recorded
as a component of exchange loss for non-qualifying hedges under
SFAS No.&nbsp;133. As of December&nbsp;31, 2002, the Company had
no outstanding forward contracts. The fair value of the option
contracts at December&nbsp;31, 2002 represented an unrealized
gain of approximately $402,000, consisting of $382,000 of
unrealized gains recorded as a component of
</FONT>

<P align="center"><FONT size="2">F-28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">other comprehensive loss for qualifying hedges
and $20,000 of unrealized gains for non-qualifying hedges under
SFAS No.&nbsp;133.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the year ended December&nbsp;31, 2002, the
ineffectiveness generated by the Company&#146;s forward
contracts and option contracts designated as hedges was
insignificant. Certain hedged forecasted transactions do not
appear probable of occurring due to timing differences between
the original and current forecasts, and accordingly $164,000 of
gains were reclassified into earnings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The outstanding option contracts had a notional
value denominated in Mexican pesos of 523,000,000 in put and
call positions at December&nbsp;31, 2002 and mature at various
dates through December&nbsp;31, 2003. The outstanding forward
contracts had notional values denominated in Mexican pesos of
688,873,000 at December&nbsp;31, 2001 and matured in 2002.
Notional amounts do not quantify market or credit exposure or
represent assets or liabilities of the Company, but are used in
the calculation of cash settlements under the contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table provides information about
the details of the Company&#146;s option contracts as of
December&nbsp;31, 2002 (in thousands):
</FONT>

<P align="left">
<B><FONT size="2">At December&nbsp;31, 2002:</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Coverage in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Foreign Currency</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexican Pesos</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Strike Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S. Dollars(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Maturity Date</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchased Puts (Company may sell Peso/buy USD)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.31-10.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(113</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Jan.-Mar. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.05-12.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Apr.-June 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.76-12.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">July-Aug 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.51-12.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Oct.-Dec. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Written Calls (Counterparty may buy Peso/sell USD)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.01-9.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(207</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Jan.-Mar. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.50-9.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(144</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Apr.-June 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.69-10.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">July-Aug 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.15-10.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Oct.-Dec. 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(518</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The fair value of the option contracts presented
    above, an unrealized gain of $402,000 at December&nbsp;31, 2002,
    represents the carrying value and has been recorded in other
    receivables in the accompanying consolidated balance sheets.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The tables below describe the forward contracts
that were outstanding at December&nbsp;31, 2001 (in thousands):
</FONT>

<P align="left">
<B><FONT size="2">December&nbsp;31, 2001:</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Forward Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">In Mexican</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Maturity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value in</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Foreign Currency</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pesos(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Contract Rate</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S. Dollars(1)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1/31/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sell Mexican Peso/buy US Dollar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1/31/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/28/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">756</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sell Mexican Peso/buy US Dollar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/28/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3/27/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sell Mexican Peso/buy US Dollar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3/27/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/30/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sell Mexican Peso/buy US Dollar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(30,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/30/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5/31/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">559</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sell Mexican Peso/buy US Dollar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5/31/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6/28/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sell Mexican Peso/buy US Dollar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(30,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6/28/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7/31/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8/30/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9/30/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10/31/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buy US Dollar/sell Mexican Peso
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11/29/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">688,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,540(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Fair Value of the forward positions presented
    above, an unrealized loss of $5,540,000 at December&nbsp;31,
    2001, represents the carrying value of the forward contracts and
    has been recorded in accrued liabilities in the accompanying
    consolidated balance sheets.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">(16)&nbsp;Fourth Quarter Adjustments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the fourth quarter of 2001, the Company
recorded a total of approximately $4,288,000 to bad debt expense
due to declining consultant liquidity as a result of the general
slowdown of the economy in Mexico and Brazil. During the fourth
quarter of 2000, the Company recorded certain adjustments
related to changes in cost accounting estimates, which resulted
in an increase to cost of sales of approximately $3,000,000.
</FONT>

<P align="left">
<B><FONT size="2">(17)&nbsp;Discontinued Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company discontinued its operations in
Venezuela, Colombia, Chile and Peru. The Company has terminated
sales in these markets and has liquidated a majority of the
assets. Final liquidation of the assets in Venezuela, Colombia,
Chile and Peru is expected to be complete during the fourth
quarter of 2003 or early 2004. As such, the results of the
operations of these markets have been classified as discontinued
operations in all periods disclosed on the accompanying
consolidated statements of income. The assets and liabilities
from the discontinued operations have been segregated on the
accompanying consolidated balance sheets.
</FONT>

<P align="center"><FONT size="2">F-30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">Net sales and loss from discontinued operations
is as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Venezuela</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Colombia</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Chile</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Peru</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">For the Year Ended December&nbsp;31,
    2000</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,958</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (Loss) from discontinued operations, net
    of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">187</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(241</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(119</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">For the Year Ended December&nbsp;31,
    2001</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (Loss) from discontinued operations, net
    of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(321</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(152</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(185</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">For the Year Ended December&nbsp;31,
    2002</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,349</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from discontinued operations, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(651</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(109</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(397</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(285</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,442</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">The components of assets and liabilities of the
discontinued operations is as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Venezuela</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Colombia</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Chile</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Peru</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">As of December&nbsp;31, 2001</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,097</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">661</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,918</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,284</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">426</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">591</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">992</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">As of December&nbsp;31, 2002</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">195</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">663</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">372</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,419</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">222</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">363</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-31
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">(18)&nbsp;Subsequent Events</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;20, 2003, CDRJ and certain existing
and newly formed subsidiaries completed a recapitalization of
its operations by the issuance of $90&nbsp;million of new senior
secured credit facilities, consisting of a $50&nbsp;million
senior secured term loan facility and a $40&nbsp;million senior
secured revolving credit facility and the issuance of
$200&nbsp;million of 10.75% Senior Subordinated Notes due 2011
(collectively the &#147;recapitalization&#148;). The proceeds
from the recapitalization were used to repay the 11.75% Senior
Subordinated Notes due 2008 (the &#147;Notes&#148;), originally
issued April&nbsp;30, 1998, to repay all amounts outstanding
under the existing credit facilities and to make a liquidating
distribution to the shareholders of CDRJ. Jafra Worldwide
Holdings (Lux) S.&#224;r.1, a Luxembourg <I>soci&#233;t&#233;
&#224; responsabilit&#233; limit&#233;e</I>, is the liquidator
of CDRJ. In connection with the liquidation of CDRJ, the Parent,
the direct wholly owned subsidiary of CDRJ, transferred all of
its assets and liabilities, including its direct and indirect
shares of JCI, Jafra Distribution and Jafra, S.A., to Jafra
Worldwide Holdings (Lux)&nbsp;S.&#224;r.1 in exchange for all of
the common stock of Jafra Worldwide Holdings
(Lux)&nbsp;S.&#224;r.1.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distribuidora Comercial Jafra,&nbsp;S.A. de C.V.,
a <I>sociedad an&#243;nima de capital variable</I>, organized
under the laws of the United Mexican States (&#147;Jafra
Distribution&#148;) on February&nbsp;26, 2003, is owned by five
indirect wholly owned subsidiaries of Jafra Worldwide Holdings
(Lux),&nbsp;S.&#224;r.1. Jafra Distribution was organized by
CDRJ to conduct the Company&#146;s distribution business in
Mexico. The distribution business was previously conducted by
Distribuidora Venus,&nbsp;S.A. de C.V., (&#147;Venus&#148;) a
wholly owned subsidiary of Jafra,&nbsp;S.A.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the recapitalization on
May&nbsp;20, 2003, Jafra Distribution and JCI issued
$200&nbsp;million aggregate principal amount of 10.75%
Subordinated Notes due 2011 (the &#147;New Notes&#148;). The New
Notes represent several obligations of Jafra Distribution and
JCI with each participating on a pro rata basis upon redemption.
Jafra Distribution and JCI have fully and unconditionally
guaranteed the obligations under the Notes of the other on a
senior subordinated basis, subject to a 30-day standstill period
prior to enforcement of such guarantees. Jafra,&nbsp;S.A. has
fully and unconditionally guaranteed the obligations of Jafra
Distribution under the Notes, subject to a 30-day standstill
period prior to the enforcement of such guarantees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Further, in connection with the recapitalization,
the Board of Directors approved an amendment to CDRJ&#146;s
stock incentive plan to reflect the equity instruments as rights
to shares in the Parent rather than shares in CDRJ. In addition,
the Board approved a reduction in the exercise price of all
existing options of $100, $150 and $210 to $39.91, $59.86 and
$83.80, respectively, due to the recapitalization. In order to
affect this re-pricing, the exercise price per share of all
existing options of CDRJ was reduced and the awards aggregate
intrinsic value immediately after the recapitalization was not
greater than the aggregate intrinsic value immediately before
recapitalization.
</FONT>

<P align="center">
<FONT size="2">*****
</FONT>

<P align="center"><FONT size="2">F-32
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="11" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,567</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intercompany receivables
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">822</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,846</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,782</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,437</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trademarks
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,570</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred financing fees and other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,796</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281,030</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND STOCKHOLDER&#146;S EQUITY
    (DEFICIT)</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,677</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,073</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,071</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">241,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,254</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Noncurrent payable to affiliates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,407</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">179,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">338,829</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commitments and contingencies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholder&#146;s equity (deficit):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Quotas par value $100: 150 shares authorized,
    issued and outstanding in 2002 and 2003.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retained earnings (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46,432</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,268</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,382</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57,799</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281,030</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements
</FONT>

<P align="center"><FONT size="2">F-33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF
OPERATIONS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Unaudited)</FONT></B>
</DIV>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,794</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">219,218</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">212,948</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188,493</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other income (expense):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exchange loss, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,814</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,764</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,745</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,102</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on early extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,620</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(296</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from continuing operations
    before income taxes and cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,915</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,327</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from continuing operations
    before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,202</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,486</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on discontinued operations, net of income
    tax expense of $55 and $28 in 2002 and 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,099</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,053</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(244</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,053</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements
</FONT>

<P align="center"><FONT size="2">F-34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Unaudited)</FONT></B>
</DIV>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash flows from operating
    activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)&nbsp;from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,202</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,486</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">244</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from continuing operations
    before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,486</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile income (loss)&nbsp;from
    continuing operations before cumulative effect of accounting
    change to net cash (used in) provided by operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on sale of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization and write off of deferred financing
    fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for uncollectible accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,831</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset impairment charge
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized foreign exchange and derivative loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,483</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred realized foreign exchange loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,504</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in operating assets and liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,341</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(718</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,414</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,434</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable and accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(803</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,108</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes payable/prepaid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(448</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,301</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivable from affiliate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">806</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net operating activities of discontinued
    operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash (used in) provided by operating
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,254</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,704</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash flows from investing
    activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from sale of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,588</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,963</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(303</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(643</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net investing activities of discontinued
    operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,677</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,606</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash flows from financing
    activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from issuance of subordinated debt due
    2011.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from issuance of term loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Repurchase of subordinated debt due 2008.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75,180</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Repayments under term loan facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,625</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net borrowings under revolving credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,800</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Distribution of additional paid-in capital to
    shareholder
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(83,618</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Distribution payment to shareholder from retained
    earnings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(76,163</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred financing costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,449</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net repayments under bank debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(479</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(828</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash used in financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,654</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,863</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of exchange rate changes on cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,210</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(659</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (decrease)&nbsp;increase in cash and cash
    equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,832</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at beginning of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at end of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements
</FONT>

<P align="center"><FONT size="2">F-35
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(Unaudited)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(1)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Basis of Presentation</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CDRJ North Atlantic (Lux) S.&#224;r.L., a
Luxembourg <I>soci&#233;t&#233; &#224; responsabilit&#233;
limit&#233;e </I>(the &#147;Company&#148;), is a wholly-owned
subsidiary of CDRJ Investments (Lux) S.A. a Luxembourg
<I>soci&#233;t&#233; anonyme </I>(&#147;CDRJ&#148;). Jafra
Worldwide Holdings (Lux) S.&#224;r.l, a Luxembourg
<I>soci&#233;t&#233; &#224; responsabilit&#233; limit&#233;e
</I>(&#147;Worldwide&#148;) is a wholly-owned subsidiary of the
Company. CDRJ North Atlantic (Lux) S.&#224;r.L. is to be renamed
Jafra S.A.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;20, 2003, Worldwide, Jafra Cosmetics
International, Inc. (&#147;JCI&#148;) and Distribuidora
Comercial Jafra S.A. de C.V. (&#147;Jafra Distribution&#148; and
together with JCI, the &#147;Issuers&#148;) completed a
recapitalization of their operations by entering into
$90&nbsp;million of new senior secured credit facilities,
consisting of a $50&nbsp;million senior secured term loan
facility and a $40&nbsp;million senior secured revolving credit
facility and issuing $200&nbsp;million of 10&nbsp;3/4% Senior
Subordinated Notes due 2011 (collectively, the
&#147;Recapitalization&#148;). The proceeds from the
Recapitalization were used to redeem the 11&nbsp;3/4% Senior
Subordinated Notes due 2008 (the &#147;Old Notes&#148;) of JCI
and Jafra Cometics International, S.A. de C.V. (&#147;Jafra
S.A.&#148;), to repay all amounts outstanding under the existing
credit facilities of JCI and Jafra S.A. and to make certain
payments to CDRJ and employees of JCI and Jafra S.A. The
stockholders of CDRJ then resolved that CDRJ be liquidated and
appointed Worldwide to act as its liquidator. Thereafter, CDRJ
made an initial liquidating distribution of such proceeds to its
stockholders. In connection with the liquidation of CDRJ, the
Company transferred all of its assets and liabilities, including
its direct and indirect holdings of JCI, Jafra S.A. and Jafra
Distribution, to Worldwide in exchange for additional shares of
common stock of Worldwide. Jafra S.A. and Jafra Distribution are
collectively referred to as &#147;Jafra Mexico.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jafra Distribution was organized
February&nbsp;26, 2003 to conduct the distribution functions of
the Company&#146;s Mexican operations. Worldwide was organized
on February&nbsp;24, 2003 as a holding company to conduct the
worldwide Jafra cosmetics business through its subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying unaudited interim consolidated
financial statements as of September&nbsp;30, 2003 and for the
nine months ended September&nbsp;30, 2002 and 2003, reflect the
operations of the Company and its subsidiaries and have been
prepared in accordance with Article&nbsp;10 of the Securities
and Exchange Commission&#146;s Regulation&nbsp;S-X. In the
opinion of management, the accompanying unaudited interim
financial statements contain all adjustments, including normal
recurring adjustments, necessary to present fairly the
Company&#146;s consolidated financial statements as of
September&nbsp;30, 2003 and for the interim periods presented.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The functional currency of certain of the
Company&#146;s foreign subsidiaries generally consists of
currencies other than the U.S.&nbsp;dollar. For presentation
purposes, assets and liabilities are translated into
U.S.&nbsp;dollars at current exchange rates, and related
revenues and expenses are translated at average exchange rates
in effect during the period. Resulting translation adjustments
are recorded as a component of other comprehensive loss.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Management Incentive
Arrangements.</FONT></I><FONT size="2"> The Company applies
Accounting principles Board Opinion (&#147;APB&#148;)
No.&nbsp;25, &#147;Accounting for Stock issued to
Employees&#148; and related Interpretations in accounting for
the issuance of stock options under the Company&#146;s Stock
Incentive Plan. No options were granted during the nine months
ended September&nbsp;30, 2003. Had the Company recorded
compensation cost based on the fair value of options granted at
the grant date, as prescribed by Statement of Financial
Accounting Standards (&#147;SFAS&#148;) No.&nbsp;123,
&#147;Accounting for Stock Based Compensation,&#148; the
compensation expense for the nine months ended
September&nbsp;30, 2002 and 2003 would be immaterial to the
consolidated statements of operations.
</FONT>

<P align="center"><FONT size="2">F-36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">New Accounting
Pronouncements.</FONT></I><FONT size="2"> The Company adopted
SFAS No.&nbsp;145, &#147;Rescission of FASB Statements
No.&nbsp;4, 44, and 64, Amendment of FASB Statement No.&nbsp;13,
and Technical Corrections&#148; on January&nbsp;1, 2003. This
statement rescinds or modifies existing authoritative
pronouncements including SFAS No.&nbsp;4 &#147;Reporting Gains
and Losses from Extinguishment of Debt.&#148; As a result of the
issuance of SFAS No.&nbsp;145, gains and losses from
extinguishment of debt are classified as extraordinary items
only if they meet the criteria in APB Opinion&nbsp;30,
&#147;Reporting the Results of Operations&nbsp;&#151; Reporting
the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions.&#148; Applying the provisions of APB
Opinion&nbsp;30 distinguishes transactions that are part of an
entity&#146;s recurring operations from those that are unusual
or infrequent or that meet the criteria for classification as an
extraordinary item. Based on the adoption of this principle, the
Company has reclassified any gain or loss on extinguishment of
debt that was classified as an extraordinary item in prior
periods and has classified its current loss on extinguishment of
debt within other income (expense).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company adopted SFAS No.&nbsp;146,
&#147;Accounting for Costs Associated with Exit or Disposal
Activities&#148; on January&nbsp;1, 2003 which did not result in
any material impact to the Company&#146;s consolidated
statements of operations. This statement addresses financial
accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No.&nbsp;94-3,
&#147;Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(2)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Inventories</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inventories consist of the following (in
thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Raw materials and supplies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Finished goods
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,274</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,567</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(3)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Property and Equipment</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and equipment consist of the following
(in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Land
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,452</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,849</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Machinery, equipment and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,539</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less accumulated depreciation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,683</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(4)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Goodwill and Other Intangible
    Assets.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s intangible assets consist of
trademarks and goodwill. The Company has determined trademarks
to have an indefinite life. The carrying value of trademarks was
$42,015,000 as of
</FONT>

<P align="center"><FONT size="2">F-37
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">September&nbsp;30, 2003. The changes in the
carrying amount of goodwill for the nine months ended
September&nbsp;30, 2003 are as follows (in thousands):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consolidated</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Goodwill</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexico</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Others</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment losses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Translation effect
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,610</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(459</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,069</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of September&nbsp;30, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,841</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the implementation of SFAS
No.&nbsp;142, &#147;Goodwill and Other Intangible Assets,&#148;
the Company identified all reporting units and allocated all
goodwill accordingly. During the nine months ended
September&nbsp;30, 2003, the Company identified impairment
indicators regarding the Venezuelan operations given the
Company&#146;s decision to exit this market. The Company
recorded an impairment loss of $72,000 for goodwill originally
allocated to the Venezuelan reporting unit.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(5)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Income Taxes</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The actual income tax rate of the Company differs
from the &#147;expected&#148; tax rate, computed by applying the
U.S. federal corporate rate of 35% to income (loss)&nbsp;from
continuing operations before income taxes and cumulative effect
of accounting change for the nine months ended
September&nbsp;30, 2003. During the nine months ended
September&nbsp;30, 2003, Jafra Mexico reported pretax income and
income tax expense. The income tax expense was partially offset
by an income tax benefit in the United States based on pretax
net loss. Additionally, during the nine months ended
September&nbsp;30, 2003, the Company recorded valuation
allowances against certain pretax losses in other subsidiaries.
The actual income tax rate of the Company differed from the
expected rate for the nine months ended September&nbsp;30, 2002,
principally as a result of (i)&nbsp;a lower effective tax rate
at Jafra Mexico, as the result of the enactment of changes in
Mexico&#146;s future corporate statutory tax rates and the
related impact on Jafra Mexico&#146;s net deferred income tax
liabilities of $1,167,000 and (ii)&nbsp;the release of valuation
allowances of $2,337,000 against certain foreign tax credits in
the United States. These were offset by state income taxes in
the United States and valuation allowances provided against
certain operating losses in South America and Europe. The new
tax legislation in Mexico reduces Mexico&#146;s corporate income
tax rate annually in one-percent increments from 35% to 32%
beginning January&nbsp;1, 2003 through 2005.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(6)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Debt and Distribution to
    Shareholders</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;20, 2003, the Issuers issued
$200&nbsp;million aggregate principal amount of 10&nbsp;3/4%
Subordinated Notes due 2011 (the &#147;New Notes&#148;) pursuant
to an Indenture dated May&nbsp;20, 2003 (the
&#147;Indenture&#148;) and entered into a $90&nbsp;million
senior credit agreement (&#147;the &#147;Senior Credit
Agreement&#148;). The New Notes represent the several
obligations of JCI and Jafra Distribution in the amount of
$80&nbsp;million and $120&nbsp;million, respectively. The New
Notes mature in 2011 and bear a fixed interest rate of
10&nbsp;3/4% payable semi-annually.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">JCI is a direct wholly-owned subsidiary of
Worldwide and Jafra Distribution is an indirect wholly-owned
subsidiary of Worldwide. Worldwide has fully and unconditionally
guaranteed the obligations under the New Notes on a senior
subordinated basis on the terms provided in the Indenture
governing the New Notes. Each Issuer has fully and
unconditionally guaranteed the obligations of the other under
the New Notes on a senior subordinated basis, subject to a
30-day standstill period prior to enforcement of such
guarantees. Each existing and subsequently acquired or organized
U.S.&nbsp;subsidiary of JCI is required to fully and
unconditionally guarantee the U.S.&nbsp;portion of New Notes
jointly and severally, on a senior subordinated basis. Each
acquired or organized Mexican subsidiary of Jafra Distribution
is also required to
</FONT>

<P align="center"><FONT size="2">F-38
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">fully and unconditionally guarantee the Mexican
portion of the New Notes jointly and severally, on a senior
subordinated basis. Jafra S.A. has also fully and
unconditionally guaranteed the obligations of Jafra Distribution
under the New Notes. Each existing and subsequently acquired or
organized subsidiary of Jafra S.A. is also required to fully and
unconditionally guarantee the Mexican portion of the New Notes
jointly and severally, on a senior subordinated basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The New Notes are unsecured and are generally not
redeemable for four years from their issue date. Thereafter, the
New Notes will be redeemable on a pro rata basis at premiums
declining to par in the sixth year. Prior to May&nbsp;16, 2006,
the Issuers at their option may concurrently redeem the New
Notes in an aggregate principal amount equal to up to 35% of the
original aggregate principal amount of the New Notes, with funds
in an aggregate amount not exceeding the aggregate cash proceeds
of one or more equity offerings, at a redemption price of
110.75% plus accrued interest. On September&nbsp;15, 2003, the
Issuers consummated a registered exchange of the New Notes under
the Securities Act of 1933.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the Issuers entered into the Senior
Credit Agreement, which provides for senior secured credit
facilities in an aggregate principal amount of $90&nbsp;million,
consisting of a $50&nbsp;million senior secured term loan
facility maturing in 2008 and a $40&nbsp;million senior secured
revolving credit facility, also maturing in 2008, of which
$20&nbsp;million is available as letters of credit. The Senior
Credit Agreement is allocated 40% to JCI and 60% to Jafra
Distribution. On May&nbsp;20, 2003, JCI borrowed
$20&nbsp;million and Jafra Distribution borrowed
$30&nbsp;million of the loans under the term facility. At
September&nbsp;30, 2003, $48,750,000 was outstanding under the
term loan and no amounts were outstanding under the revolving
credit facility. Borrowings under the term loan facility are
payable in quarterly installments of principal and interest over
five years through May&nbsp;20, 2008. Borrowings under the
revolving credit facility mature on May&nbsp;20, 2008.
Borrowings under the Senior Credit Agreement bear interest at an
annual rate of LIBOR plus a margin not to exceed 4.00% or an
alternate base rate plus an applicable margin not to exceed
3.00%. The interest rate in effect at September&nbsp;30, 2003
was 5.2% for LIBOR borrowings and 7.0% for Prime based
borrowings. Borrowings under the Senior Credit Agreement are
secured by substantially all of the assets of JCI and Jafra
Distribution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Both the Indenture and the Senior Credit
Agreement contain certain covenants that limit Worldwide&#146;s
ability to incur additional indebtedness, pay cash dividends and
make certain other payments. These debt agreements also require
Worldwide to maintain certain financial ratios including a
minimum EBITDA to cash interest expense coverage ratio and a
maximum debt to EBITDA ratio. As of September&nbsp;30, 2003,
Worldwide was in compliance with all covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;23, 2003, with proceeds from the
issuance of the New Notes and borrowings under the Senior Credit
Agreement, JCI and Jafra S.A. redeemed the Old Notes in the
aggregate outstanding principal amount of $75,180,000 at a
premium of approximately $4,417,000. Additionally, JCI and Jafra
S.A. repaid $7,375,000 under its existing credit agreement (the
&#147;Old Credit Agreement&#148;) and terminated the Old Credit
Agreement. In connection with the redemption of the Old Notes
and the termination of the Old Credit Agreement, the Company
wrote off approximately $2,203,000 of capitalized deferred
financing fees. Total costs related to the redemption of the Old
Notes and the repayment of amounts outstanding under the Old
Credit Agreement were $6,620,000 and were recorded as a
component of net (loss)&nbsp;income on the accompanying
consolidated statements of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the redemption of the Old Notes and
repayment of all outstanding amounts under the Old Credit
Agreement, the Company made a distribution to CDRJ of
$159,780,846 and then the shareholders of CDRJ made a
distribution of $157,609,000 to its shareholders of record as of
May&nbsp;20, 2003. JCI and Jafra&nbsp;S.A. also made a special
payment to the holders of Company options and certain members of
management and non-employee directors. (See footnote&nbsp;9).
</FONT>

<P align="center"><FONT size="2">F-39
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company capitalized $14,449,000 of costs
related to the issuance of the New Notes and the Senior Credit
Agreement as deferred financing fees. These deferred financing
fees are reported as a noncurrent asset on the accompanying
consolidated balance sheets and are being amortized on a basis
that approximates the interest method over the term of the New
Notes and the Senior Credit Agreement. As of September&nbsp;30,
2003, approximately $740,000 of the deferred financing fees were
amortized.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(7)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Management Incentive Plan</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the Recapitalization, the
board of directors approved an amendment to CDRJ&#146;s stock
incentive plan (the &#147;Stock Incentive Plan&#148;) to reflect
the equity instruments as rights to shares in North Atlantic
rather than shares in CDRJ. In addition the board approved a
reduction in the exercise price of all existing stock options
due to the Recapitalization. In order to affect this re-pricing
the exercise price per share of all existing options of CDRJ,
was reduced such that the awards ratio of exercise price per
share to the market value per share was not reduced and the
awards aggregate intrinsic value immediately after the
Recapitalization was not greater than the aggregate intrinsic
value immediately before Recapitalization. The amendments became
effective as of the initiation of the liquidation of CDRJ.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(8)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Comprehensive Income (Loss)</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Comprehensive income (loss)&nbsp;is summarized as
follows (in thousands):
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,053</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized and deferred realized&nbsp;gain on
    derivatives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reclassification of deferred realized
    (loss)&nbsp;gain to<BR>
    exchange (loss)&nbsp;gain
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(549</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reclassification of deferred realized loss to
    cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">654</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax benefit on unrealized and deferred realized
    (loss) gain on derivatives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,227</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(49</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency translation adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,600</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">527</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comprehensive income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(9)&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Related Party Transaction</FONT></B></TD>
</TR>

</TABLE>

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

<P align="left">
<B><FONT size="2">(10)&nbsp;Financial Reporting for Business
Segments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s business is comprised of one
industry segment, direct selling, with worldwide operations. The
Company is organized into geographical business units that each
sell the full line of Jafra cosmetics, skin care, body care,
fragrances, and other products. Jafra has three reportable
business
</FONT>

<P align="center"><FONT size="2">F-40
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">segments: Mexico, the United States, and Europe.
Business results for subsidiaries in South America, the
Dominican Republic, and Thailand are combined and included in
the following table under the caption &#147;All Others&#148;.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accounting policies used to prepare the
information reviewed by the Company&#146;s chief operating
decision makers are the same as those described in the summary
of significant accounting policies included in the
Company&#146;s audited consolidated financial statements as of
and for the year ended December&nbsp;31, 2002 included in the
CDRJ&#146;s Annual Report on Form&nbsp;10-K. The Company
evaluates performance based on segment operating income,
excluding restructuring and impairment charges, unusual gains
and losses, and amortization of goodwill and intangibles.
Consistent with the information reviewed by the Company&#146;s
chief operating decision makers, corporate costs, foreign
exchange gains and losses, interest expense, other nonoperating
income or expense, and income taxes are not allocated to
operating segments for purposes of this presentation. The
effects of intersegment sales (net sales and related gross
profit) are excluded from the related captions below and from
the computation of segment operating income.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Corporate,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unallocated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consolidated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexico</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Others</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Segments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">And Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <B><FONT size="2">As of and for the Nine Months Ended
    September&nbsp;30, 2002</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">190,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,865</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,728</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,016</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,719</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">176,641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79,712</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280,054</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Discontinued operations assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="29"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <B><FONT size="2">As of and for the Nine Months Ended
    September&nbsp;30, 2003</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,483</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,532</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">473</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,868</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28,641</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,067</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,814</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,565</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">305</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">279</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,466</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,744</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,030</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280,664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Discontinued operations assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,841</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">(11)&nbsp;Foreign Currency Forward and Option
Contracts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is exposed to currency risk relating
to its forecasted U.S. dollar-denominated expenditures at Jafra
Mexico. As part of its overall strategy to reduce the risk of
potential adverse exchange rate fluctuations in Mexico, the
Company entered into foreign currency exchange contracts
(&#147;forward contracts&#148;) during the first four months of
2002, and entered into foreign currency option contracts
(&#147;option contracts&#148; or &#147;options&#148;) during
2002 and 2003. The Company places forward contracts or option
contracts based on its rolling forecasted cash outflows from
Jafra Mexico and hedges transactions included in the forecast on
the date the forward contract or option contract is initiated.
As a matter of policy, the Company does not hold or issue
forward contracts or option contracts for trading or speculative
purposes nor does it enter into contracts or agreements
containing &#147;embedded&#148; derivative features.
</FONT>

<P align="center"><FONT size="2">F-41
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company currently designates certain of its
forward contracts and option contracts as cash flow hedges of
forecasted U.S.&nbsp;dollar-denominated inventory purchases,
forecasted U.S.&nbsp;dollar-denominated intercompany charges
from JCI to Jafra Mexico, forecasted management fee charges from
JCI to Jafra Mexico, and U.S.&nbsp;dollar-denominated interest
payments. For all qualifying and highly effective cash flow
hedges, the changes in the fair value of the derivative are
deferred as a component of other comprehensive loss. Such
amounts will be reclassified from other comprehensive loss into
net (loss)&nbsp;income when the underlying hedged exposure is
recognized in income. For U.S.&nbsp;dollar-denominated inventory
purchases, this will occur upon sale to an outside party of the
related inventory. For intercompany charges and interest, this
will occur at the date such charges are paid by Jafra Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the nine months ended September&nbsp;30,
2003, the Company recognized gains of approximately $627,000 on
option contracts. The Company recognized losses on forward
contracts of approximately $949,000 during the nine months ended
September&nbsp;30, 2002. The Company recognized gains on option
contracts of approximately $755,000 during the nine months ended
September&nbsp;30, 2002, in the accompanying consolidated
statements of operations.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2002, the Company had
deferred as a component of other comprehensive loss $739,000 of
losses on forward contracts and $475,000 of gains on option
contracts. During the nine months ended September&nbsp;30, 2003,
the Company deferred as a component of other comprehensive loss
an additional $303,000 of gains on option contracts qualifying
for hedge accounting under SFAS No.&nbsp;133. During the nine
months ended September&nbsp;30, 2003, approximately $549,000 of
gains were reclassified as exchange loss and approximately
$654,000 of losses were reclassified as cost of sales upon the
recognition of the underlying hedged exposure. The Company
expects that substantially all of the remaining gain of $144,000
deferred as a component of other comprehensive loss at
September&nbsp;30, 2003 will be recognized into net income
(loss)&nbsp;within the next twelve months.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of the option contracts was
$144,000 at September&nbsp;30, 2003 and has been recorded in
other receivables in the consolidated balance sheets. The fair
value of the option contracts was $402,000 at December&nbsp;31,
2002, and was recorded in other receivables in the consolidated
balance sheets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the nine months ended September&nbsp;30,
2003 and 2002, the ineffectiveness generated by the
Company&#146;s forward and option contracts designated as hedges
was insignificant. Certain hedged forecasted transactions do not
appear probable of occurring due to timing differences between
the original and current forecasts, and accordingly during the
nine months ended September&nbsp;30, 2003 and 2002, $230,000 and
$162,000, respectively, of gains, were reclassified into
earnings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The outstanding foreign currency option contracts
had a notional value denominated in Mexican pesos of 743,000,000
in put and call positions at September&nbsp;30, 2003 and mature
at various dates through December&nbsp;31, 2004. The outstanding
foreign currency option contracts had a notional value
denominated in Mexican pesos of 523,000,000 in put and call
positions at December&nbsp;31, 2002 and mature at various dates
through December&nbsp;31, 2003. Notional amounts do not quantify
market or credit exposure or represent assets or liabilities of
the Company, but are used in the calculation of cash settlements
under the contracts.
</FONT>

<P align="center"><FONT size="2">F-42
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">(12)&nbsp;Discontinued Operations/ Markets to
be Exited</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2003, the Company
discontinued its operations in Venezuela, Colombia, Chile and
Peru. The Company has terminated sales in these markets and has
liquidated a majority of the assets during the quarter ended
September&nbsp;30, 2003. Final liquidation of the assets in
Venezuela, Colombia, Chile and Peru is expected to be complete
during the fourth quarter of 2003 or early 2004. As such, the
results of the operations of these markets has been classified
as discontinued operations in all periods disclosed on the
statements of operations. The assets and liabilities from the
discontinued operations has been segregated on the accompanying
balance sheets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net sales and loss from discontinued operations
is as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Venezuela</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Colombia</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Chile</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Peru</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <B><FONT size="2">For the Nine Months Ended September&nbsp;30,
    2002</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">212</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (Loss) from discontinued operations net of
    tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(543</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(369</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,099</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="21"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <B><FONT size="2">For the Nine Months Ended September&nbsp;30,
    2003</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,483</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from discontinued operations net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(995</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,129</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(191</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(252</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of assets and liabilities of the
discontinued operations is as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="44%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Venezuela</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Colombia</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Chile</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Peru</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">As of December&nbsp;31, 2002</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">195</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">663</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">372</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,419</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="22"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">222</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">363</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CDRJ NORTH ATLANTIC (LUX) S.&#224;R.L. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="44%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Venezuela</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Colombia</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Chile</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Peru</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">As of September&nbsp;30, 2003</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the markets discontinued, the
Company is currently evaluating its operations in Argentina and
Brazil for potential restructuring or discontinuation. The
Company has begun implementation of plans to liquidate its
operations in Thailand and expect to exit the market by the end
of the fourth quarter of 2003.
</FONT>

<P align="center"><FONT size="2">F-44
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">[Inside Back Cover]</FONT></B>

<P align="center">
<B><FONT size="2">[Photographs of skin care and color cosmetic
products;</FONT></B>

<DIV align="center">
<B><FONT size="2">photographs depicting Jafra
consultants]</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">[Jafra logo]</FONT></B>

<P align="center">
<FONT size="2">Until &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004 (25&nbsp;days after the date of this offering), all dealers
that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers&#146; obligation
to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">PART II</FONT></B>

<P align="center">
<B><FONT size="2">INFORMATION NOT REQUIRED IN
PROSPECTUS</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;13.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Other Expenses of Issuance and
    Distribution</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table itemizes the expenses
incurred by the Registrant in connection with the issuance and
distribution of the securities being registered, other than
underwriting discounts. All the amounts shown are estimates
except the Securities and Exchange Commission registration fee
and the NASD filing fee.
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Registration fee&nbsp;&#151; Securities and
    Exchange Commission
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Filing fee&nbsp;&#151; National Association of
    Securities Dealers, Inc.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Listing fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounting fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal fees and expenses (other than blue sky)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Printing; stock certificates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Transfer agent and registrar fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Miscellaneous
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To be completed by amendment.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;14.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Indemnification of Officers and
    Directors</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the laws of Luxembourg, directors of a
soci&#233;t&#233; anonyme, such as Jafra S.A., do not in
principle incur any personal liability for the debts and
obligations of the company. Directors are however liable for
damages caused through their fault. Article&nbsp;59 of the
August&nbsp;15, 1915 Luxembourg law on commercial companies, for
instance, provides that Directors are responsible to the
company, in accordance with the general provisions of Luxembourg
law, for the execution of the mandate for which they have been
appointed and for the faults committed during their management.
They are jointly and severally liable either to the company or
to third parties for all damages resulting from infringements of
the law or of the company&#146;s articles. They shall be
discharged from this liability for infringements in which they
did not take part, only if no fault is imputable to them and if
they denounce the infringements to the next general meeting of
the shareholders after the date at which they became aware
thereof. The members of the board of directors may be discharged
from their liability by the company&#146;s shareholders, but
such dischargement remains strictly internal to the company.
Directors may not be discharged from their obligations towards
third parties. Furthermore, in the event of bankruptcy of the
company, according to article 495-1 of the Luxembourg Commercial
Code, the Luxembourg court may hold the company&#146;s directors
liable to reimburse any indebtedness of the bankrupt company,
whenever the company&#146;s assets are not sufficient and the
director&#146;s serious and wrongful offences have led to the
bankruptcy of the company. Under article 495 of the Luxembourg
Commercial Code, directors may be declared personally bankrupt
if (i)&nbsp;they abusively pursued, for their interest, a non
profitable business which resulted in the company becoming
insolvent or (ii)&nbsp;they disposed of corporate assets in the
same manner as if those had been their own personal assets or
(iii)&nbsp;they carried out business on behalf of the company
for their personal interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Article&nbsp;9 of the Articles of Incorporation
of Jafra&nbsp;S.A. provides for the indemnification of directors
of Jafra&nbsp;S.A. as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The company shall indemnify any director and his
or her heirs, executors and administrators, against expenses
(including attorneys&#146; fees) judgments and fines in
connection with any action, suit or proceeding or appeal
therefrom, to which he may be made a party by reason of his
being or having been a director of the company, or, at the
request of the company, of any other company partnership, joint
venture, trust or other enterprise in which the company holds a
direct or indirect ownership interest or of which the company is
a direct or indirect creditor and by which he is not entitled to
be indemnified,
</FONT>

<P align="center"><FONT size="2">II-1
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">provided that he did not act recklessly in a
manner he believed to be not in or opposed to the best interests
of the company, and, with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct was
unlawful; and in the event of a settlement, such indemnification
shall be provided for all expenses as and when they are incurred
and amounts paid in connection with such settlement unless the
company is advised by its legal counsel that the person to be
indemnified acted recklessly or intentionally not in or opposed
to the best interests of the company; except that in the case of
an action or suit brought by the company against such a
director, to procure a judgment in favor of the company
(1)&nbsp;such indemnification shall be limited to expenses
(including attorneys&#146; fees) actually and reasonably
incurred by such person in the defense or settlement of such
action or suit, and (2)&nbsp;notwithstanding any other
provisions hereof, no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the company unless and only to the
extent that the Luxembourg Courts or the courts in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such costs and expenses as
the Luxembourg Court or such other court may deem legal and
proper.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The company may purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a
director, of the company, or is or was serving at the request of
the company in any equivalent position in any such other
company, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him
or on his behalf in any such capacity, or arising out of his
status as such, whether or not the company would have the power
to indemnify him against such liability under the provisions of
this Article, provided that such insurance is available on
acceptable terms, which determination shall be made by a vote of
a majority of the directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this Article or any portion hereof shall be
invalidated on any ground by any court of competent
jurisdiction, then the company shall nevertheless indemnify each
such director, and may indemnify each employee or agent of the
company as to costs, charges and expenses (including
attorneys&#146; fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative,
including an action by or in the right of the company, to the
fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the applicable provisions of
Luxembourg law and in particular Section&nbsp;59 of the
Luxembourg Law on Commercial Companies, no director, of the
company shall be liable to the company or its stockholders for
his actions or omissions when performing his duties as a
director, provided that nothing contained in these Articles of
Incorporation shall eliminate or limit the liability of a
director, (i)&nbsp;for any breach of his duty of loyalty to the
company or its stockholders, (ii)&nbsp;for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of the law, or (iii)&nbsp;for any transaction
from which the director derived an improper personal benefit.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;15.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Recent Sales of Unregistered
    Securities</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the past three years, there have been no
issuances of securities of Jafra S.A. Prior to the closing of
the sale of the shares of common stock offered hereby,
outstanding options granted to our employees to purchase shares
of CDRJ Investments (Lux) S.A. will automatically convert into
options to purchase shares of our common stock.
</FONT>

<P align="center"><FONT size="2">II-2
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;16.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Exhibits and Financial Statement
    Schedules.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">(a)</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Document</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Underwriting Agreement.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Notarial Deed,
    dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2004, of CDRJ North Atlantic (Lux) S.&#224;r.l., providing for
    the conversion of CDRJ North Atlantic (Lux) S.&#224;r.l. to a
    soci&#233;t&#233; anonyme and change of name to Jafra, together
    with an unofficial summary in English.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Articles of Incorporation of Jafra S.A.,
    dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2004, together with an unofficial English translation.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture, dated May&nbsp;20, 2003, by and among
    Jafra Cosmetics International, Inc., Distribuidora Comercial
    Jafra, S.A. de C.V., Jafra Worldwide Holdings (Lux) S.&#224;r.l.
    and U.S. Bank National Association; previously filed as
    Exhibit&nbsp;4.14 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Supplemental Indenture, dated as of
    May&nbsp;20, 2003, by and among Jafra Cosmetics International,
    S.A. de C.V., Distribuidora Comercial Jafra, S.A. de C.V.,
    Dirsamex, S.A. de C.V., Distribuidora Venus, S.A. de C.V.,
    Serviday, S.A. de C.V., Cosmeticos y Frangancias, S.A. de C.V.,
    Jafra Cosmetics S. A. de C.V., JafraFin S.A. de C.V., Jafra
    Cosmetics International, Inc. and U.S. Bank National
    Association; previously filed as Exhibit&nbsp;4.15 in
    Registration Statement No.&nbsp;333-106666 under the Securities
    Act of 1933, as amended, on June&nbsp;30, 2003, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Registration Rights Agreement, dated May&nbsp;20,
    2003, by and among Jafra Cosmetics International, Inc.,
    Distribuidora Comercial Jafra, S.A. de C.V., Jafra Worldwide
    Holdings (Lux) S.&#224;r.l, CDRJ Investments (Lux) S.A. and the
    Initial Purchasers; previously filed as Exhibit&nbsp;4.16 in
    Registration Statement No.&nbsp;333-106666 under the Securities
    Act of 1933, as amended, on June&nbsp;30, 2003, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of 144A Global Note; previously filed as
    Exhibit&nbsp;4.17 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Regulation&nbsp;S Global Note; previously
    filed as Exhibit&nbsp;4.18 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of Debevoise &#38; Plimpton LLP.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of Bonn Schmitt Steichen.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.1&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Registration and
    Participation Agreement, dated as
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2004, by and among CDRJ
    North Atlantic (Lux) S.&#224;r.l., Clayton, Dubilier&nbsp;&#38;
    Rice Fund V Limited Partnership and the other parties thereto.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.2&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Employment Agreement for
    Messrs.&nbsp;Clark, Rubio, Mason, Guirao and DiGregorio;
    previously filed as Exhibit&nbsp;10.3 to Registration Statement
    No.&nbsp;333-62989 under the Securities Act of 1933, as amended,
    filed September&nbsp;4, 1998, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.3&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Jafra Cosmetics
    International, Inc. Stock Incentive Plan, as adopted
    September&nbsp;3, 1998; previously filed as Exhibit&nbsp;10.4 to
    Amendment No.&nbsp;1 to Registration Statement
    No.&nbsp;333-62989 under the Securities Act of 1933, as amended,
    filed October&nbsp;27, 1998, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.4&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CDRJ Investments (Lux) S.A. Form of Management
    Stock Option Agreement; previously filed as Exhibit&nbsp;10.5 to
    Amendment No.&nbsp;1 to Registration Statement
    No.&nbsp;333-62989 under the Securities Act of 1933, as amended,
    filed October&nbsp;27, 1998, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.5&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Stock Purchase Warrant,
    dated September&nbsp;30, 1998, by and between CDRJ Investments
    (Lux) S.A. and Jafra Cosmetics International, Inc.; previously
    filed as Exhibit&nbsp;10.6 to Amendment No.&nbsp;1 to
    Registration Statement No.&nbsp;333-62989 under the Securities
    Act of 1933, as amended, filed October&nbsp;27, 1998, and
    incorporated herein by reference.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Document</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.6&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Registration and Participation Agreement, dated
    April&nbsp;30, 1998, among CDRJ Investments (Lux) S.A. and
    Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
    Partnership and the other parties thereto; previously filed as
    Exhibit&nbsp;10.7 to Registration Statement No.&nbsp;333-62989
    under the Securities Act of 1933, as amended, filed
    September&nbsp;4, 1998, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CDRJ Investments (Lux) S.A. Form of Management
    Stock Subscription Agreement; previously filed as
    Exhibit&nbsp;10.8 to Amendment No.&nbsp;1 to Registration
    Statement No.&nbsp;333-62989 under the Securities Act of 1933,
    as amended, filed October&nbsp;27, 1998, and incorporated herein
    by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.8&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CDRJ Investments (Lux) S.A. Form of Individual
    Investor Stock Subscription Agreement; previously filed as
    Exhibit&nbsp;10.9 to Amendment No.&nbsp;1 to Registration
    Statement No.&nbsp;333-62989 under the Securities Act of 1933,
    as amended, filed October&nbsp;27, 1998, and incorporated herein
    by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.9&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jafra Cosmetics International, Inc. Supplemental
    Savings Plan, dated October&nbsp;27, 1998; previously filed as
    Exhibit&nbsp;10.1 to CDRJ Investments (Lux) S.A.&#146;s
    Quarterly Report on Form&nbsp;10-Q for the first quarter ended
    March&nbsp;31, 1999, filed May&nbsp;17, 1999, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.10&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jafra Cosmetics International, Inc. Special
    Supplemental Savings Plan for Non-United States-Source Income,
    dated January&nbsp;20, 1999; previously filed as
    Exhibit&nbsp;10.2 to CDRJ Investments (Lux) S.A.&#146;s
    Quarterly Report on Form&nbsp;10-Q for the first quarter ended
    March&nbsp;31, 1999, filed May&nbsp;17, 1999, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Asset Purchase Agreement, dated as of
    June&nbsp;18, 1999, as amended by Amendment No.&nbsp;1, dated as
    of June&nbsp;18, 1999; by and between Jafra Cosmetics
    International, Inc. and the Contractor, previously filed as
    Exhibit&nbsp;10.1 to Jafra Cosmetics International, Inc.&#146;s
    Form&nbsp;8-K, filed on June&nbsp;18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;1 to Asset Purchase Agreement,
    dated as of June&nbsp;18, 1999; previously filed as
    Exhibit&nbsp;10.2 to Jafra Cosmetics International, Inc.&#146;s
    Form&nbsp;8-K, filed on June&nbsp;18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Manufacturing Agreement, dated as of
    June&nbsp;18, 1999, by and between Jafra Cosmetics
    International, Inc. and the Contractor, as amended by Amendment
    No.&nbsp;1, dated as of June&nbsp;22, 1999; previously filed as
    Exhibit&nbsp;10.3 to Jafra Cosmetics International, Inc.&#146;s
    Form&nbsp;8-K, filed on June&nbsp;18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Amendment No.&nbsp;1 to Manufacturing
    Agreement, dated as of June&nbsp;18, 1999; previously filed as
    Exhibit&nbsp;10.4 to Jafra Cosmetics International, Inc.&#146;s
    Form&nbsp;8-K, filed on June&nbsp;18, 1999 and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sale Agreement, dated as of September&nbsp;29,
    1999, between Jafra Cosmetics International Inc. and Townsgate
    Road LLC; previously filed as Exhibit&nbsp;10.1 to CDRJ
    Investment (Lux) S.A.&#146;s Quarterly Report on Form&nbsp;10-Q
    for the third quarter ended September&nbsp;30, 1999, filed
    November&nbsp;12, 1999, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sale Agreement, dated as of October&nbsp;15,
    1999, between Jafra Cosmetics International Inc. and Selvin
    Properties; previously filed as Exhibit&nbsp;10.2 to CDRJ
    Investment (Lux) S.A.&#146;s Quarterly Report on Form&nbsp;10-Q
    for the third quarter ended September&nbsp;30, 1999, filed
    November&nbsp;12, 1999, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Trust Agreement dated May&nbsp;26, 1999 by and
    between Jafra Cosmetics International, Inc. and Scudder Trust
    Company; previously filed as Exhibit&nbsp;10.20 to CDRJ
    Investments (Lux) S.A.&#146;s Annual Report on Form&nbsp;10-K
    for the fiscal year ended 1999, filed on March&nbsp;30, 2000,
    and incorporated herein by reference.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Document</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Amended and Restated Jafra
    Cosmetics International, Inc. Stock Incentive Plan; previously
    filed as exhibit 10.22 to CDRJ Investments (Lux) S.A.&#146;s
    Annual Report on Form&nbsp;10-K for the fiscal year ended 2000,
    filed on April&nbsp;2, 2001, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CDRJ Investments (Lux) S.A. Form of Management
    Stock Subscription Agreement, as amended; previously filed as
    exhibit&nbsp;10.23 to CDRJ Investments (Lux) S.A.&#146;s Annual
    Report on Form&nbsp;10-K for the fiscal year ended 2000, filed
    on April&nbsp;2, 2001, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Administrative Services Agreement, dated
    May&nbsp;20, 2003, between Distribuidora Venus, S.A. de C.V.;
    and Distribuidora Comercial Jafra, S.A. de C.V.; previously
    filed as Exhibit&nbsp;10.21 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Assignment Assumption and Liquidation Agreement,
    dated May&nbsp;20, 2003, between CDRJ North Atlantic (Lux)
    S.&#224;r.l and Jafra Worldwide Holdings (Lux) S.&#224;r.l;
    previously filed as Exhibit&nbsp;10.22 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Indemnification Agreement,
    dated May&nbsp;20, 2003, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.&#224;r.l, Jafra Worldwide Holdings (Lux)
    S.&#224;r.l, Jafra Cosmetics International, Inc., Jafra
    Cosmetics International, S.A. de C.V., Distribuidora Comercial
    Jafra, S.A. de C.V., CD&#38;R Fund&nbsp;V and Clayton,
    Dubilier&nbsp;&#38; Rice, Inc. (&#147;CD&#38;R&#148;);
    previously filed as Exhibit&nbsp;10.23 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amended and Restated Consulting Agreement,
    dated May&nbsp;20, 2003, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.&#224;r.l, Jafra Worldwide Holdings (Lux)
    S.&#224;r.l, Jafra Cosmetics International, Inc., Jafra
    Cosmetics International, S.A. de C.V., Distribuidora Comercial
    Jafra, S.A. de C.V. and CD&#38;R; previously filed as
    Exhibit&nbsp;10.24 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stock Purchase Agreement, dated May&nbsp;20,
    2003, among Jafra Cosmetics International, S.A. de C.V.,
    Distribuidora Comercial Jafra, S.A. de C.V., CDRJ Latin American
    Holding Company B.V, Latin Cosmetics Holdings, B.V., Regional
    Cosmetics Holding, B.V., Southern Cosmetics Holdings, B.V. and
    CDRJ Mexico Holding Company, B.V.; previously filed as
    Exhibit&nbsp;10.25 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stock Subscription and Guarantee Agreement, dated
    May&nbsp;20, 2003, between Jafra Cosmetics International, S.A.
    de C.V. and Distribuidora Comercial Jafra, S.A. de C.V.;
    previously filed as Exhibit&nbsp;10.26 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Purchase and Sale Agreement, dated May&nbsp;20,
    2003, between Distribuidora Venus, S.A. de C.V. and
    Distribuidora Comercial Jafra, S.A. de C.V.; previously filed as
    Exhibit&nbsp;10.27 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Registration and Participation Agreement, dated
    May&nbsp;20, 2003, among CDRJ North Atlantic (Lux) S.&#224;r.l.
    and Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;&#38; Limited
    Partnership and other parties thereto; previously filed as
    Exhibit&nbsp;10.28 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Contribution Agreement and Power of
    Attorney, among CDRJ Investments (Lux) S.A., Jafra Worldwide
    Holdings (Lux) S.&#224;r.l., and the stockholders of CDRJ
    Investments (Lux) S.A.; previously filed as Exhibit&nbsp;10.29
    in Registration Statement No.&nbsp;333-106666 under the
    Securities Act of 1933, as amended, on June&nbsp;30, 2003, and
    incorporated herein by reference.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Document</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Consent to Assignment of Stock
    Subscription Agreement, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.&#224;r.l. and the stockholders of CDRJ
    Investments (Lux) S.A.; previously filed as Exhibit&nbsp;10.30
    in Registration Statement No.&nbsp;333-106666 under the
    Securities Act of 1933, as amended, on June&nbsp;30, 2003, and
    incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Consent to Assignment, Assumption and
    Novation of Employment Agreement, between CDRJ Investments (Lux)
    S.A., Jafra Worldwide Holdings (Lux) S.&#224;r.l., Jafra
    Cosmetics International, Inc. and certain executives party to
    employment agreements pursuant to which such executives are
    employed by Jafra Cosmetics International, Inc.; previously
    filed as Exhibit&nbsp;10.31 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Amendment to Management Stock Option
    Agreement; previously filed as Exhibit&nbsp;10.35 in
    Registration Statement No.&nbsp;333-106666 under the Securities
    Act of 1933, as amended, on June&nbsp;30, 2003, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Second Amended and Restated Stock
    Purchase Warrant, by and between Jafra S.A. and Jafra Cosmetics
    International, Inc.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Purchase Agreement, dated as of May&nbsp;2, 2003,
    by and among Jafra Cosmetics International, Inc., Distribuidora
    Comercial Jafra, S.A. de C.V., Jafra Worldwide Holdings (Lux)
    S.&#224;r.l, CDRJ Investments (Lux) S.A.; previously filed as
    Exhibit&nbsp;10.36 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Exchange Agreement among Jafra Cosmetics
    International, Inc., Distribuidora Comercial Jafra, S.A. de C.V.
    and U.S. Bank National Association; previously filed as Exhibit
    10.37 in Registration Statement No.&nbsp;333-106666 under the
    Securities Act of 1933, as amended, on June&nbsp;30, 2003, and
    incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jafra S.A. 2004 Omnibus Stock Incentive Plan.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Option Agreement under the Jafra S.A.
    2004 Omnibus Stock Incentive Plan.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Restricted Stock Agreement under the
    Jafra 2004 Omnibus Stock Incentive Plan.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amendment to the Amended and Restated
    Jafra Cosmetics International, Inc. Stock Incentive Plan.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jafra S.A. Annual Incentive Plan.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jafra S.A. Directors Stock Incentive Plan.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Credit Agreement, dated as of May&nbsp;20, 2003,
    among Jafra Cosmetics International, Inc., Distribuidora
    Comercial Jafra, S.A. de C.V., Jafra Worldwide Holdings (Lux),
    S.&#224;r.l., CDRJ North Atlantic (Lux) S.&#224;r.l. and the
    lenders party thereto; previously filed as Exhibit&nbsp;4.1 in
    Registration Statement No.&nbsp;333-106666 under the Securities
    Act of 1933, as amended, on June&nbsp;30, 2003, and incorporated
    therein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;1, dated as of June&nbsp;25,
    2003, to the Credit Agreement, dated as of May&nbsp;20, 2003,
    previously filed as Exhibit&nbsp;4.1 in Registration Statement
    No.&nbsp;333-10666 under the Securities Act of 1933, as amended
    on June&nbsp;30, 2003, and incorporated herein by reference.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stock Subscription Agreement, dated
    April&nbsp;30, 1998, between CDRJ Investments (Lux) S.A. and
    Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
    Partnership.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">11.1&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Statement regarding computation of per share
    earnings.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">21.1&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Subsidiaries of the registrant.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.1&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Ernst &#38; Young LLP.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.2&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Deloitte &#38; Touche LLP.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.3&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Debevoise &#38; Plimpton LLP
    (contained in Exhibit&nbsp;5.1).*
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Document</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.4&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Bonn Schmitt Steichen (contained in
    Exhibit&nbsp;5.3).*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">24.1&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Powers of Attorney (contained on signature pages
    hereto).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To be filed by amendment.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">(b)</FONT></B>

<P align="center"><FONT size="2">II-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SCHEDULE II&nbsp;&#151;&nbsp;VALUATION AND
QUALIFYING ACCOUNTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">CDRJ North Atlantic (Lux) S.&#224;r.l. and
Subsidiaries:</FONT></B>

<P align="left">
<B><FONT size="2">As of December&nbsp;31:</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">at</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Charged to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beginning</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Costs and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Deductions-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">at End of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Descriptions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Period</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Recoveries</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Period</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts Receivable:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,323</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,968</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,936</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,473</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,799</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,867</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,505</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,389</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,973</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,923</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;17.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Undertakings</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The undersigned registrant hereby undertakes as
follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned
    will provide to the underwriters at the closing specified in the
    Underwriting Agreement certificates in such denominations and
    registered in such names as required by the underwriters to
    permit prompt delivery to each purchaser.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of
    determining any liability under the Securities Act, the
    information omitted from the form of prospectus filed as part of
    this registration statement in reliance on Rule&nbsp;430A and
    contained in a form of prospectus filed by the registrant
    pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the
    Securities Act shall be deemed to be part of this registration
    statement as of the time it was declared effective.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the purpose
    of determining any liability under the Securities Act of 1933,
    each post-effective amendment that contains a form of prospectus
    shall be deemed to be a new registration statement relating to
    the securities offered therein, and the offering of such
    securities at that time shall be deemed to be the initial bona
    fide offering thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions described in Item&nbsp;14 or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
</FONT>

<P align="center"><FONT size="2">II-8
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, as amended, the Registrant has duly caused this
Registration Statement on Form&nbsp;S-1 to be signed on its
behalf by the undersigned, thereunto duly authorized in the City
of Westlake Village, State of California, on February&nbsp;13,
2004.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">CDRJ NORTH ATLANTIC (LUX)&nbsp;S.&#192;R.L.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="center">
    <FONT size="2">/s/ RONALD B. CLARK
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:&nbsp;Ronald B. Clark
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Title:&nbsp;<I>Chairman (Principal Executive
    Officer)</I>
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">POWER OF ATTORNEY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Ronald B.
Clark, Michael A. DiGregorio, Gary Eshleman and Ralph S. Mason,
III and each of them (with full power to act alone) his true and
lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this
registration statement, and any new registration statement with
respect to the offering contemplated hereby filed pursuant to
Rule&nbsp;462(b) of the Securities Act, and to file the same,
with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto any such attorney-in-fact full power and authority to do
and perform each and every act and thing requisite or necessary
to be done in and about the premises, and each such person
hereby ratifies and confirms all that such attorneys-in-fact and
agents, or any of them, or any of their respective substitutes,
may lawfully do or cause to be done by virtue hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, as amended, this Registration Statement has been
signed by the following persons in the capacities and on the
dates indicated.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ RONALD B. CLARK<BR>
    <HR size="1" noshade>Ronald B. Clark
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Chairman and Manager (Principal Executive Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ MICHAEL A. DIGREGORIO<BR>
    <HR size="1" noshade>Michael A. DiGregorio
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Chief Financial Officer (Principal Financial
    Officer, Principal Accounting Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ RALPH S. MASON, III<BR>
    <HR size="1" noshade>Ralph S. Mason, III
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Executive Vice President (Representative in the
    U.S.)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ DONALD J. GOGEL<BR>
    <HR size="1" noshade>Donald J. Gogel
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ STEVEN D. GOLDSTEIN<BR>
    <HR size="1" noshade>Steven D. Goldstein
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ THOMAS E. IRELAND<BR>
    <HR size="1" noshade>Thomas E. Ireland
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ SIRI MARSHALL<BR>
    <HR size="1" noshade>Siri Marshall
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ DAVID A. NOVAK<BR>
    <HR size="1" noshade>David A. Novak
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ ANN REESE<BR>
    <HR size="1" noshade>Ann Reese
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ EDWARD H. RENSI<BR>
    <HR size="1" noshade>Edward H. Rensi
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ GONZALO RUBIO<BR>
    <HR size="1" noshade>Gonzalo Rubio
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Chief Operating Officer and Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ KENNETH D. TAYLOR<BR>
    <HR size="1" noshade>Kenneth D. Taylor
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Manager
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">February&nbsp;13, 2004
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">S-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">EXHIBITS</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Document</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Underwriting Agreement.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Notarial Deed,
    dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2004, of CDRJ North
    Atlantic (Lux) S.&#224;r.l., providing for the conversion of
    CDRJ North Atlantic (Lux) S.&#224;.r.l. to a soci&#233;t&#233;
    anonyme and change of name to Jafra S.A., together with an
    unofficial summary in English.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Articles of Incorporation of Jafra S.A.,
    dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2004, together with
    an unofficial English translation.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture, dated May&nbsp;20, 2003, by and among
    Jafra Cosmetics International, Inc., Distribuidora Comercial
    Jafra, S.A. de C.V., Jafra Worldwide Holdings (Lux) S.&#224;r.l,
    CDRJ Investments (Lux) S.A. and U.S. Bank National Association;
    previously filed as Exhibit&nbsp;4.14 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Supplemental Indenture, dated as of
    May&nbsp;20, 2003, by and among Jafra Cosmetics International,
    S.A. de C.V., Distribuidora Comercial Jafra, S.A. de C.V.,
    Dirsamex, S.A. de C.V., Distribuidora Venus, S.A. de C.V.,
    Serviday, S.A. de C.V., Cosmeticos y Frangancias, S.A. de C.V.,
    Jafra Cosmetics S. A. de C.V., JafraFin S.A. de C.V. Jafra
    Cosmetics International, Inc. and U.S. Bank National
    Association; previously filed as Exhibit&nbsp;4.15 in
    Registration Statement No.&nbsp;333-106666 under the Securities
    Act of 1933, as amended, on June&nbsp;30, 2003, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Registration Rights Agreement, dated May&nbsp;20,
    2003, by and among Jafra Cosmetics International, Inc.,
    Distribuidora Comercial Jafra, S.A. de C.V., Jafra Worldwide
    Holdings (Lux) S.&#224;r.l, CDRJ Investments (Lux) S.A. and the
    Initial Purchasers; previously filed as Exhibit&nbsp;4.16 in
    Registration Statement No.&nbsp;333-106666 under the Securities
    Act of 1933, as amended, on June&nbsp;30, 2003, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of 144A Global Note; previously filed as
    Exhibit&nbsp;4.17 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Regulation&nbsp;S Global Note; previously
    filed as Exhibit&nbsp;4.18 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of Debevoise &#38; Plimpton LLP.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of Bonn Schmitt Steichen.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.1&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Registration and
    Participation Agreement, dated as
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2004, by and among CDRJ
    North Atlantic (Lux) S.&#224;r.l., Clayton, Dubilier&nbsp;&#38;
    Rice Fund&nbsp;V Limited Partnership and the other parties
    thereto.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.2&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Employment Agreement for
    Messrs.&nbsp;Clark, Rubio, Mason, Guirao and DiGregorio;
    previously filed as Exhibit&nbsp;10.3 to Registration Statement
    No.&nbsp;333-62989 under the Securities Act of 1933, as amended,
    filed September&nbsp;4, 1998, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.3&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Jafra Cosmetics
    International, Inc. Stock Incentive Plan, as adopted
    September&nbsp;3, 1998; previously filed as Exhibit&nbsp;10.4 to
    Amendment No.&nbsp;1 to Registration Statement
    No.&nbsp;333-62989 under the Securities Act of 1933, as amended,
    filed October&nbsp;27, 1998, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CDRJ Investments (Lux) S.A. Form of Management
    Stock Option Agreement; previously filed as Exhibit&nbsp;10.5 to
    Amendment No.&nbsp;1 to Registration Statement
    No.&nbsp;333-62989 under the Securities Act of 1933, as amended,
    filed October&nbsp;27, 1998, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Stock Purchase Warrant,
    dated September&nbsp;30, 1998, by and between CDRJ Investments
    (Lux) S.A. and Jafra Cosmetics International, Inc.; previously
    filed as Exhibit&nbsp;10.6 to Amendment No.&nbsp;1 to
    Registration Statement No.&nbsp;333-62989 under the Securities
    Act of 1933, as amended, filed October&nbsp;27, 1998, and
    incorporated herein by reference.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Document</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Registration and Participation Agreement, dated
    April&nbsp;30, 1998, among CDRJ Investments (Lux) S.A. and
    Clayton, Dubilier&nbsp;&#38; Rice Fund&nbsp;V Limited
    Partnership and the other parties thereto; previously filed as
    Exhibit&nbsp;10.7 to Registration Statement No.&nbsp;333-62989
    under the Securities Act of 1933, as amended, filed
    September&nbsp;4, 1998, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CDRJ Investments (Lux) S.A. Form of Management
    Stock Subscription Agreement; previously filed as
    Exhibit&nbsp;10.8 to Amendment No.&nbsp;1 to Registration
    Statement No.&nbsp;333-62989 under the Securities Act of 1933,
    as amended, filed October&nbsp;27, 1998, and incorporated herein
    by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CDRJ Investments (Lux) S.A. Form of Individual
    Investor Stock Subscription Agreement; previously filed as
    Exhibit&nbsp;10.9 to Amendment No.&nbsp;1 to Registration
    Statement No.&nbsp;333-62989 under the Securities Act of 1933,
    as amended, filed October&nbsp;27, 1998, and incorporated herein
    by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jafra Cosmetics International, Inc. Supplemental
    Savings Plan, dated October&nbsp;27, 1998; previously filed as
    Exhibit&nbsp;10.1 to CDRJ Investments (Lux) S.A.&#146;s
    Quarterly Report on Form&nbsp;10-Q for the first quarter ended
    March&nbsp;31, 1999, filed May&nbsp;17, 1999, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jafra Cosmetics International, Inc. Special
    Supplemental Savings Plan for Non-United States-Source Income,
    dated January&nbsp;20, 1999; previously filed as
    Exhibit&nbsp;10.2 to CDRJ Investments (Lux) S.A.&#146;s
    Quarterly Report on Form&nbsp;10-Q for the first quarter ended
    March&nbsp;31, 1999, filed May&nbsp;17, 1999, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Asset Purchase Agreement, dated as of
    June&nbsp;18, 1999, as amended by Amendment No.&nbsp;1, dated as
    of June&nbsp;18, 1999; by and between Jafra Cosmetics
    International, Inc. and the Contractor, previously filed as
    Exhibit&nbsp;10.1 to Jafra Cosmetics International, Inc.&#146;s
    Form&nbsp;8-K, filed on June&nbsp;18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;1 to Asset Purchase Agreement,
    dated as of June&nbsp;18, 1999; previously filed as
    Exhibit&nbsp;10.2 to Jafra Cosmetics International, Inc.&#146;s
    Form&nbsp;8-K, filed on June&nbsp;18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Manufacturing Agreement, dated as of
    June&nbsp;18, 1999, by and between Jafra Cosmetics
    International, Inc. and the Contractor, as amended by Amendment
    No.&nbsp;1, dated as of June&nbsp;22, 1999; previously filed as
    Exhibit&nbsp;10.3 to Jafra Cosmetics International, Inc.&#146;s
    Form&nbsp;8-K, filed on June&nbsp;18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Amendment No.&nbsp;1 to Manufacturing
    Agreement, dated as of June&nbsp;18, 1999; previously filed as
    Exhibit&nbsp;10.4 to Jafra Cosmetics International, Inc.&#146;s
    Form&nbsp;8-K, filed on June&nbsp;18, 1999 and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sale Agreement, dated as of September&nbsp;29,
    1999, between Jafra Cosmetics International Inc. and Townsgate
    Road LLC; previously filed as Exhibit&nbsp;10.1 to CDRJ
    Investment (Lux) S.A.&#146;s Quarterly Report on Form&nbsp;10-Q
    for the third quarter ended September&nbsp;30, 1999, filed
    November&nbsp;12, 1999, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sale Agreement, dated as of October&nbsp;15,
    1999, between Jafra Cosmetics International Inc. and Selvin
    Properties; previously filed as Exhibit&nbsp;10.2 to CDRJ
    Investment (Lux) S.A.&#146;s Quarterly Report on Form&nbsp;10-Q
    for the third quarter ended September&nbsp;30, 1999, filed
    November&nbsp;12, 1999, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Trust Agreement dated May&nbsp;26, 1999 by and
    between Jafra Cosmetics International, Inc. and Scudder Trust
    Company; previously filed as Exhibit&nbsp;10.20 to CDRJ
    Investments (Lux) S.A.&#146;s Annual Report on Form&nbsp;10-K
    for the fiscal year ended 1999, filed on March&nbsp;30, 2000,
    and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Amended and Restated Jafra
    Cosmetics International, Inc. Stock Incentive Plan; previously
    filed as exhibit&nbsp;10.22 to CDRJ Investments (Lux)
    S.A.&#146;s Annual Report on Form&nbsp;10-K for the fiscal year
    ended 2000, filed on April&nbsp;2, 2001, and incorporated herein
    by reference.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Document</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CDRJ Investments (Lux) S.A. Form of Management
    Stock Subscription Agreement, as amended; previously filed as
    exhibit&nbsp;10.23 to CDRJ Investments (Lux) S.A.&#146;s Annual
    Report on Form&nbsp;10-K for the fiscal year ended 2000, filed
    on April&nbsp;2, 2001, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Administrative Services Agreement, dated
    May&nbsp;20, 2003, between Distribuidora Venus, S.A. de C.V.;
    and Distribuidora Comercial Jafra, S.A. de C.V.; previously
    filed as Exhibit&nbsp;10.21 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Assignment Assumption and Liquidation Agreement,
    dated May&nbsp;20, 2003, between CDRJ North Atlantic (Lux)
    S.&#224;r.l and Jafra Worldwide Holdings (Lux) S.&#224;r.l;
    previously filed as Exhibit&nbsp;10.22 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Indemnification Agreement,
    dated May&nbsp;20, 2003, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.&#224;r.l, Jafra Worldwide Holdings (Lux)
    S.&#224;r.l, Jafra Cosmetics International, Inc., Jafra
    Cosmetics International, S.A. de C.V., Distribuidora Comercial
    Jafra, S.A. de C.V., CD&#38;R Fund V and Clayton, Dubilier &#38;
    Rice, Inc. (&#147;CD&#38;R&#148;); previously filed as
    Exhibit&nbsp;10.23 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amended and Restated Consulting Agreement,
    dated May&nbsp;20, 2003, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.&#224;r.l, Jafra Worldwide Holdings (Lux)
    S.&#224;r.l, Jafra Cosmetics International, Inc., Jafra
    Cosmetics International, S.A. de C.V., Distribuidora Comercial
    Jafra, S.A. de C.V. and CD&#38;R; previously filed as
    Exhibit&nbsp;10.24 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stock Purchase Agreement, dated May&nbsp;20,
    2003, among Jafra Cosmetics International, S.A. de C.V.,
    Distribuidora Comercial Jafra, S.A. de C.V., CDRJ Latin American
    Holding Company B.V, Latin Cosmetics Holdings, B.V., Regional
    Cosmetics Holding, B.V., Southern Cosmetics Holdings, B.V. and
    CDRJ Mexico Holding Company, B.V.; previously filed as
    Exhibit&nbsp;10.25 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stock Subscription and Guarantee Agreement, dated
    May&nbsp;20, 2003, between Jafra Cosmetics International, S.A.
    de C.V. and Distribuidora Comercial Jafra, S.A. de C.V.;
    previously filed as Exhibit&nbsp;10.26 in Registration Statement
    No.&nbsp;333-106666 under the Securities Act of 1933, as
    amended, on June&nbsp;30, 2003, and incorporated herein by
    reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Purchase and Sale Agreement, dated May&nbsp;20,
    2003, between Distribuidora Venus, S.A. de C.V. and
    Distribuidora Comercial Jafra, S.A. de C.V.; previously filed as
    Exhibit&nbsp;10.27 in Registration Statement No.&nbsp;333-106666
    under the Securities Act of 1933, as amended, on June&nbsp;30,
    2003, and incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Registration and Participation Agreement, dated
    May&nbsp;20, 2003, among CDRJ North Atlantic (Lux) S.&#224;r.l.
    and Clayton, Dubilier &#38; Rice Fund V Limited Partnership and
    other parties thereto; previously filed as Exhibit&nbsp;10.28 in
    Registration Statement No.&nbsp;333-106666 under the Securities
    Act of 1933, as amended, on June&nbsp;30, 2003, and incorporated
    herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Contribution Agreement and Power of
    Attorney, among CDRJ Investments (Lux) S.A., Jafra Worldwide
    Holdings (Lux) S.&#224;r.l., and the stockholders of CDRJ
    Investments (Lux) S.A.; previously filed as Exhibit&nbsp;10.29
    in Registration Statement No.&nbsp;333-106666 under the
    Securities Act of 1933, as amended, on June&nbsp;30, 2003, and
    incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Consent to Assignment of Stock
    Subscription Agreement, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.&#224;r.l. and the stockholders of CDRJ
    Investments (Lux) S.A.; previously filed as Exhibit&nbsp;10.30
    in Registration Statement No.&nbsp;333-106666 under the
    Securities Act of 1933, as amended, on June&nbsp;30, 2003, and
    incorporated herein by reference.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

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[{"type": "S-1", "sequence": "1", "filename": "v96362sv1.htm", "description": "FORM S-1", "secsgml_size_bytes": 2031175}]
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FORM S-1
Table of Contents
As filed with the Securities and Exchange
Commission on February 13, 2004
Registration
No. 333-
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
Form S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CDRJ NORTH ATLANTIC (Lux)
S.àr.l.
To Be Renamed
Jafra S.A.
(Exact name of Registrant as specified in its
charter)
Luxembourg
2844
98-0185445
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer Identification No.)
174 route de Longwy
L-1940 Luxembourg
Luxembourg
352 22 6027
(Address, including zip code, and telephone
number, including
area code, of Registrant's principal
executive offices)
Ralph S. Mason, III
Vice Chairman, Executive Vice President
and
General Counsel
Jafra Cosmetics International, Inc.
2451 Townsgate Road
Westlake Village, California 91361
(805) 449-3004
(Address, including zip code, and telephone
number, including
area code, of Registrant's agent for
service)
Copies to:
Steven J. Slutzky, Esq.
Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
(212) 909-6000
William J. Whelan III, Esq.
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
Approximate
date of commencement of proposed sale to the public:
As soon
as practicable after this Registration Statement becomes
effective.
If
the securities being registered on this Form are being offered
on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act, check the following
box.
o
If
this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.
o
If
this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If
this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If
delivery of the prospectus is expected to be made pursuant to
Rule 434, check the following
box.
o
CALCULATION OF REGISTRATION FEE
Proposed Maximum Aggregate
Amount of
Title of Each Class of Securities to be Registered
Offering Price(1)
Registration Fee
Common Stock, $2.00 par value
$100,000,000
$12,670
(1)
Estimated solely for the purpose of calculating
    the amount of the registration fee in accordance with
    Rule 457(o) promulgated under the Securities Act of 1933,
    as amended. Includes shares of common stock subject to the
    underwriters' over-allotment option.
The
Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, or until this Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
Table of Contents
The information in this
prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
Subject to
Completion
Preliminary Prospectus dated
February 13, 2004
PROSPECTUS
Shares
Jafra S.A.
Common Stock
We are
selling                      shares
of common stock and the selling stockholders are
selling                      shares
of common stock. We will not receive any of the proceeds from
the shares of common stock sold by the selling stockholders.
Prior to this offering, there has been no public
market for our common stock. The initial public offering price
of our common stock is expected to be between
$                    and
$                    per
share. We intend to apply to list the shares on the New York
Stock Exchange under the symbol "JFA".
Investing in our common stock involves risks that are
described in the "Risk Factors" section beginning on
page 11 of this prospectus.
Per Share
Total
Public offering price
$
$
Underwriting discount
$
$
Proceeds, before expenses, to Jafra
    S.A.
$
$
Proceeds, before expenses, to the selling
    stockholders
$
$
The underwriters have an option to purchase a
maximum
of                     additional
shares from the selling stockholders at the public offering
price, less the underwriting discount, within 30 days from
the date of this prospectus to cover over-allotments.
Delivery of the shares of common stock will be
made on or
about                     ,
2004.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
Merrill Lynch & Co.
Credit Suisse First Boston
Banc of America Securities LLC
The date of this prospectus
is                     ,
2004.
Table of Contents
[Inside Front Cover]
[Photographs of skin care and color cosmetic
products;
photographs depicting Jafra
consultants]
TABLE OF CONTENTS
MARKET AND INDUSTRY DATA
TRADEMARKS AND TRADE NAMES
PRESENTATION OF FINANCIAL MATTERS
EXPLANATORY NOTE
PROSPECTUS SUMMARY
Summary Consolidated Financial and Other Data
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
RISK FACTORS
FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
CAPITALIZATION
DILUTION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
FISCAL YEAR-END OPTION VALUE TABLE
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND SELLING STOCKHOLDERS
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
DESCRIPTION OF OUR INDEBTEDNESS
DESCRIPTION OF CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALE
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
CERTAIN MATERIAL LUXEMBOURG TAX CONSIDERATIONS
UNDERWRITING
NOTICE TO CANADIAN RESIDENTS
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
CONSENT OF ERNST & YOUNG LLP
CONSENT OF DELOITTE & TOUCHE LLP
Table of Contents
TABLE OF CONTENTS
Page
Market and Industry Data
i
Trademarks and Trade Names
ii
Presentation of Financial Matters
ii
Explanatory Note
ii
Prospectus Summary
1
Risk Factors
11
Forward-Looking Statements
26
Use of Proceeds
27
Dividend Policy
28
Capitalization
29
Dilution
30
Selected Historical Consolidated Financial and
    Other Data
31
Management's Discussion and Analysis of
    Financial Condition and Results of Operations
34
Business
62
Management
72
Security Ownership of Certain Beneficial Owners,
    Management and Selling Stockholders
85
Certain Relationships and Related Party
    Transactions
87
Description of Our Indebtedness
92
Description of Capital Stock
94
Shares Eligible for Future Sale
98
Certain Material U.S. Federal Income Tax
    Considerations
100
Certain Material Luxembourg Tax Considerations
104
Underwriting
105
Notice to Canadian Residents
109
Legal Matters
110
Experts
110
Where You Can Find More Information
110
Index to Financial Statements
F-1
Independent Auditors' Report
F-2
Independent Auditors' Report
F-3
No dealer, salesperson or other person is
authorized to give any information or to represent anything not
contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is
an offer to sell or buy only the securities offered hereby, but
only under circumstances and in jurisdictions where it is lawful
to do so. The information contained in this prospectus is
current only as of its date.
MARKET AND INDUSTRY DATA
Market data used throughout this prospectus,
including information relating to our relative position in the
direct selling cosmetics and fragrance industries, and in Mexico
and in the United States generally, are based on the good faith
estimates of management, which are based upon management's
review of internal company surveys, independent industry surveys
and publications and other publicly available information,
including reports and information prepared by the World
Federation of Direct Selling Associations, Euromonitor, the
Selig Center for Economic Growth at the University of Georgia,
and the U.S. Census Bureau. Although such data is
inherently imprecise, based on management's understanding
of the markets in which we compete, management believes that
such data is generally indicative of our relative market share
and competitive position.
i
Table of Contents
TRADEMARKS AND TRADE NAMES
We own or have the right to use trademarks or
trade names used in conjunction with the operation of our
business. In addition, our name, logo and website name and
address are our service marks or trademarks. Each trademark,
trade name or service mark of any other company appearing in
this prospectus belongs to its holder. Some of the more
important trademarks that we use include
Adorisse, Always
Color, Chosen, Eau D'Aromes, Fm Force Magnetique,
Jafra, JF9, Legend for Men, Le Moiré, Optimeyes,
Precious Protein, Rediscover, Royal Almond, Royal Ginger, Tender
Moments, Time Corrector, Time Protector
and
Victus.
PRESENTATION OF FINANCIAL MATTERS
We report our financial statements in
U.S. dollars and prepare our financial statements in
accordance with accounting principles generally accepted in the
United States, or GAAP. We have adopted a fiscal year end of
December 31.
In this prospectus, except where otherwise
indicated, references to:
•
"$" or "dollars" are to the
    lawful currency of the United States, and
•
"pesos" are to the lawful currency of
    Mexico.
EXPLANATORY NOTE
Prior to the closing of the sale of common stock
offered hereby, the issuer of the shares, CDRJ North Atlantic
(Lux) S.àr.l., will convert from a Luxembourg private
company, or
société à responsabilité
limitée,
to a Luxembourg corporation, or
société anonyme,
and will change its name to
"Jafra S.A."
ii
Table of Contents
PROSPECTUS SUMMARY
This summary highlights selected information
about us. In addition to reading this summary, you should review
carefully the entire prospectus, especially the "Risk
Factors" section and our consolidated financial statements
and notes to those consolidated financial statements included in
this prospectus, before making any investment decision. Unless
the context otherwise requires, in this prospectus, references
to "Jafra", "we", "us" and
"our" mean collectively Jafra S.A., our top-tier
holding company following the completion of the liquidation of
CDRJ Investments (Lux) S.A., which we also refer to as
"Jafra", Jafra Worldwide Holdings (Lux) S.àr.l.,
our intermediate holding company and a wholly-owned subsidiary
of Jafra S.A., which we also refer to as "Jafra
Worldwide", Jafra Cosmetics International, Inc., which we
also refer to as "Jafra US", Distribuidora
Comercial Jafra, S.A. de C.V., our Mexican operating company
that conducts our distribution activities in Mexico, which we
also refer to as "Jafra Distribution (Mexico)", and
Jafra Cosmetics International, S.A. de C.V., which we also refer
to as "Jafra Mexico", and their direct and indirect
subsidiaries. In 2003, we ceased operations in Venezuela, Chile,
Colombia, Peru and Thailand. Consequently, our historical
financial statements have been revised to reflect those
operations, other than Thailand, as discontinued operations for
all periods presented and our number of direct selling
consultants has been reduced accordingly.
Our Business
We are a direct seller of skin and body care
products, color cosmetics, fragrances and other personal care
products. We sell our Jafra brand products through a multi-level
direct selling network of over 400,000 independent consultants,
who market and sell our products to their customers. Our largest
markets are Mexico and the United States, which together
contributed approximately 90% of our total net sales in 2002 and
are among the world's largest direct selling markets. We
have a leading market share as a direct seller of skin care
products, color cosmetics and fragrances in Mexico, where Jafra
is among the most recognized cosmetics brand names. We introduce
new products each year in many of our product categories to
motivate and excite our consultants. In developing and
introducing new products, we employ a "fast follower"
strategy to minimize research costs and focus our development
efforts on products that have proven successful in the
marketplace. Our independent consultant base grew 14% to 401,000
in 2002 over 2001, and 4% during the nine months ended
September 30, 2003 over the comparable period in 2002.
During the year ended December 31, 2002, we generated net
sales of $382.6 million, of which $251.6 million
represents sales in Mexico, $92.1 million represents sales
in the United States and $38.9 million represents sales in
Europe and other markets. We also generated Consolidated EBITDA,
as defined in the indenture governing our 10 3/4% Senior
Subordinated Notes due 2011, or our 10 3/4% Notes, of
$63.6 million for the year ended December 31, 2002 and
$45.7 million for the nine months ended September 30,
2003.
We believe that the global direct selling market
provides substantial sales opportunity and has robust growth
prospects. The World Federation of Direct Selling Associations
estimates that in 2002, global direct selling was an
$85.6 billion industry, as measured by the retail value of
all products and services sold. Globally, direct selling
increased at a compound annual growth rate of approximately 5%
from 1991 to 2002. In 2002, total consumer goods direct sales in
our largest markets, Mexico and the United States, were
$1.2 billion and $28.6 billion, respectively. These
markets ranked fourth and first, respectively, in terms of
largest markets for total direct sales in 2002. Consumer goods
direct sales in Mexico and the United States increased at a
compound annual growth rate of 9.4% and 5.8%, respectively, from
1998 to 2002. Within the United States direct selling market, we
focus on the Hispanic community, which comprises over 13% of the
entire U.S. population, and which is expected to increase
its buying power at a compound annual growth rate of 9.2% from
2003 through 2008.
Our business strategy is focused on expanding and
retaining our loyal and motivated consultant base, the growth of
which has been a significant driver of our net sales growth. Our
multi-level direct selling business model is a source of organic
growth that aligns our consultants' income opportunities
with our strategy of continuing to grow our consultant base, net
sales and cash flow. We focus on providing our
1
Table of Contents
independent consultants with a portfolio of
premium quality skin care and beauty products, superior customer
service, and excellent marketing and training support. Our
established, cost-effective distribution infrastructure allows
us to generate high levels of operating profitability and
requires relatively low capital investment and working capital
to support and expand our business. We believe that these
strengths of our business model have given us a competitive
advantage in attracting and retaining a productive consultant
base, which in turn has contributed to our success and positions
us well for ongoing growth in net sales and profitability.
We were founded 48 years ago in Southern
California and were acquired in April 1998 from The Gillette
Company by an affiliate of Clayton, Dubilier & Rice,
Inc., a New York-based private investment firm, along with a
newly formed management team highly experienced in the direct
selling industry. Since our acquisition, we have grown our
consultant base more than 95% from approximately 205,000 to
approximately 401,000 consultants as of December 31, 2002.
Our net sales have grown from $241.9 million to
$382.6 million from 1998 to 2002 largely as a result of
this growth in our consultant base.
Our Competitive Strengths
Attractive Direct Selling Business Model.
Our direct selling business model
requires relatively low investment, promotes organic growth and
generates high levels of operating profitability and cash flow.
We believe that we provide our independent consultants with a
compelling career opportunity and have various competitive
advantages in attracting and retaining our consultant base. We
have designed our multi-level compensation and incentive system
to align our consultants' income opportunity with our
objectives of both sustained, profitable net sales growth and
ongoing expansion of the consultant base. Our consultants'
direct compensation, which we refer to as commissions, from the
sale of products is equal to the differential between the
wholesale price paid to Jafra and the retail price paid by the
customer. Our compensation system also encourages consultants to
recruit additional consultants since they can also receive an
override, or percentage of the sales of the consultants they
have sponsored. We believe that the cost for an individual to
become a Jafra consultant, which averages $25 in Mexico and $39
in the United States, is among the lowest of the leading direct
sellers in these markets. Furthermore, we impose no inventory
maintenance requirements and, in the United States, no minimum
order requirements on our consultants.
Presence in Leading Direct Selling Markets.
We believe we have a leading market
share of skin care products, color cosmetics and fragrance sales
in Mexico, the world's fourth largest direct selling market
in 2002, and have grown our net sales in the United States, the
world's largest direct selling market in 2002 and our
second-largest market. We believe that in Mexico, our network of
approximately 269,000 independent consultants, as of
December 31, 2002, and our strong brand equity position,
will allow us to continue to grow our consultant base and
capture additional market share. Over the four years ended
December 31, 2002, we grew our net sales in Mexico by a
compound annual growth rate of 22% measured in local currency
and 20% measured in U.S. dollars and increased our market
share of direct selling cosmetics in Mexico from approximately
17% to approximately 26%. In late 2000, we reorganized our
U.S. operations into a General Division and a Hispanic
Division, which is comprised of Spanish speaking consultants.
Since this reorganization, we have grown our net sales in the
United States by an average of 12% per year and increased our
U.S. consultant base to approximately 72,000 consultants as
of December 31, 2002. According to the U.S. Census
Bureau, currently over 13.3% of the U.S. population is
Hispanic, and the U.S. Hispanic population has been the
fastest-growing segment of the U.S. population in recent
years. We believe our focus on this demographic will allow us to
continue to grow our net sales. Additionally, U.S. Hispanic
buying power is expected to grow at a compound annual growth
rate of 9.2% from 2003 to 2008, nearly double the non-Hispanic
buying power growth rate of 4.8% over the same period.
Established and Growing Consultant Base.
We believe that as a result of
management's focus on providing our independent consultants
with superior marketing and training support and products, our
direct sales force expanded by more than 95% since our
acquisition in 1998 to approximately 401,000 consultants as of
December 31, 2002. This rapid expansion of our consultant
base has been a primary
2
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driver of our significant net sales growth. As of
December 31, 2002, a majority of our consultants had been
affiliated with us for approximately three years. Our consultant
base is anchored by a group of approximately 17,000 independent
managers, who on average, as of December 31, 2002, had been
affiliated with Jafra for more than eight years, and who provide
us with a source of organizational stability. We host meetings
approximately every two months with more than 60,000 of our
independent consultants in Mexico at one of our regularly
scheduled training sessions, sales and marketing workshops or
new product demonstrations. We believe that our frequent contact
with our consultants provides us a competitive advantage in our
core markets and helps us maximize our consultant retention
rates.
Premium Quality Product Offerings.
We develop and market a diverse
portfolio of premium quality products that we believe appeal to
a wide customer base, and enjoy significant brand equity and
strong product loyalty. We are focused on developing consumable
products that encourage repeat purchases and foster personal
interaction between consultants and their customers. We believe
that the Jafra brand is among the most widely recognized
cosmetics brands in Mexico, which presents a significant
opportunity to leverage into new cosmetics products and line
extensions. In addition, the quality of our products permits us
generally to price them at the higher end of the price range for
cosmetics sold through the direct sales channel, which is
slightly below the price point of comparable prestige products
sold in department stores.
Modern, Efficient and Scalable Operating
Infrastructure.
From the time of our
acquisition in April 1998 to December 31, 2002, we invested
more than $40 million to build a modern, efficient
operating infrastructure and prepare us for future growth. These
investments have included the establishment of a new
distribution facility in Mexico and the modernization of our
manufacturing facility in Naucalpan, Mexico. We recently decided
to move our remaining manufacturing activities in the United
States to our Mexico facility and expect that this transition
will be completed by mid-2004 and will result in cost savings
and increased profit margins. In addition, we have implemented
Enterprise Resource Planning software from JD Edwards as a
platform to run our core operations in the United States, our
order entry fulfillment, commission override processing and
financial system software. We also redefined our Internet
strategy and expanded our e-commerce platform. Our e-commerce
strategy is primarily a resource offered to our consultants to
facilitate placing orders on-line, monitoring the status of
orders, checking inventory and managing their individual
businesses more effectively. Since launch, our
U.S. consultants have embraced the system, with 75% of our
General Division orders and 21% of our Hispanic Division orders
being placed on line during 2003. Our e-commerce strategy has
not only benefited our consultants, but has allowed us to reduce
fixed overhead expenses.
Strong Financial Performance.
We have combined the growth derived
from our multi-level direct selling business model with our
focus on efficiency to generate consistent operating income.
Since our acquisition in 1998, we have reduced manufacturing
costs, streamlined our corporate overhead and established a
low-cost, scalable distribution infrastructure, resulting in an
increase of 8.6 percentage points, as of December 31,
2002, in our operating profit margin. Over the same period, we
generated $122.4 million in cumulative cash flows from
operating activities. We believe that our direct selling
business model affords us opportunities to leverage our fixed
cost structure to expand margins and increase profitability as
we grow. In addition, our business model continues to generate
significant organic growth, which creates scale that increases
our efficiencies in purchasing, manufacturing, marketing,
training and technology functions.
Proven and Experienced Management
Team.
We
are led by a highly experienced and committed senior management
team with extensive direct selling experience, most of whom have
held positions at some of the world's leading direct
selling companies. Our senior management team has developed and
executed our business strategy since our acquisition in 1998
from Gillette. In addition to our senior management team, we
have a strong middle management team with significant experience
and understanding of the business. We believe our management
team has been instrumental in growing our business and
significantly improving our operating performance.
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Our Growth Strategies
Continue Core Strategy of Expanding and
Retaining Consultant Base.
We intend
to continue to drive growth in our business by focusing on
sponsoring and retaining loyal consultants. We believe that the
attractive income opportunities offered by our multi-level
compensation structure and our operational and cultural focus on
providing support to our consultants have been instrumental in
achieving robust consultant and net sales growth over the past
five years. We believe the emphasis we place on providing our
consultants with superior customer service, training, effective
sales and marketing materials, brochures, and new product
demonstrations, will continue to differentiate us from our
competitors. Additionally, we intend to continue to stimulate
net sales growth by motivating our consultant base at local
recognition events and by offering travel rewards, gifts and
other incentives to our most productive consultants.
Capitalize on Leading Market Position and
Brand Equity in Mexico.
We believe our
leading market position and the strength of the Jafra brand in
Mexico position us to benefit from favorable demographic trends
and will facilitate our efforts to continue to expand our
consultant base and capture additional market share. Currently,
the average age of a Jafra consultant is 35, while over 50% of
the Mexican population is under the age of 20 and two-thirds are
under the age of 30. As the Mexican population ages and more
adults seek career and income opportunities, we believe that our
brand equity and the scale of our consultant base will position
Jafra as an attractive career opportunity and facilitate
consultant recruitment.
Continue Successful U.S. Divisional
Strategy.
We will continue to pursue
our successful strategy of differentiating ourselves from other
direct selling companies by focusing on demographic
characteristics of our consultants and their target customers.
In late 2000, we bifurcated our operations in the United States
into a Hispanic Division and a General Division. The
establishment of two separate divisions in the United States has
allowed us to customize our marketing efforts. We have focused
on those separate segments of the population and will continue
to provide our U.S. Spanish and non-Spanish speaking
consultants with tailored recruiting programs, training
materials, seminars and product presentations. In particular, we
believe we will continue to benefit from the growth of the
U.S. Hispanic population and its increasing buying power.
We believe these trends will continue to benefit our sales and
recruitment efforts. Our divisional approach to the U.S. market
facilitates the interaction of our consultants with their
customers and contributed to the 16% net sales growth of our
U.S. business during fiscal 2002 and an 11% increase in net
sales during the first nine months of fiscal 2003 as compared
with the comparable fiscal 2002 period.
Maintain Strong New Product Pipeline.
The development and introduction of
new products and line extensions are fundamental to our direct
selling business model in that they serve to motivate our
consultants by providing them with new and exciting products to
demonstrate and market to their customers. As part of each of
our consecutive two-month marketing and promotion cycles, we
regularly introduce line extensions, such as new colors within
our existing color cosmetics lines, and new products that employ
the latest technology and capitalize on the face-to-face
interaction between consultants and their customers. In the
development of new products, we employ a "fast
follower" strategy that minimizes research costs and
focuses development efforts on innovative, efficacious products
that have already proven successful in the marketplace.
Leverage Brand Strength into Complementary
Categories and Markets.
Since our
acquisition in 1998, we have primarily focused on growing our
loyal consultant base and establishing a cost-effective
distribution infrastructure and superior support structure for
our consultants. We have recently begun to assess incremental
growth opportunities through the development of new products in
complementary categories that leverage the Jafra brand equity
and ultimately could increase our consultants' average
order size. Our measured strategy is to cost-effectively develop
selective products in complementary categories with our
consultants' core customer in mind and that will
specifically lend themselves to the one-on-one meetings and
product demonstrations that are fundamental to our direct
selling business model. We also continue to evaluate the
possibility of expanding into other direct selling markets and
evaluate acquisition opportunities.
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Continue to Identify Operating Efficiencies
and Benefit from Economies of Scale.
From the time of our acquisition in 1998 to December 31,
2002, we have increased our gross profit margin by approximately
5.3 percentage points from 71.1% to 76.4% and reduced
selling, general and administrative expenses, less one-time
charges related to our May 2003 recapitalization, as a
percentage of net sales by approximately 3.3 percentage points
from 64.4% to 61.1%, primarily by reducing manufacturing and
overhead costs, streamlining our marketing efforts and improving
our working capital management. We intend to continue to pursue
additional opportunities to realize cost savings and operating
efficiencies in order to increase profitability. We recently
announced our intention to relocate our skin care and body care
manufacturing facilities to Mexico. Further, we believe our
direct selling business model will continue to generate
significant organic growth and that the resulting scale will
afford us increasing opportunities to leverage our fixed cost
base and increase efficiencies in our purchasing, manufacturing,
marketing, training and technology functions.
*          *          *
Controlling Stockholder
The Clayton, Dubilier & Rice Fund V
Limited Partnership, or CD&R Fund V, owns approximately
84.0% of the outstanding shares of common stock of Jafra on a
fully-diluted basis on the date of this prospectus, including
all outstanding options, and will
own           %
of Jafra's common stock following the completion of this
offering. Clayton, Dubilier & Rice Inc., or CD&R,
is a private equity investment firm which manages CD&R
Fund V. Of the ten members of our board of directors, three
are principals of CD&R.
*          *          *
Our principal executive offices are located at
174 route de Longwy, L-1940 Luxembourg, Luxembourg, and our
telephone number there is 352 22 6027. The address of
our principal U.S. subsidiary's main office is
2451 Townsgate Road, Westlake Village, California 91361,
and the telephone number there is (805) 449-3004. Our
website is located at www.jafra.com. The information on our
website is not incorporated into and is not intended to be part
of this prospectus. Our website address is included in this
prospectus as an inactive textual reference only.
5
Table of Contents
The Offering
Issuer
Jafra S.A. Prior to the sale of the shares
    offered hereby, the issuer will be converted from a
société à responsabilité limitée
into a
société anonyme
and its outstanding
    quotas will be recapitalized into shares of capital stock.
Shares of Common Stock Offered by Jafra
Shares of Common Stock Offered by the Selling
    Stockholders
(or            shares
    if the underwriters exercise their over-allotment option in full)
Shares of Common Stock Outstanding After the
    Offering
Use of Proceeds
Our net proceeds from this offering, after
    deducting underwriting discounts and estimated expenses, will be
    approximately            million.
    We intend to use our net proceeds from this offering, together
    with borrowings under our credit facility, principally to redeem
    $70 million in aggregate principal amount of our
    outstanding 10 3/4% Senior Subordinated Notes due 2011, or
    our 10 3/4% Notes, and to pay related transaction fees and
    related taxes and expenses. See "Use of Proceeds". We
    will not receive any proceeds from the sale of shares by the
    selling stockholders.
Dividend Policy
We do not expect to pay dividends on our common
    stock for the foreseeable future.
New York Stock Exchange Trading Symbol
JFA
Unless we specifically state otherwise or the
context otherwise requires, all information in this prospectus:
•
gives effect to our conversion to an S.A. from an
    S.àr.l. and the
    related           for
    1 split of our common shares;
•
assumes no exercise of the over-allotment option
    granted by the selling stockholders to the underwriters; and
•
excludes 84,242 shares of common stock
    issuable upon the exercise of outstanding stock options at a
    weighted average exercise price of
    $          per
    share with exercise prices ranging from
    $          per
    share to
    $          per
    share; of these shares, 68,120 shares are subject to
    currently vested stock options at a weighted average exercise
    price of
    $          per
    share with exercise prices ranging from
    $          to
    $          per
    share. All exercise prices have been adjusted to reflect the May
    2003 recapitalization transactions. See "Certain
    Relationships and Related Party Transactions — May
    2003 Recapitalization."
Risk Factors
You should consider carefully all the information
included in this prospectus and, in particular, the specific
factors set forth under "Risk Factors" beginning on
page 11 for risks involved in investing in our common stock.
6
Table of Contents
Summary Consolidated Financial and Other
Data
The following is a summary of consolidated
financial and other data of CDRJ North Atlantic (Lux)
S.àr.l. (to be renamed Jafra S.A.) (amounts in millions
except for per share and consultant data and ratios). The
summary consolidated financial data for the years ended
December 31, 2000, 2001 and 2002 are derived from the
audited consolidated financial statements of CDRJ North Atlantic
(Lux) S.àr.l. The consolidated financial statements as of
December 31, 2001 and for each of the two years in the
period ended December 31, 2001 have been audited by
Deloitte & Touche LLP, independent auditors. The
consolidated financial statements as of December 31, 2002
and for the year then ended have been audited by
Ernst & Young LLP, independent auditors. The audited
consolidated financial statements as of December 31, 2001
and 2002 and for the years ended December 31, 2000, 2001
and 2002 are included elsewhere in this prospectus. The summary
consolidated financial data as of September 30, 2003 and
for the nine months ended September 30, 2002 and 2003 are
derived from the unaudited consolidated financial statements of
CDRJ North Atlantic (Lux) S.àr.l. included elsewhere in
this prospectus and give effect to our May 2003
recapitalization. Results for the nine months ended
September 30, 2003 are not necessarily indicative of
results that can be expected for the year ended
December 31, 2003. The as adjusted balance sheet data below
as of and for the period ended September 30, 2003 reflects
adjustments to our historical financial data to give effect to
the sale of the shares offered hereby and the use of proceeds
therefrom, as well as to borrowings under the revolving portion
of our senior credit facilities, to fund the full amount of a
final liquidating distribution of up to $20 million to
shareholders of CDRJ Investments (Lux) S.A., as if such
transactions had occurred on September 30, 2003. You should
read the following summary consolidated financial and other data
of CDRJ North Atlantic (Lux) S.àr.l. in conjunction with
the historical consolidated financial statements and other
financial information appearing elsewhere in this prospectus,
including "Capitalization", "Selected Historical
Consolidated Financial and Other Data" and
"Management's Discussion and Analysis of Financial
Condition and Results of Operations".
SUMMARY CONSOLIDATED FINANCIAL AND OTHER
DATA
Nine Months Ended
Years Ended December 31,
September 30,
1999
2000
2001
2002
2002
2003
Statement of Income Data:
Net sales
$
286.8
$
310.5
$
365.4
$
382.6
$
285.3
$
276.7
Gross profit
207.5
233.8
281.2
292.4
219.2
212.9
Selling, general and administrative expenses
173.2
188.8
224.8
233.8
174.9
188.5
(g)
Restructuring and impairment charges(a)
4.8
2.6
—
—
—
—
Gain on sale of assets
(1.1
)
—
—
—
—
—
Income from operations
30.6
42.4
56.4
58.6
44.3
24.4
(g)
Interest (expense), net
17.0
15.7
13.4
11.4
8.8
14.1
Loss on early extinguishment of debt
(0.7
)
(0.5
)
—
—
—
(6.6
)(h)
Loss on discontinued operations, net of income
    tax expense of $0 in 1999 and 2000, $0.1 in 2001 and 2002 and $0
    in 2003
(0.8
)
—
(0.2
)
(1.5
)
(1.1
)
(2.5
)
Net income (loss)
4.7
6.4
16.0
18.8
14.9
(8.1
)(i)
7
Table of Contents
Nine Months Ended
Years Ended December 31,
September 30,
1999
2000
2001
2002
2002
2003
Earnings per share from continuing operations
    (basic)
Loss per share from discontinued operations
    (basic)
Earnings per share (basic)
Earnings per share from continuing operations
    (diluted)
Loss per share from discontinued operations
    (diluted)
Earnings per share (diluted)
Other Financial and Operational
    Data:
Net cash provided by (used in) operating
    activities
$
(1.6
)
$
32.6
$
29.8
$
43.5
$
23.2
$
(1.7
)
Consolidated EBITDA(b)
41.3
46.2
54.0
63.6
47.7
45.7
Capital expenditures
5.3
6.7
11.2
11.0
7.6
5.0
Average number of consultants(c)
260,000
290,000
344,000
376,000
368,000
404,000
Consultants at end of period(d)
274,000
293,000
351,000
401,000
384,000
400,000
Ratio of Consolidated EBITDA to consolidated
    interest expense
3.2
x
As of
September 30, 2003
Actual
As Adjusted
Balance Sheet Data:
Cash and cash equivalents
$
8.9
$
Net working capital(e)
23.1
Total assets
281.0
Total debt(f)
248.8
Stockholders' deficit
(57.8
)
(a)
For 1999, $2.7 million of our restructuring
    and impairment charges were primarily cash charges for severance
    related to the closure of our U.S. factory. Of the
    remainder, $1.0 million were other restructuring charges
    and approximately $1.1 million were non-cash asset
    impairment charges related to the write down or impairment of
    assets. For 2000, our restructuring and impairment charges
    included approximately $1.6 million of restructuring
    charges related to the restructuring of our European operations,
    most of which were payments of severance and lease termination
    costs, and approximately $1.0 million of non-cash asset
    impairment charges related to the write down or impairment of
    assets.
(b)
"Consolidated EBITDA" as presented
    herein is a financial measure that is used in the indenture
    governing our 10 3/4% Notes, or our "10 3/4%
    Notes Indenture", as a component of a coverage ratio that
footnotes continued on following
page
8
Table of Contents
is used to test whether a variety of transactions
    are permitted. Consolidated EBITDA (as defined in the
    10 3/4% Notes Indenture) differs from the term
    "EBITDA" as it is commonly used. In addition to
    adjusting net income to exclude income tax expense, interest
    expense and depreciation and amortization, Consolidated EBITDA
    (as defined in the 10 3/4% Notes Indenture) also adjusts
    net income by excluding items or expenses not typically excluded
    in the calculation of "EBITDA", such as extraordinary,
    unusual or nonrecurring charges, the cumulative effect of
    accounting change, unrealized foreign exchange gains or losses
    (with respect to currency agreements, indebtedness or certain
    intercompany obligations), non-cash charges and losses and
    income or loss from markets we exited in 2003. The historical
    Consolidated EBITDA measures set forth in this prospectus
    reflect the application of the terms of the 10 3/4% Notes
    Indenture to the financial results of the specified prior
    periods. We present Consolidated EBITDA because it is one of the
    measures upon which management assesses our financial
    performance, and is a measure of our financial performance that
    is used in the 10 3/4% Notes Indenture to test the
    permissibility of specified types of transactions. Among other
    provisions, Consolidated EBITDA is used in the 10 3/4%
    Notes Indenture to test whether our subsidiaries may incur
    additional indebtedness or make dividends or other advances of
    funds to us. Purchasers of our common stock may view
    Consolidated EBITDA as a measure of our ability to service debt
    and of our financial performance. However, Consolidated EBITDA
    is not a measure of financial performance or liquidity under
    GAAP. Accordingly, while providing useful information,
    Consolidated EBITDA should not be considered in isolation or as
    a substitute for consolidated statement of income and cash flow
    data prepared in accordance with GAAP as an indication of our
    operating performance or liquidity.
The 10 3/4% Notes Indenture provides that,
in order to enter into the following types of transactions, in
addition to other applicable requirements, the ratio of
Consolidated EBITDA (as defined in the 10 3/4% Notes
Indenture) to our consolidated interest expense (subject to
certain adjustments as provided in the 10 3/4% Notes
Indenture) must be greater than 2.25 to 1.00 for the four most
recent quarters for which financial statements are available,
after giving pro forma effect to the transaction being tested:
•
The incurrence of indebtedness in addition to
    limited specified categories of permitted indebtedness that are
    enumerated in the 10 3/4% Notes Indenture.
•
Mergers and consolidations involving Jafra.
•
Dividends, investments and other restricted
    payments in addition to limited specified categories of
    permitted restricted payments and investments that are
    enumerated in the 10 3/4% Notes Indenture.
•
The re-designation of an unrestricted subsidiary
    for the purposes of the 10 3/4% Notes Indenture.
The following table illustrates the
    reconciliation of Consolidated EBITDA to net cash provided by
    operating activities, which management believes is the most
    nearly equivalent GAAP measure. The adjustments set forth below
    are those relevant to the periods presented, and do not
    represent all adjustments that may be applicable pursuant to the
    indenture in subsequent periods.
Nine Months
Ended
Years Ended December 31,
September 30,
1999
2000
2001
2002
2002
2003
Net cash provided by (used in) operating
    activities
$
(1.6
)
$
32.6
$
29.8
$
43.5
$
23.2
$
(1.7
)
Change in operating assets and liabilities
26.0
(3.3
)
6.9
4.8
13.3
20.4
Asset impairment charges
(1.1
)
(1.0
)
—
0.1
—
—
Depreciation and amortization
(7.0
)
(7.5
)
(7.5
)
(5.5
)
(3.7
)
(4.4
)
Cumulative effect of accounting change
—
—
0.1
(0.2
)
(0.2
)
—
Provision for uncollectible accounts receivable
(4.7
)
(5.9
)
(9.3
)
(12.4
)
(9.8
)
(7.0
)
footnotes continued on following
page
9
Table of Contents
Nine Months
Ended
Years Ended December 31,
September 30,
1999
2000
2001
2002
2002
2003
Unrealized foreign exchange and hedging gain
    (loss)
2.4
(2.9
)
0.7
(8.4
)
(8.5
)
(8.5
)
Provision for deferred taxes
(7.3
)
(3.4
)
(3.9
)
(0.6
)
3.5
—
Other items to reconcile net cash provided by
    operating activities to net income
(2.0
)
(2.2
)
(0.8
)
(2.5
)
(2.9
)
(6.9
)
Net income (loss)
$
4.7
$
6.4
$
16.0
$
18.8
$
14.9
$
(8.1
)
Net interest expense
17.0
15.7
13.4
11.4
8.8
14.1
Income tax expense
10.7
9.7
17.3
16.2
9.7
1.2
Depreciation and amortization
7.0
7.5
7.5
5.5
3.7
4.4
EBITDA
39.4
39.3
54.2
51.9
37.1
11.6
Cumulative effect of accounting change
—
—
(0.1
)
0.2
0.2
—
Loss on early extinguishment of debt
0.7
0.5
—
—
—
6.6
Unrealized foreign exchange and hedging (gain)
    loss
(2.4
)
2.9
(0.7
)
8.4
8.5
8.5
Transaction related costs
—
—
—
1.5
0.7
15.6
U.S. factory closing costs
2.7
—
—
—
—
—
European restructuring charges
—
1.6
—
(0.1
)
(0.1
)
—
Sale or writedown of assets
0.1
1.2
—
(0.1
)
(0.1
)
—
Losses from discontinued operations, net of tax
0.8
0.1
0.2
1.5
1.1
2.5
Losses in Thailand
—
0.6
0.4
0.3
0.3
0.9
Consolidated EBITDA
$
41.3
$
46.2
$
54.0
$
63.6
$
47.7
$
45.7
(c)
The average number of consultants is calculated
    based on the total ending consultant base for each month during
    the period. A consultant is included in the total ending
    consultant base if she places an order within the past four
    months. Consultant numbers are rounded to the nearest thousand.
(d)
Consultant numbers are rounded to the nearest
    thousand.
(e)
Net working capital is defined as total current
    assets, excluding cash and cash equivalents, less total current
    liabilities, excluding short-term debt and the current portion
    of long-term debt.
(f)
Consists of long-term debt, short-term debt and
    the current portion of long-term debt.
(g)
Includes $15.6 million of expenses related
    to our May 2003 recapitalization.
(h)
Relates to our redemption of debt in connection
    with our May 2003 recapitalization.
(i)
Includes $15.6 million of expenses and
    $6.6 million of losses on the early extinguishment of debt
    related to our May 2003 recapitalization.
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RISK FACTORS
An investment in our common stock involves a
high degree of risk. You should carefully consider the risks
described below, together with other information in this
prospectus, before making an investment decision. The risks
described below are not the only ones facing us. Additional
risks and uncertainties not currently known to us or that we
currently deem to be immaterial may also materially and
adversely affect our business operations. Any of the following
risks could materially and adversely affect our business,
financial condition or results of operations. In such case, you
may lose all or part of your original investment. This
prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ
materially from those anticipated in those forward-looking
statements as a result of many factors, including the risks
described below and elsewhere in this prospectus. See
"Forward-Looking Statements".
Risks Related to Our Business and
Industry
Because our Mexican operations account for
over 60% of our business, any adverse changes in our business
operations in Mexico would adversely affect our net sales and
profitability.
Approximately 66% of our net sales for the year
ended December 31, 2002 and 62% of our net sales for the
nine months ended September 30, 2003 were generated in
Mexico. Various factors could harm our business in Mexico and
our other non-U.S. markets. These factors include, among
others:
•
worsening economic conditions, including a
    prolonged recession in Mexico or other applicable market;
•
greater difficulty in staffing and managing
    foreign operations;
•
fluctuations in currency exchange rates and
    inflation;
•
longer collection cycles and increases in bad
    debt expenses;
•
potential adverse changes in laws and regulatory
    practices, including tax laws;
•
changes in labor conditions;
•
burdens and costs of compliance with a variety of
    laws;
•
political, social and economic instability;
•
increases in taxation; and
•
greater difficulty in protecting intellectual
    property.
Mexico is an emerging market economy, with
attendant risks to our results of operations and financial
condition.
The Mexican government has exercised, and
continues to exercise, significant influence over the Mexican
economy. Accordingly, Mexican governmental actions concerning
the economy and state-owned enterprises could have a significant
impact on Mexican private sector entities in general and on us
in particular, as well as on market conditions. The national
elections held on July 2, 2000 ended 71 years of rule
by the Institutional Revolutionary Party (or "PRI")
with the election of President Vicente Fox Quesada, a member of
the National Action Party (or "PAN") and resulted in
the increased representation of opposition parties in the
Mexican Congress and in mayoral and gubernatorial positions.
Although there have not yet been any material adverse
repercussions resulting from this political change, multiparty
rule is still relatively new in Mexico and could result in
economic or political conditions that could materially and
adversely affect our operations. The next national elections
will be held in 2006, and campaigning activities have begun as
of the date of this prospectus. We cannot predict the impact
that this new political landscape will have on the Mexican
economy. Furthermore, our financial condition, results of
operations and prospects and, consequently, the market price for
our securities, may be affected by currency
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fluctuations, inflation, interest rates,
regulation, taxation, social instability and other political,
social and economic developments in or affecting Mexico.
The Mexican economy in the past has suffered
balance of payment deficits and shortages in foreign exchange
reserves. There are currently no exchange controls in Mexico.
However, Mexico has imposed foreign exchange controls in the
past. Pursuant to the provisions of the North American Free
Trade Agreement, if Mexico experiences serious balance of
payment difficulties or the threat thereof in the future, Mexico
would have the right to impose foreign exchange controls on
investments made in Mexico, including those made by U.S. and
Canadian investors. Any restrictive exchange control policy
could adversely affect our ability to obtain U.S. dollars
or to convert pesos into U.S. dollars for purposes of
paying dollar-denominated expenses, such as interest on our
indebtedness, to the extent that we may have to effect those
conversions. This could have a material adverse effect on our
business and financial condition.
Securities of companies with substantial
operations in emerging market countries tend to be influenced by
economic and market conditions in other emerging market
countries. Emerging market countries, including Argentina and
Brazil, have recently been experiencing significant economic
downturns and market volatility. These events have had an
adverse effect on the economic conditions and securities markets
of other emerging market countries, including Mexico.
There are many risks inherent in our
international operations.
Our ability to conduct business outside the
United States and our revenues derived from foreign markets are
subject to the risks inherent in international operations. Our
international operations may be adversely affected by import
duties or other legal restrictions on imports, currency exchange
control regulations, transfer pricing regulations, the
possibility of hyperinflationary conditions and potentially
adverse tax consequences, among other things. In addition, the
governments of many developing nations have exercised and
continue to exercise significant influence over many aspects of
their domestic economies. For example, in Brazil, we have
encountered significant tax costs associated with the Brazilian
tax on imports of manufactured goods, or Imposto sobre Produtos
Industrializados. There can be no assurance that the governments
of nations in which we operate or may expand will not take
actions that materially adversely affect us.
Currency exchange rate fluctuations,
particularly with respect to the U.S. dollar/ Mexican peso
exchange rate, could lower our net sales and net
income.
During 2002, we recognized approximately 76% of
our net sales in non-U.S. markets in each market's
respective local currency, including approximately 66% in
Mexican pesos. During the first three quarters of 2003, we
recognized approximately 73% of our net sales in non-U.S.
markets in each market's respective local currency,
including approximately 62% in Mexican pesos. In preparing our
financial statements, we translate net sales and expenses in
foreign countries from their local currencies into
U.S. dollars using weighted average exchange rates. If the
U.S. dollar strengthens relative to local currencies, our
reported net sales, gross profits and net income will likely be
reduced. For example, as discussed below, in 2002, the Mexican
peso weakened, which reduced our operating results on a
U.S. dollar reported basis. Our 2003 operating results
could be similarly harmed if the Mexican peso weakens from
current levels.
The value of the Mexican peso has been subject to
significant fluctuations with respect to the U.S. dollar in the
past and may be subject to significant fluctuations in the
future. The Mexican peso decreased in value against the
U.S. dollar from approximately 9.14 pesos to the
dollar at December 31, 2001 to approximately
11.20 pesos to the dollar at December 31, 2003, a
devaluation of approximately 23% over two years. Historically,
Jafra Mexico and its Mexican affiliates have been able to raise
their prices generally in line with local inflation, thereby
helping to mitigate the effects of devaluations of the Mexican
peso. However, there can be no assurance that our Mexican
operating companies will be able to maintain this pricing policy
in the future, or that future exchange rate fluctuations will
not have a material adverse
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effect on our ability to pay when due the
principal and interest on our indebtedness, which is primarily
denominated in U.S. dollars.
Given our inability to predict the degree of
exchange rate fluctuations, we cannot estimate the effect these
fluctuations may have upon future reported results, product
pricing or our overall financial condition. Although we attempt
to reduce our exposure to short-term exchange rate fluctuations
by using foreign currency puts and calls, we cannot be certain
these instruments or any other hedging activity will effectively
reduce exchange rate exposure. In particular, we currently
employ a hedging strategy comprised of zero-cost collars that
are designed to protect us against sudden and extreme
devaluations in the Mexican peso. When we began purchasing these
zero-cost collars in early 2002, we were able to purchase
instruments, which expired in early 2003, that protected us
against devaluations in excess of 16%, as measured by the
difference between the U.S. dollar/ Mexican peso exchange
rate in effect on the date a particular instrument was entered
into and the rate specified in it. As the volatility of the
U.S. dollar/ Mexican peso exchange rate increased
throughout 2002 and early 2003, the range outside of which we
were able to acquire protection increased. In September 2003, we
modified our hedging policy to reduce the collar band on new
zero-cost collars to 10% in exchange for an increase in the
overall levels of the collar range in relation to the spot rate.
Currently, the hedging contracts have call strikes at
approximately 2% above current spot rates and collar bands of
approximately 10% and will therefore protect us against
devaluations in excess of approximately 12%. Consequently, our
existing zero-cost collars will not protect us (i) against
fluctuations in exchange rates within this range or
(ii) against a prolonged, gradual decline in the value of
the Mexican peso against the U.S. dollar. There can be no
assurance that instruments protecting us to the same or a
similar extent will be available in the future on reasonable
terms, if at all. Unprotected declines in the value of the
Mexican peso against the U.S. dollar will adversely affect
our ability to pay our dollar-denominated expenses, including
our obligations under our outstanding indebtedness, and will
reduce our reported net sales. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations".
Mexico may experience high levels of
inflation in the future which could adversely affect our results
of operations.
Mexico has a history of high levels of inflation,
and may experience inflation in the future. During most of the
1980s and during the mid-and late-1990s, Mexico experienced
periods of high levels of inflation. The annual rates of
inflation for the last five years as measured by changes in the
National Consumer Price Index, as provided by Banco de Mexico,
were:
1999
12.32
%
2000
8.96
%
2001
4.40
%
2002
5.70
%
2003
3.98
%
A substantial increase in the Mexican inflation
rate would have the effect of increasing some of our costs,
which could adversely affect our results of operations and
financial condition, as well as the market value of our
securities. High levels of inflation may also affect the balance
of trade between Mexico and the United States, and other
countries, which could adversely affect our results of
operations.
The final liquidation and dissolution of
subsidiaries in our non-core markets may result in additional
costs and diversion of management resources.
Our shift in strategic focus involving the recent
exit of markets in Venezuela, Chile, Colombia, Peru and Thailand
may prove to be unsuccessful for a number of reasons:
•
The completion of our liquidation of these
    non-core operations may take longer than we anticipate, prove to
    be more expensive and more time consuming than we project, and
    divert management's attention from our core business;
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•
We may need to obtain regulatory and other
    governmental approvals and third-party consents, and may
    encounter other factors typical in a closure that could
    significantly increase the cost and/or delay the completion of
    this process. To the extent the completion of this process is
    delayed, the costs of liquidating and dissolving these
    subsidiaries and the negative impact on our income statement
    will continue, and the exit-related transaction costs could be
    greater than planned;
•
Our shift in strategy may reduce the morale of
    our consultant base in our remaining markets; and
•
Tax authorities in the jurisdictions in which we
    are liquidating operations may conclude that additional taxes
    are payable as part of the liquidation process.
If we are unable to retain our existing
independent consultants and recruit additional consultants, our
net sales will not increase.
We distribute almost all of our products through
our independent consultants and we depend on them directly for
all of our net sales. Our consultants may terminate their
services at any time, and, like most direct selling companies,
we experience high turnover among consultants from year to year.
As a result, we need to continue to retain existing and recruit
additional independent consultants. To increase our net sales,
we must increase the number and/or the productivity of our
consultants. Our operations would be harmed if we failed to
generate continued interest and enthusiasm among our consultants
and failed to attract new consultants.
Although in the recent past we experienced an
increase in active consultants, we could experience declines in
active consultants, including senior consultants at the manager
and district director levels. The number of our active
consultants, including those at the manager and district
director level, may not increase and could decline in the
future. We cannot accurately predict how the number and
productivity of consultants may fluctuate because we rely upon
our existing consultants to recruit, train and motivate new
consultants. Our operating results could be harmed if our
existing and new business opportunities and products do not
generate sufficient interest to retain existing consultants and
attract new consultants. The number and productivity of our
consultants also depends on several additional factors,
including:
•
adverse publicity regarding us, our products, our
    distribution channel or our competitors;
•
failure to motivate our consultants with new
    products;
•
the public's perception of our products and
    their ingredients;
•
competition for consultants from other direct
    selling cosmetics companies;
•
the public's perception of our consultants
    and direct selling businesses in general; and
•
general economic and business conditions.
In addition, we may face saturation or maturity
levels in a given country or market. The maturity of several of
our markets could also affect our ability to attract and retain
consultants in those markets.
Failure of new products to gain consultant
and market acceptance could harm our business.
A critical component of our business is our
ability to develop new products that create enthusiasm among our
consultant force. If we fail to introduce new products planned
for the future, our consultant productivity could be harmed. In
addition, if any new products fail to gain market acceptance,
are restricted by regulatory requirements, or have quality
problems, it would harm our results of operations. Factors that
could affect our ability to continue to introduce new products
include, among others, government regulations, proprietary
protections of competitors that may limit our ability to offer
comparable products and any failure to anticipate changes in
consumer tastes and buying preferences.
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The loss of key high-level consultants
could negatively impact our consultant growth and our net
sales.
At September 30, 2003, we had approximately
14,000 managers, 3,000 district managers and
1,000 district directors. These district directors,
together with their extensive networks of downline consultants,
account for substantially all of our net sales. As a result, the
loss of a high-level consultant or a group of leading
consultants in the consultant's network of downline
consultants, whether by their own choice or through disciplinary
actions by us for violations of our policies and procedures,
could negatively impact our consultant growth and our net sales.
The regulatory environment in which we
operate is evolving, and our operations may be modified or
otherwise harmed by regulatory changes, subjective
interpretations of laws or an inability to work effectively with
national and local government agencies.
Although we review applicable local laws in
developing our plans, our efforts to comply with them may be
harmed by an evolving regulatory climate and subjective
interpretation of laws by the authorities. Any determination
that our operations or activities are not in compliance with
applicable regulations could negatively impact our business and
our reputation with regulators in the markets in which we
operate.
Government regulation of our products and
services may restrict or inhibit introduction of these products
in some markets and could harm our business.
Our products and our related marketing and
advertising efforts are subject to extensive government
regulation by numerous domestic and foreign governmental
agencies and authorities. These include, in the United States,
the Federal Trade Commission, the Consumer Product Safety
Commission, the Food and Drug Administration, the State
Attorneys General and other federal and state regulatory
agencies, and, in Mexico, the Ministry of Health along with
similar government agencies in other foreign markets where we
may operate. Our markets have varied regulations concerning
product formulation, labeling, packaging and importation. These
laws and regulations often require us to, among other things:
•
conform product labeling to the regulations in
    each country; and
•
register or qualify products with the applicable
    government authority or obtain necessary approvals or file
    necessary notifications for the marketing of our products.
Failure to introduce products or delays in
introducing products could reduce our net sales and decrease our
profitability. Regulators may also prohibit us from making
therapeutic claims about products despite research and
independent studies supporting these claims. These product claim
restrictions could prevent us from realizing the potential
revenue from some of our products.
We may shift our strategy to include the
marketing of products that we currently have no experience
selling. This shift in strategy would entail business risks, as
well as expose us to a regulatory environment in which we do not
currently operate.
We may in the future seek to use our existing
consultant network to market new lines of non-cosmetics products
such as health and wellness (including weight loss), vitamins,
nutritional supplements and other products that are outside our
current core product lines. This strategy, if adopted, would
expose us to a number of new risks that we do not currently
face, any of which, if adversely affecting us, could be
material. These risks include, among others:
•
our becoming subject to regulation in areas in
    which we have no operating experience, including increased
    regulation by the U.S. Food and Drug Administration and the
    U.S. Department of Agriculture and their foreign
    counterparts;
•
the imposition of significant penalties or claims
    due to our failure, or the failure of our consultants, to comply
    with these regulations;
•
increased exposure to product liability claims;
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•
diversion of our consultants' attention from
    sales of our existing product line;
•
diversion of management's attention from the
    continued growth and development of our existing business; and
•
the fact that our management has no experience,
    and our independent consultants may have no experience, in
    marketing these new product lines.
Laws and regulations may prohibit or
severely restrict our direct sales efforts and cause our net
sales and profitability to decline.
Various government agencies throughout the world,
including in the United States and Mexico, regulate direct sales
practices. These laws and regulations are generally intended to
prevent fraudulent or deceptive schemes, often referred to as
"pyramid" schemes, that compensate participants for
recruiting additional participants irrespective of product sales
and/or do not involve legitimate products. The laws and
regulations in our current markets often:
•
impose on us order cancellations, product
    returns, inventory buy-backs and cooling-off rights for
    consumers and consultants;
•
require us or our consultants to register with
    governmental agencies;
•
impose on us reporting requirements to regulatory
    agencies; and/or
•
require us to ensure that consultants are not
    being compensated solely based upon the recruitment of new
    consultants.
Complying with these sometimes inconsistent rules
and regulations can be difficult and requires the devotion of
significant resources on our part. If we are unable to continue
business in existing markets or commence operations in new
markets because of these laws, our net sales and profitability
will decline.
In addition, countries where we operate could
change their laws or regulations to negatively affect or
prohibit completely network or direct sales efforts. Government
agencies and courts in these countries may also use their powers
and discretion in interpreting and applying laws in a manner
that limits our ability to operate or otherwise harms our
business. If any governmental authority were to bring a
regulatory enforcement action against us that interrupts our
business, our net sales and earnings would likely suffer.
Challenges by private parties to the form
of our multi-level marketing system could harm our
business.
We may be subject to challenges by private
parties, including our consultants, to the form of our
multi-level marketing system or elements of our business. In the
United States, the multi-level marketing industry and regulatory
authorities have generally relied on the implementation of rules
and policies designed to protect consumers, to prevent
inappropriate activities and to distinguish between legitimate
multi-level marketing distribution plans and unlawful pyramid
schemes. We have adopted rules and policies based on case law,
rulings of the FTC, pronouncements of regulatory authorities in
several states and domestic and global industry standards. Legal
and regulatory requirements concerning multi-level marketing
systems, however, involve a high level of subjectivity, are
inherently fact-based and are subject to judicial and
administrative interpretation. Because of the foregoing, we can
provide no assurance that we would not be harmed by the
application or interpretation of statutes or regulations
governing multi-level marketing, particularly in any civil
challenge by a current or former consultant.
Our consultants are independent contractors
and not employees. If regulatory authorities were to determine,
however, on a facts and circumstances basis, that our
consultants are legally our employees, we could have significant
liability under social benefit laws.
Our consultants are self-employed and are not our
employees. Periodically, the question of the legal status of our
consultants has arisen, usually in regard to possible coverage
under social benefit laws
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that would require us, and in most instances our
consultants, to make regular contributions to social benefit
funds. This issue has not been fully resolved in all of the
markets in which we operate, including the United States. If
there should be a final determination adverse to us, the cost
for future, and possibly past, contributions could be
substantial and materially adversely affect our business and
financial condition.
Improper consultant actions could harm our
business.
Consultant activities in our existing markets
that violate governmental laws or regulations or that are
otherwise improper could result in governmental actions against
us in markets where we operate. Given the size of our consultant
force, we experience problems with consultants from time to
time. In particular, some of our consultants may make
unauthorized claims about either our products or the earnings
potential related to becoming a Jafra consultant. These claims
could harm our reputation or otherwise adversely impact us if
regulatory authorities were to determine that we should have
prevented such behavior.
If our industry, business or its products
are subject to adverse publicity, our business may
suffer.
We are very dependent upon our consultants'
and the general public's perception of the overall
integrity of our business, as well as the safety and quality of
our products and similar products distributed by other
companies. The number and motivation of our consultants and the
acceptance by the general public of our products may be
negatively affected by adverse publicity regarding:
•
the legality of multi-level marketing systems in
    general or Jafra's multi-level marketing system
    specifically;
•
the safety and quality of our products and
    product ingredients;
•
regulatory investigations of our products;
•
the actions of our consultants;
•
our management of our consultants; and
•
the direct selling industry.
We have provided notice to our primary
contract manufacturer that we are not extending the term of
their manufacturing agreement; and we may have difficulties
migrating the additional manufacturing burden to our own
facilities.
We have outsourced certain product manufacturing
functions to a third-party contractor located in Chino,
California. In 2002, products supplied by this manufacturer
accounted for approximately 29% of our net sales. On
December 8, 2003, we provided this supplier with notice
that we are not extending the term of their manufacturing
agreement, which will expire on July 1, 2004. Upon the
termination of the manufacturing agreement, the majority of
products previously sourced from this supplier will be
manufactured by us at our manufacturing facilities in Mexico
City. In the interim, if this supplier has unscheduled downtime
or is unable to fulfill its obligations under this manufacturing
agreement because of equipment breakdowns, natural disasters,
power failures or any other cause, it could adversely affect our
overall operations and financial condition. Although we provide
all of the formulations used to manufacture our products, we
have limited control over the manufacturing process itself. As a
result, any difficulties encountered by the third-party
manufacturer that result in product defects, production delays,
cost overruns or the inability to fulfill orders on a timely
basis could have a material adverse effect on our business,
financial condition and operating results. Additionally, if the
transition of additional manufacturing burden to our facilities
in Mexico City results in downtime or the inability to supply
finished goods due to equipment failure, labor stoppages or any
other cause, it could materially adversely affect our overall
operations and financial condition.
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After July 1, 2004, we will rely on
one manufacturing facility to provide products accounting for
substantially all of our net sales.
Beginning in July of 2004, we will manufacture
products accounting for approximately 90% of our net sales at
our manufacturing facility in Mexico City. Workers at this
facility are unionized pursuant to a collective bargaining
agreement that expires in January of 2005. In the past we have
experienced many minor work stoppages at this facility. If
manufacturing operations were to be interrupted for a material
period of time because of an employment dispute, strike or any
other labor-related cause, it could have a material adverse
effect on our overall operations and financial condition.
Additionally, if manufacturing operations at this facility were
interrupted due to equipment failures, natural disasters, power
failures, lack of suitable water supply or any other reason, our
overall operations and financial condition could be materially
adversely affected.
Failure of our Internet and other
technology initiatives to create sustained consultant enthusiasm
and incremental cost savings could negatively impact our
business.
We have been developing and implementing a
strategy to use the Internet to sign-up consultants and take
orders from consultants for our products. There can be no
assurance, however, that any cost savings from our Internet
strategy in Mexico and the United States will prove to be
significant or that we will be successful in adapting and
implementing our strategy to other markets in which we operate.
This could result in our inability to service our consultants in
the manner they expect, which could adversely impact our
profitability and growth.
If we are unable to protect our
intellectual property rights our ability to compete could be
negatively impacted.
The market for our products depends to a
significant extent upon the goodwill associated with our
trademark and trade names. We own, have licenses or have the
right to use the material trademark and trade names used in
connection with the packaging, marketing and distribution of our
major products in the markets where such products are
principally sold. Therefore, trademark and trade name protection
is important to our business. Although most of our trademarks
are registered in the United States and in certain foreign
countries in which we operate, we may not be successful in
asserting trademark or trade name protection. In addition, the
laws of certain foreign countries may not protect our
intellectual property rights to the same extent as the laws of
the United States. The costs required to protect our trademarks
and trade names may be substantial.
Other parties may infringe on our intellectual
property rights or intellectual property rights which we are
licensed to use, and may thereby dilute our brand in the
marketplace. Any such infringement of our intellectual property
rights would also likely result in a commitment of our time and
resources to protect these rights through litigation or
otherwise.
Governmental authorities may question our
intercompany transfer pricing or other payment policies or
change their laws in a manner that could increase our effective
tax rate or otherwise harm our business.
As a group doing more than 76% of its business in
non-U.S. markets during 2002, we are subject to foreign tax and
intercompany pricing laws, including those relating to the flow
of funds among our companies pursuant to, for example, purchase
agreements, licensing agreements, intercompany loans or other
arrangements. Regulators (including tax authorities) in the
United States, Mexico and in other foreign markets may closely
monitor our corporate structure and how we effect intercompany
fund transfers. If such regulators successfully challenge our
structure or these mechanisms, we may be subject to additional
taxes, interest and penalties, which could have a material
adverse impact on our cash flow, net income and effective tax
rate. Furthermore, proposed changes in United States tax laws
may adversely affect the ability of Jafra US to deduct interest
on its indebtedness. If such changes are enacted, our effective
tax rate may increase.
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We depend on our key personnel and the loss
of the services provided by any of our executive officers or
other key employees could harm our business and results of
operations.
Our success depends to a significant degree upon
the continued contributions of our senior management, many of
whom would be difficult to replace. These employees may
voluntarily terminate their employment with us at any time. We
may not be able to successfully retain existing personnel or
identify, hire and integrate new personnel. We do not have key
person insurance policies in place for these employees.
Our markets are intensely competitive, and
market conditions and the strengths of competitors may harm our
business.
The markets for our products are intensely
competitive. Our results of operations may be harmed by market
conditions and competition in the future. Many of our
competitors have much greater name recognition and financial
resources than we have, which may give them a competitive
advantage. For example, our products compete directly with
branded, premium retail products. We currently do not have
significant patent or other proprietary protection, and
competitors may introduce products with the same ingredients
that we use in our products. At least two of such competitors,
Mary Kay and Avon, utilize direct sales marketing and have
substantially larger numbers of salespersons, sales volume and
resources.
We also compete with other multi-level marketing
companies for consultants. Some of these competitors have a
longer operating history and greater visibility, name
recognition and financial resources than we do. Some of our
competitors have also adopted and could continue to adopt some
of our successful business strategies, including our
compensation strategy for our consultants. Consequently, to
successfully compete in this market and attract and retain
consultants, we must ensure that our business opportunities and
compensation plans are financially rewarding. We cannot assure
you that we will be able to successfully compete in this market
for consultants.
Product liability claims or recalls could
harm our business.
We may be required to pay for losses or injuries
purportedly caused by our products. To date, we have not been
subject to any material product liability lawsuits. We could,
however, become subject to such suits in the future. Claims
could be based on allegations that, among other things, our
products contain contaminants, include inadequate instructions
regarding their use or inadequate warnings concerning side
effects and interactions with other substances. In addition, any
such claim may result in negative publicity that may adversely
affect our net sales. Also, if one of our products is found to
be defective we may be required to recall it, which may result
in substantial expense and adverse publicity and adversely
affect our net sales. Although we maintain, and require our
material suppliers and manufacturers to maintain, product
liability insurance coverage, potential product liability claims
may exceed the amount of insurance coverage or potential product
liability claims may be excluded under the terms of the policy,
which could hurt our financial condition.
System failures could harm our
business.
Because of our diverse geographic operations and
our complex consultant compensation plan, our business is highly
dependent on efficiently functioning information technology
systems. These systems and operations are vulnerable to damage
or interruption from fires, earthquakes, telecommunications
failures and other events. They are also subject to break-ins,
sabotage, intentional acts of vandalism and similar misconduct.
Despite any precautions, the occurrence of a natural disaster or
other unanticipated problems could result in interruptions in
services and reduce our net sales and profits. We have licensed
and implemented a highly customized JD Edwards commercial
software system currently for use by our U.S. operations. As
anticipated, we are in the process of addressing necessary
system corrections. If we are unable to complete these or
subsequently required corrections in a timely manner, our
service levels, net sales and profits could be negatively
impacted.
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Our net sales depend on consumer confidence
and spending, which may fluctuate from period to period for
reasons beyond our control.
The sale of cosmetics and other personal care
products correlates strongly to the level of consumer spending
generally, and thus is significantly affected by the general
state of the economy and the ability and willingness of
consumers to spend on discretionary items. Reduced consumer
confidence and spending generally may result in reduced demand
for our products and limitations on our ability to maintain or
increase prices. A decline in economic conditions or general
consumer spending in any of our major markets could have a
material adverse effect on our business, financial condition and
results of operations.
Our quarterly results may exhibit
significant volatility due to our two-month business cycle
practices.
We execute six two-month marketing cycles per
year. Each marketing cycle includes specific catalogue,
promotional and product offerings, and sometimes certain
seasonal offerings. Sales are typically stronger in the second
month of a two month cycle. Due to the fact that the second and
fourth quarters coincide with the end of a business cycle while
the first and third quarters do not, quarter to quarter results
may exhibit significant levels of volatility that could impact
our stock price. In addition, because the types of promotions
and the timing of certain key new product launches may vary from
year to year, quarter over quarter comparisons are generally not
representative of our growth.
If we acquire any companies, businesses or
products in the future, they could prove difficult to integrate,
disrupt our business, dilute shareholder value or have an
adverse effect on our results of operations.
We intend to expand our business primarily
through internal growth, but from time to time we may consider
strategic acquisitions. Any future acquisition would involve
numerous risks, including, without limitation:
•
potential disruption of our ongoing business and
    distraction of management;
•
difficulty integrating the operations and
    products of the acquired business;
•
unanticipated expenses related to technology
    integration;
•
exposure to unknown liabilities, including
    litigation against the companies we may acquire;
•
additional costs due to differences in culture,
    geographic locations and duplication of key talent; and
•
potential loss of key employees or customers of
    the acquired company.
If we make acquisitions in the future,
acquisition-related accounting charges may affect our balance
sheet and results of operations. We may not be successful in
addressing these risks or any other problems encountered in
connection with any acquisitions.
Risks Related to Our Substantial
Indebtedness
Our substantial indebtedness could have a
material adverse effect on our financial health, our ability to
obtain financing in the future and our ability to react to
changes in our business.
We have a significant amount of debt. On a pro
forma basis assuming that this offering and the use of proceeds
to us thereof as described in "Use of Proceeds", as
well as the dividend and related borrowing to be made prior to
this transaction, occurred on September 30, 2003, we would
have had approximately
$           million
of debt outstanding and a total debt to equity ratio
of           to           .
Our significant amount of debt could have important consequences
to you. For example, it could:
•
make it more difficult for us to satisfy our
    obligations to the holders of the 10 3/4% Notes and to the
    lenders under our senior credit facilities, resulting in
    possible defaults on and acceleration of such indebtedness;
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•
increase our vulnerability to adverse economic
    and general industry conditions, including interest rate
    fluctuations, because a significant portion of our borrowings is
    and will continue to be at variable rates of interest;
•
increase our vulnerability to fluctuations in the
    exchange rate of the principal currency in which we sell
    products, the Mexican peso, to the U.S. dollar, the currency in
    which our interest obligations are payable;
•
require us to dedicate a substantial portion of
    our cash flow from operations to payments on our debt, which
    would reduce the availability of our cash flow from operations
    to fund working capital, capital expenditures or other general
    corporate purposes;
•
limit our flexibility in planning for, or
    reacting to, changes in our business and industry;
•
place us at a disadvantage compared to
    competitors that have proportionately less debt; and
•
limit our ability to borrow additional funds in
    the future.
Any of the foregoing impacts of our substantial
indebtedness could have a material adverse effect on our
business, financial condition and results of operations.
We and our subsidiaries may be able to
incur substantial additional indebtedness.
We and our subsidiaries may be able to incur
substantial additional indebtedness in the future. Although the
terms of the indenture governing our 10 3/4% Notes include
restrictions on the incurrence of additional indebtedness, the
restrictions are subject to a number of significant
qualifications and exceptions, including an exception for
indebtedness incurred under our senior credit facilities, which
provide for an additional revolving facility of up to
$40.0 million, including letters of credit. Under certain
circumstances, the indebtedness incurred in compliance with
these restrictions could be substantial. Such restrictions apply
only to our subsidiaries, and do not limit our ability to incur
debt at Jafra. In addition, the restrictions contained in the
indenture governing our 10 3/4% Notes do not prevent us or
our subsidiaries from incurring obligations not included within
the definition of Indebtedness in that indenture. If new debt is
added to our and our subsidiaries' current debt levels, the
related risks that we and they now face would intensify.
We expect to make additional borrowings of up to
$20 million and
$               million,
respectively, to fund the payment of a final liquidating
distribution to shareholders of our former parent company and to
pay the redemption premium and accrued and unpaid interest on
$70 million in aggregate principal amount of our
10 3/4% Notes. See "Certain Relationships and Related
Party Transactions" and "Use of Proceeds."
Our subsidiaries may not be able to
generate sufficient cash to service all of their and our
indebtedness, and may be forced to take other actions to satisfy
their and our obligations under such indebtedness, which may not
be successful.
Our subsidiaries' ability to make scheduled
payments on or to refinance their and our debt obligations
depends on our subsidiaries' financial condition and
operating performance, which is subject to prevailing economic
and competitive conditions and to certain financial, business
and other factors beyond their or our control.
We cannot assure you that our subsidiaries will
maintain a level of cash flows from operating activities
sufficient to permit them and us to pay the principal, premium,
if any, and interest on their and our indebtedness.
If our subsidiaries' cash flows and capital
resources are insufficient to fund our and their debt service
obligations, we and our subsidiaries may be forced to reduce or
delay capital expenditures, sell assets, seek additional capital
or restructure or refinance our and their indebtedness. These
alternative measures may not be successful and may not permit us
and our subsidiaries to meet our and their scheduled debt
service obligations and, even if successful, may not be
favorable to you. In the absence of
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such operating results and resources, we and they
could face substantial liquidity problems and might be required
to dispose of material assets or operations to meet our and
their debt service and other obligations. The senior credit
facilities and the indenture governing the 10 3/4% Notes
restrict our subsidiaries' ability to dispose of assets and
use the proceeds from the disposition. Our subsidiaries may not
be able to consummate those dispositions or to obtain the
proceeds which could be realized from them and, even if
consummated, such proceeds may not be adequate to meet any debt
service obligations then due.
Restrictive covenants in our debt
instruments may adversely affect our financial
flexibility.
Our senior credit facilities and the indenture
governing the 10 3/4% Notes contain various covenants that
limit our subsidiaries' ability to engage in specified
types of transactions. These covenants limit our
subsidiaries' ability to, among other things:
•
incur indebtedness or issue preferred shares;
•
pay dividends or make distributions or other
    restricted payments to us;
•
make investments;
•
sell assets;
•
create liens without securing our 10 3/4%
    Notes;
•
consolidate, merge, sell or otherwise dispose of
    all or substantially all of our assets;
•
enter into certain transactions with us and our
    affiliates; and
•
designate our subsidiaries as unrestricted
    subsidiaries.
In addition, our senior credit facilities contain
covenants that require our restricted subsidiaries to maintain
specified financial ratios and satisfy other financial condition
tests. Our subsidiaries' ability to meet those financial
ratios and tests can be affected by events beyond our and their
control, and we cannot assure you that they will meet those
tests. A breach of any of these covenants could result in a
default under our senior credit facilities. Upon the occurrence
of an event of default under our senior credit facilities, the
lenders could elect to declare all amounts outstanding under our
senior credit facilities to be immediately due and payable and
terminate all commitments to extend further credit. If we or
they were unable to repay those amounts, the lenders under our
senior credit facilities could proceed against the collateral
granted to them to secure that indebtedness. Jafra Worldwide,
Jafra US, Jafra Mexico and Jafra Distribution (Mexico) have
pledged substantially all of their assets as collateral under
our senior credit facilities. If the lenders under our senior
credit facilities accelerate the repayment of borrowings, we
cannot assure you that we will have sufficient assets to repay
our senior credit facilities or our 10 3/4% Notes, and, in
such circumstances, we could be forced into liquidation or
reorganization.
The instruments governing our debt contain
cross default provisions that may cause all of the debt issued
under such instruments to become immediately due and payable as
a result of a default under an unrelated debt
instrument.
The indenture governing our 10 3/4% Notes
and the agreements governing our senior credit facilities
contain numerous operating covenants and require our
subsidiaries to meet certain financial ratios and tests. Our
failure to comply with the obligations contained in the
indenture governing the 10 3/4% Notes, the senior credit
facilities or other instruments governing our indebtedness could
result in an event of default under the applicable instrument,
which could result in the related debt and the debt issued under
other instruments becoming immediately due and payable. In such
event, we would need to raise funds from alternative sources,
which funds may not be available to us on favorable terms, on a
timely basis or at all. Alternatively, such a default could
require us to sell our assets and otherwise curtail our
operations in order to pay our creditors. Such alternative
measures could have a material adverse effect on our business,
financial condition and results of operations.
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Risks Related to our Common Stock and This
Offering
Jafra may not have access to the cash flow
and other assets of its subsidiaries that would be needed to pay
dividends on our common stock.
Jafra's operations are conducted through its
subsidiaries and our ability to pay dividends is dependent on
the earnings and the receipt of funds from our subsidiaries via
dividends or intercompany loans. However, none of our
subsidiaries is obligated to make funds available to us for the
payment of dividends. In addition, payments of dividends and
interest among the companies in our group may be subject to
withholding taxes. Further, the terms of the indenture governing
our 10 3/4% Notes and the agreement governing our senior
credit facilities significantly restrict Jafra Worldwide and
Jafra's other subsidiaries from paying dividends and
otherwise transferring assets to Jafra. For example, the ability
of Jafra Worldwide to make such payments is governed by a
formula based on 50% of its consolidated net income (which, as
defined in the indenture governing the 10 3/4% Notes,
excludes goodwill impairment charges and any after-tax
extraordinary, unusual or nonrecurring gains and losses)
accruing from October 1, 2002. In addition, as a condition
to making such payments to Jafra based on such formula, Jafra
Worldwide must have a consolidated coverage ratio (as defined in
the indenture governing the 10 3/4% Notes) of at least 2.25
to 1 after giving effect to any such payments. Notwithstanding
such restrictions, the indenture governing the 10 3/4%
Notes permits an aggregate of $5.0 million of such payments
to be made whether or not there is availability under the
formula or the conditions to its use are met. As of
September 30, 2003, Jafra Worldwide would have been able to
distribute $18.0 million to Jafra, including the
$5.0 million unrestricted amount. This amount will be
reduced by any amounts we receive from our subsidiaries to fund
the payment of a final liquidating distribution of up to
$120 million to shareholders of CDRJ Investments (Lux) S.A.
described "Use of Proceeds". Furthermore, Jafra's
subsidiaries are permitted under the terms of the senior credit
facilities and other indebtedness to incur additional
indebtedness that may severely restrict or prohibit the making
of distributions, the payment of dividends or the making of
loans by such subsidiaries to Jafra. In addition, Luxembourg law
imposes surplus and timing requirements that may restrict our
ability to pay dividends to holders of our common stock, as well
as dividend withholding taxes.
There currently exists no market for our
common stock. We cannot assure you that an active trading market
will develop for our common stock. If our share price fluctuates
after this offering, you could lose all or a significant part of
your investment.
Prior to this offering, there was no public
market for our common stock. An active and liquid market for our
common stock may not develop following the completion of this
offering or, if developed, may not be maintained. If an active
trading market does not develop or is not maintained, you may
have difficulty selling any shares of our common stock that you
buy. We negotiated the initial public offering price with the
underwriters. The initial public offering price may not be
indicative of the price at which our common stock will trade
following completion of this offering.
The market price of shares of our common stock
may also be influenced by many other factors, some of which are
beyond our control, including, among other things:
•
the failure of securities analysts to cover our
    common stock after this offering or changes in financial
    estimates by analysts;
•
announcements by us or our competitors of
    significant contracts, acquisitions, strategic partnerships,
    joint ventures or capital commitments;
•
variations in quarterly operating results;
•
loss of a large supplier or important sales
    consultant(s);
•
general economic conditions;
•
terrorist acts or wars;
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•
future sales of our common stock; and
•
investor perceptions of us and the direct
    marketing industry.
As a result of these factors, investors in our
common stock may not be able to resell their shares at or above
the initial offering price. In addition, the stock market in
general has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the
operating performance of companies like us. These broad market
and industry factors may materially reduce the market price of
our common stock, regardless of our operating performance.
If the market price of our common stock is
volatile, we may be the target of securities litigation, which
is costly and time-consuming to defend.
In the past, following periods of market
volatility in the price of a company's securities,
securityholders have often instituted class action litigation.
If the market value of our common stock experiences adverse
fluctuations and we become involved in this type of litigation,
regardless of the outcome, we could incur substantial legal
costs and our management's attention could be diverted from
the operation of our business, causing our business to suffer.
Our articles of incorporation may
discourage takeovers and business combinations that holders of
our common stock might consider to be in their best
interests.
Provisions in our articles of incorporation may
delay, defer, prevent or render more difficult a takeover
attempt that holders of our common stock might consider to be in
their best interests. These provisions include:
•
establishment of a classified board of directors
    with staggered, three year terms; and
•
establishment of advance notice requirements for
    stockholder proposals and nominations for election to the board
    of directors at stockholder meetings.
These provisions may prevent holders of our
common stock from receiving the benefit from any premium to the
market price of our shares offered by a bidder in a takeover
context. Even in the absence of a takeover attempt, the
existence of these provisions may adversely affect the
prevailing market price of our common stock if they are viewed
as discouraging takeover attempts in the future.
See "Description of Capital Stock" for
additional information on the anti-takeover measures applicable
to us.
A few significant stockholders control the
direction of our business. If the ownership of our common stock
continues to be highly concentrated, it will prevent you and
other purchasers of our common stock from influencing
significant corporate decisions.
Following the completion of this offering,
Clayton, Dubilier & Rice Fund V Limited
Partnership will beneficially own
approximately           %
of the outstanding shares of our common stock. As a result,
Clayton, Dubilier & Rice Fund V Limited
Partnership will continue to exercise control over the
composition of our board of directors and other matters
requiring stockholder approval, and control over our policy and
affairs, including, for example, being able to direct the use of
proceeds received from this and future securities offerings and
decisions regarding future change of control transactions. In
addition, Clayton, Dubilier & Rice, Inc., which manages
Clayton, Dubilier & Rice Fund V Limited
Partnership, will continue to provide us with financial advisory
and management consulting services following the completion of
this offering and it will be entitled to receive fees, including
financial advisory fees, in the future. See "Certain
Relationships and Related Party Transactions."
The concentrated holdings of Clayton,
Dubilier & Rice Fund V Limited Partnership and the
presence of Clayton, Dubilier & Rice Fund V
Limited Partnership's designees may result in a delay or
the deterrence of possible changes in control of our company,
which may reduce the market price of our shares. The interests
of our existing stockholders may conflict with the interests of
our other stockholders,
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and we cannot assure you that our existing
stockholders will not resolve any such conflicts in a manner
adverse to you.
Our share price may decline due to the
large number of shares eligible for future sale.
Sales of substantial amounts of common stock, or
the perception that such sales may occur, may adversely affect
the price of our common stock and impede our ability to raise
capital through the issuance of equity securities. We cannot
predict the size of future issuances of common stock or the
impact that such sales may have on the market price of the
shares purchased by you.
Upon consummation of this offering, there will
be            shares
of common stock outstanding. Of these shares, the shares of
common stock sold in the offering will be freely transferable
without restriction or further registration under the Securities
Act of 1933. The
remaining            shares
of common stock outstanding, excluding shares sold by the
selling stockholders in this offering, including the shares
owned by Clayton, Dubilier & Rice Fund V Limited
Partnership, will be restricted securities within the meaning of
Rule 144 under the Securities Act, but will be eligible for
resale subject to applicable volume, manner of sale, holding
period and other limitations of Rule 144. We and our
existing stockholders have agreed to a "lock-up",
meaning that neither we nor they will sell any shares without
the prior consent of Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Credit Suisse First Boston LLC for
180 days after the date of this prospectus. Following the
expiration of this 180 day lock-up period, all of
these                     shares
of our common stock will be eligible for future sale, subject to
the applicable volume, manner of sale, holding period and other
limitations of Rule 144. In addition, our existing
shareholders have the right under certain circumstances to
require that we register their shares for resale. See
"Shares Eligible for Future Sale" and "Certain
Relationships and Related Party Transactions —
Registration and Participation Agreement" for a discussion
of the shares of common stock that may be sold into the public
market in the future.
Purchasers of our common stock in this
offering will experience immediate and substantial dilution
resulting in their shares being worth less on a net tangible
book value basis than the amount they invested.
The initial public offering price is expected to
be significantly higher than the net tangible book value per
share of our common stock. Purchasers of the shares in this
offering will experience an immediate dilution in net tangible
book value of
$          per
share purchased, based on our net tangible book value per share
as of September 30, 2003. In the past, we issued options to
acquire shares of common stock at prices that may be
significantly below the price per share equivalent to the
initial public offering price. To the extent that these
outstanding options are exercised, there will be further
dilution to investors. Accordingly, in the event we are
liquidated, investors may not receive the full amount of their
investment. See "Dilution."
Because Jafra is not a U.S. company, it may
be difficult for you to effect service of process on us or on
our directors or to enforce any judgment you may receive against
us from a U.S. court.
Jafra is a Luxembourg company. Certain of our
officers and directors may be residents of various jurisdictions
outside the United States. All or a substantial portion of our
assets may be located outside the United States. As a result, it
may be difficult for investors to effect service of process
within the United States upon such persons or to enforce in
Luxembourg courts judgments obtained against such persons in
United States courts and predicated upon the civil liability
provisions of the United States federal securities laws.
Jafra has been advised by Bonn Schmitt Steichen,
our Luxembourg counsel, that there is doubt as to
(i) whether a Luxembourg court has jurisdiction to
entertain original cases or actions predicated solely upon the
United States federal securities laws, (ii) the
enforceability, in original actions in Luxembourg courts, of
liabilities predicated solely upon the United States federal
securities laws and (iii) the enforceability in Luxembourg
courts of judgments of United States courts obtained in actions
predicated upon the civil liability provisions of the United
States federal securities laws.
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FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking
statements". You should not place undue reliance on these
statements. Forward-looking statements include information
concerning our possible or assumed future results of operations,
including descriptions of our business strategies. These
statements often include words such as "believe",
"expect", "anticipate", "intend",
"plan", "estimate", "seek",
"will", "may" or similar expressions. These
statements are based on certain assumptions that we have made in
light of our experience in the industry as well as our
perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate
in these circumstances. As you read and consider this
prospectus, you should understand that these statements are not
guarantees of performance or results. They involve risks,
uncertainties and assumptions. Many factors could affect our
actual financial results and could cause actual results to
differ materially from those expressed in the forward-looking
statements. Some important factors include:
•
operations and prospects;
•
business and financing plans;
•
funding needs and financing sources;
•
changes in the marketplace;
•
fluctuations of exchange rates and inflation;
•
growth of the direct selling cosmetics industry
    in our major markets;
•
characteristics of competition;
•
actions of third parties, such as legislative
    bodies and government regulatory agencies; and
•
various other factors beyond our control.
In light of these risks, uncertainties and
assumptions, the forward-looking statements contained in this
prospectus might not prove to be accurate and you should not
place undue reliance upon them. All forward-looking statements
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the foregoing cautionary
statements. All such statements speak only as of the date made,
and we undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new
information, future events or otherwise.
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USE OF PROCEEDS
We estimate that our net proceeds from the sale
of                shares
of our common stock being offered by us hereby at an assumed
initial public offering price of
$              per
share, the midpoint of the range set forth on the cover page of
this prospectus, after deducting estimated underwriting
discounts and estimated offering expenses, will be approximately
$               million.
We will not receive any proceeds from the sale of
the               shares
of our common stock being offered by the selling stockholders,
or the additional shares that would be sold by the selling
stockholders if the underwriters exercised their over-allotment
option.
We intend to use the net proceeds to us from the
sale of common stock, together with borrowings under our senior
credit facilities, principally to fund the redemption of
$70 million in aggregate principal amount of our
outstanding 10 3/4% Notes due 2011 and to pay related
transaction fees, expenses and taxes.
The following table sets forth the estimated
sources and uses from this offering (dollar amounts in
millions), assuming the sale of the shares of our common stock
offered hereby occurred on September 30, 2003.
Sources
Cash on hand
$
Drawings under revolving credit facility
Common stock offered by us hereby
Total
$
Uses
Redemption of 10 3/4% Notes
$
Estimated fees, expenses and taxes
Total
$
In addition, prior to the closing of this
offering, we expect to make a final liquidating distribution of
up to $20 million in cash to shareholders of CDRJ
Investments (Lux) S.A. We expect to fund this payment by drawing
on the revolving portion of our senior credit facilities.
In connection with the May 2003 recapitalization,
we used the proceeds from the sale of the 10 3/4% Notes to:
(1) redeem or satisfy and discharge all of
    our then-outstanding 11 3/4% Senior Subordinated Notes due
    2008, in an amount equal to 105.875% of the aggregate
    outstanding principal amount thereof, plus accrued and unpaid
    interest to the redemption date;
(2) repay all amounts outstanding under our
    then-existing credit facilities concurrently with the
    termination of all commitments thereunder;
(3) make a liquidating distribution of
    approximately $157.6 million to shareholders of our former
    parent company, CDRJ Investments (Lux) S.A.;
(4) make certain compensatory payments of
    approximately $10.4 million to holders of options to
    acquire capital stock of CDRJ Investments (Lux) S.A., including
    to certain directors and members of management, in connection
    with such liquidating distribution; and
(5) pay related transaction fees, expenses
    and taxes.
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DIVIDEND POLICY
We do not expect to pay dividends on our common
stock for the foreseeable future. Instead, we anticipate that
all our earnings in the foreseeable future will be used for the
operation and growth of our business. The payment of dividends
by us to holders of our common stock is limited by our senior
credit facilities and the indenture governing our 10 3/4%
Notes, which restrict our operating subsidiaries' ability
to pay dividends or make loans to Jafra. Any future
determination to pay dividends on our common stock is subject to
the discretion of our board of directors and will depend upon
various factors, including our results of operations, financial
condition, liquidity requirements, surplus and timing
restrictions imposed by Luxembourg law, other restrictions that
may be imposed by applicable law and our contracts, and other
factors deemed relevant by our board of directors. For a
discussion of the tax treatment of dividends we may elect to pay
in the future, see "Certain Material U.S. Federal
Income Tax Considerations" and "Certain Material
Luxembourg Tax Considerations."
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CAPITALIZATION
The following table sets forth as of
September 30, 2003 on a consolidated basis:
•
our actual capitalization, which takes into
    effect our May 2003 recapitalization;
•
our as adjusted capitalization that gives effect
    to (i) our sale
    of                     shares
    of our common stock in this offering at an assumed initial
    public offering price of
    $          per
    share, the midpoint of the range set forth on the cover page of
    this prospectus and (ii) the application of the net
    proceeds therefrom together with borrowings under the revolving
    portion of our senior credit facilities to redeem
    $70 million in aggregate principal amount of our
    outstanding 10 3/4% Notes as described in "Use of
    Proceeds" and to fund the payment of premium and accrued
    and unpaid interest thereon.
Our as adjusted capitalization also gives effect
to the payment prior to our sale of the shares of our common
stock offered hereby of a final liquidating distribution of up
to $20 million in cash to shareholders of CDRJ Investments (Lux)
S.A. and related borrowings under the revolving portion of our
senior credit facilities, as described in "Certain
Relationships and Related Party Transactions"
This table should be read in conjunction with
"Use of Proceeds," "Management's Discussion
and Analysis of Financial Condition and Results of
Operations," "Description of Our Indebtedness"
and our consolidated financial statements and related notes
thereto included elsewhere in this prospectus.
As of September 30,
2003
As
Actual
Adjusted
(in millions)
Cash and cash equivalents
$
8.9
$
Short-term debt
Current portion of long-term debt
$
6.9
$
Long-term debt
Revolving credit facility
—
Term loans
41.9
41.9
10 3/4% Notes
200.0
Total long term debt
$
248.8
$
Equity:
Common stock, $2.00 par value (0 shares
    outstanding, actual,
    and            shares
    outstanding, as adjusted)
Additional paid-in capital
—
Accumulated other comprehensive loss
(11.4
)
Accumulated deficit
(46.4
)
Total equity
(57.8
)
Total capitalization
$
191.0
$
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DILUTION
If you invest in our common stock, your interest
will be diluted to the extent of the difference between the
initial public offering price of the shares of our common stock
and the net tangible book value per share after this offering.
Net tangible book value per share represents the
amount of total tangible assets less total liabilities, divided
by the number of shares of common stock then outstanding. Our
net tangible book value as of September 30, 2003 was
$           million,
or
$          per
share, based on
the                      shares
of common stock outstanding as of such date. After giving effect
to our sale
of                      shares
in this offering at an assumed initial public offering price of
$          per
share, the midpoint of the range set forth on the cover page of
this prospectus, and after deducting estimated underwriting
discounts and estimated offering expenses, our net tangible book
value as of September 30, 2003 would have been
$           million,
or
$          per
share. This represents an immediate increase in the net tangible
book value of
$          per
share to existing stockholders and an immediate and substantial
dilution of
$          per
share to new investors purchasing shares in this offering. The
following table illustrates this dilution:
Per Share
Assumed initial public offering price
$
Net tangible book value as of September 30,
    2003
Increase attributable to this offering
Net tangible book value after this offering
Dilution in net tangible book value to new
    investors
$
The following table summarizes as of
September 30, 2003 the total number of shares of common
stock purchased from us, the total consideration paid to us, and
the weighted average price per share paid by existing
stockholders and by new investors purchasing shares from us in
this offering at our assumed initial public offering price of
$          per
share, the midpoint of the range set forth on the cover page of
this prospectus and before deducting underwriting discounts and
estimated offering expenses payable by us.
Total
Shares Acquired
Consideration
Weighted
Average Price Per
Number
Percent
Amount
Percent
Share
Existing stockholders
%
$
%
$
New investors
Total
100.0
%
$
100.0
%
$
The foregoing discussion and tables assume no
exercise of outstanding stock options. As of September 30,
2003, there were options outstanding to purchase a total of
84,242 shares of our common stock at a weighted average exercise
price, adjusted to reflect the May 2003 recapitalization
transactions, of
$          per
share.
To the extent that any of these stock options are
exercised, there may be further dilution to new investors. See
"Capitalization," "Management" and note 13
to the consolidated financial statements included elsewhere in
this prospectus.
30
Table of Contents
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND
OTHER DATA
The following table sets forth the selected
historical consolidated financial and other data of CDRJ North
Atlantic (Lux) S.àr.l. (to be renamed Jafra S.A.) (amounts
in millions except for per share and consultant data and
ratios). The selected historical consolidated financial data as
of December 31, 2001 and 2002 and the years ended
December 31, 2000, 2001 and 2002 are derived from the
audited consolidated financial statements of CDRJ North Atlantic
(Lux) S.àr.l. included elsewhere in this prospectus. The
consolidated financial statements as of December 31, 2001,
and for each of the two years in the period ended
December 31, 2001 have been audited by Deloitte &
Touche LLP, independent auditors. The consolidated financial
statements as of December 31, 2002 and for the year then
ended have been audited by Ernst & Young LLP,
independent auditors. The selected historical consolidated
financial data as of September 30, 2002 and 2003 and for
the nine months ended September 30, 2002 and 2003 are
derived from the unaudited consolidated financial statements of
CDRJ North Atlantic (Lux) S.àr.l. included elsewhere in
this prospectus. Such unaudited consolidated financial
statements, in the opinion of our management, include all
adjustments necessary for the fair presentation of our financial
condition and results of operations for such periods and as of
such dates. The financial data prior to April 30, 1998
reflect the business prior to the acquisition of the Jafra
business from the Gillette Company and are referred to as the
"Predecessor" operations. You should read the
following selected historical consolidated financial and other
data of CDRJ North Atlantic (Lux) S.àr.l. in conjunction
with the historical consolidated financial statements and other
financial information appearing elsewhere in this prospectus,
including "Summary — Summary Consolidated
Financial and Other Data", "Capitalization" and
"Management's Discussion and Analysis of Financial
Condition and Results of Operations".
31
Table of Contents
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND
OTHER DATA
CDRJ North Atlantic (Lux) S.àr.l.
Predecessor
(to be renamed Jafra S.A.)
Four
Eight
Nine Months
Months
Months
Ended
Ended
Ended
Years Ended December 31,
September 30,
April 30,
December 31,
1998
1998
1999
2000
2001
2002
2002
2003
Statement of Income Data:
Net sales
$
75.1
$
166.8
$
286.8
$
310.5
$
365.4
$
382.6
$
285.3
$
276.7
Cost of sales(a)
21.7
54.3
79.3
76.7
84.2
90.2
66.1
63.8
Gross profit
53.4
112.5
207.5
233.8
281.2
292.4
219.2
212.9
Selling, general and administrative expenses
48.4
105.1
173.2
188.8
224.8
233.8
174.9
188.5
(i)
Restructuring and impairment charges(b)
4.8
2.6
—
—
—
—
Loss (gain) on sale of assets
—
0.2
(1.1
)
—
—
—
—
—
Income from operations
5.0
7.2
30.6
42.4
56.4
58.6
44.3
24.4
(i)
Other income (expense):
Exchange (loss) gain
1.5
(1.8
)
3.3
(11.7
)
(9.5
)
(10.6
)
(9.8
)
(7.8
)
Interest (expense) income, net
0.1
(11.5
)
(17.0
)
(15.7
)
(13.4
)
(11.4
)
(8.8
)
(14.1
)
Loss on early extinguishment of debt
—
—
(0.7
)
(0.5
)
—
—
—
(6.6
)(j)
Other income (expense), net
0.1
(0.1
)
—
1.6
(0.1
)
0.1
0.2
(0.3
)
Income (loss) from continuing operations before
    income taxes and cumulative effect of accounting change
6.7
(6.2
)
16.2
16.1
33.4
36.7
25.9
(4.4
)(k)
Income tax expense
2.9
1.7
10.7
9.7
17.3
16.2
9.7
1.2
Income (loss) from continuing operations before
    cumulative effect of accounting change
3.8
(7.9
)
5.5
6.4
16.1
20.5
16.2
(5.6
)
Gain (loss) on discontinued operations, net of
    income tax expense of $0 in 1998, 1999 and 2000, $0.1 in 2001
    and 2002 and $0 in 2003
0.3
(0.1
)
(0.8
)
—
(0.2
)
(1.5
)
(1.1
)
(2.5
)
Income (loss) before cumulative effect of
    accounting change
4.1
(8.0
)
4.7
6.4
15.9
19.0
15.1
(8.1
)
Cumulative effect of accounting change, net of
    income tax expense of $0.1 in 2001 and $0 in 2002(c)
—
—
—
—
0.1
(0.2
)
(0.2
)
—
Net income (loss)
$
4.1
$
(8.0
)
$
4.7
$
6.4
$
16.0
$
18.8
$
14.9
$
(8.1
)(k)
Earnings per share from continuing operations
    (basic)
Loss per share from discontinued operations
    (basic)
Earnings per share (basic)
Earnings per share from continuing operations
    (diluted)
Loss per share from discontinued operations
    (diluted)
Earnings per share (diluted)
Weighted average number of shares outstanding:
Basic
Diluted
32
Table of Contents
CDRJ North Atlantic (Lux) S.àr.l.
Predecessor
(to be renamed Jafra S.A.)
Four
Eight
Nine Months
Months
Months
Ended
Ended
Ended
Years Ended December 31,
September 30,
April 30,
December 31,
1998
1998
1999
2000
2001
2002
2002
2003
Other Financial and Operational
    Data:
Net cash provided by (used in) operating
    activities
$
(8.0
)
$
18.1
$
(1.6
)
$
32.6
$
29.8
$
43.5
$
23.2
$
(1.7
)
Capital expenditures
6.0
6.2
5.3
6.7
11.2
11.0
7.6
5.0
Average number of consultants(d)
201,000
221,000
260,000
290,000
344,000
376,000
368,000
404,000
Consultants at end of period(e)
205,000
232,000
274,000
293,000
351,000
401,000
384,000
400,000
Balance Sheet Data (at end of
    period):
Cash and cash equivalents
$
17.1
$
3.5
$
4.6
$
5.6
$
26.8
10.4
$
8.9
Net working capital(f)
8.1
33.8
19.5
16.6
12.9
22.4
23.1
Property and equipment, net
56.1
50.2
50.8
59.0
60.4
59.2
58.9
Total assets
288.7
278.1
276.8
291.8
289.0
284.2
281.0
Total debt(g)
141.5
133.5
109.0
93.1
84.4
85.3
248.8
Net debt(h)
124.4
130.0
104.4
87.5
57.6
74.9
239.9
Stockholder's equity (deficit)
75.2
75.5
81.0
96.7
109.1
106.2
(57.8
)
(a)
Cost of sales for the eight months ended
    December 31, 1998 includes a $2.7 million charge
    relating to the sale of certain inventories that were revalued
    to fair value in conjunction with the acquisition of the Jafra
    business by CDRJ Investments (Lux) S.A. and its subsidiaries.
(b)
For 1999, $2.7 million of our restructuring
    and impairment charges were primarily cash charges for severance
    related to the closure of our U.S. factory. Of the
    remainder, $1.0 million were other restructuring charges
    and approximately $1.1 million were non-cash asset
    impairment charges related to the write down or impairment of
    assets. For 2000, our restructuring and impairment charges
    included approximately $1.6 million of restructuring
    charges related to the restructuring of our European operations,
    most of which were payments of severance and lease termination
    costs, and approximately $1.0 million of non-cash asset
    impairment charges related to the write down or impairment of
    assets.
(c)
In connection with the adoption of SFAS
    No. 133, "Accounting for Derivative Instruments and
    Hedging Activities," on January 1, 2001, we recorded a
    net gain of $0.1 million (net of a tax effect of
    $0.1 million) as a cumulative transition adjustment to
    earnings. In connection with the adoption of SFAS No. 142,
    "Goodwill and other Intangible Assets", on
    January 1, 2002, we recorded a net loss of
    $0.2 million (net of a tax effect of $0) as a cumulative
    transition adjustment to earnings.
(d)
The average number of consultants is calculated
    based on the total ending consultant base for each month during
    the period. A consultant is included in the total ending
    consultant base if she places an order within the past four
    months. Consultant numbers are rounded to the nearest thousand.
(e)
Consultant numbers are rounded to the nearest
    thousand.
(f)
Net working capital is defined as total current
    assets, excluding cash and cash equivalents, less total current
    liabilities, excluding short-term debt and the current portion
    of long-term debt.
(g)
Consists of long-term debt, short-term debt and
    the current portion of long-term debt.
(h)
Net debt is total debt less cash and cash
    equivalents.
(i)
Includes $15.6 million of expenses related
    to our May 2003 recapitalization.
(j)
Relates to our redemption of debt in connection
    with our May 2003 recapitalization.
(k)
Includes $15.6 million of expenses and
    $6.6 million of losses on the early extinguishment of debt
    related to our May 2003 recapitalization.
33
Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of the results of
operations, financial condition and liquidity of Jafra should be
read in conjunction with the historical consolidated financial
statements and notes and other financial information related to
Jafra appearing elsewhere in this prospectus, including
"Prospectus Summary — Summary Consolidated
Financial and Other Data", "Capitalization" and
"Selected Historical Consolidated Financial and Other
Data". The results of operations for the periods reflected
herein are not necessarily indicative of results that may be
expected for future periods.
Overview
We are a direct seller of skin and body care
products, color cosmetics, fragrances and other personal care
products. We sell our Jafra brand products through a multi-level
direct selling network of over 400,000 independent consultants,
who market and sell our products to their customers. Our largest
markets are Mexico and the United States, which together
contributed approximately 90% of our total net sales in 2002.
Our
Markets
Our business operates in four primary markets:
Mexico, the United States, Europe and South America. Of these,
Mexico is the largest, with approximately two-thirds of total
net sales, and the United States, Europe and South America
represented 27%, 8% and 3%, respectively, of total net sales in
the nine months ended September 30, 2003. In 2000, we
divided the United States into two divisions: our General
Division and our Hispanic Division, which is comprised of
Spanish-speakers, and represents two-thirds of our total
U.S. business. In Europe, we operate in Germany,
Switzerland, Italy, Austria and Holland, and several other
countries through distributors. We have renewed our focus on the
strengths of our Mexican, U.S. and European markets by exiting
operations in certain markets in South America and Thailand. In
the third quarter of 2003, we discontinued operations in Chile,
Colombia, Peru and Venezuela, and in the fourth quarter of 2003,
we ceased our operation in Thailand. Consequently, our
historical financial statements have been revised for all
periods presented to reflect our operations in these markets,
other than Thailand, as discontinued operations and our number
of consultants have been reduced accordingly. We also
reevaluated our strategy in Brazil and Argentina, which we
believe are good market opportunities for our business. During
the fourth quarter of 2003, we completed an aggressive
restructuring in Brazil and Argentina, which included cost
cutting measures and new product management strategies.
Seasonality
and Sales Cycles
Our business, measured both in terms of net sales
and in terms of numbers of consultants, is subject to certain
seasonal trends. Both net sales and the number of consultants
typically increase at year end, primarily due to the winter
holiday season both as an occasion for the purchase of gifts and
as a time of year when there may be increased interest in
joining our consultant network as a way of generating extra
income.
Consultant turnover occurs throughout the year,
as is typical in the direct sales industry, and results in
variation in our consultant base as measured at the end of
intra-year reporting periods. In addition, our consultant base
and net sales fluctuate within quarterly reporting periods
because we have six two-month sales cycles in each fiscal year.
The second and fifth sales cycle straddle our first and second,
and third and fourth quarters, respectively. As a result, our
first and third quarters, which each include only the first half
of one of the two cycles in the period, may result in relatively
lower net sales than our second and fourth quarters, which each
include the second half of that sales cycle.
We typically schedule sales promotions to
coincide with the beginning of a new sales cycle, but our
product launches may come at various times throughout the year
based on the product development cycle. A successful product
launch in a particular reporting period may cause that period to
exhibit relatively stronger results because of the higher level
of interest in the new product or line. Some fiscal
34
Table of Contents
quarters may appear to have generated stronger or
weaker net sales or consultant interest as expressed in the
number of consultants than the preceding period because of the
number of sales cycles closing within that quarter. In addition,
because the types of promotions and the timing of certain key
new product launches may vary from year to year, quarter over
quarter comparisons are generally not representative of our
growth potential.
Measures of
Consultant Performance
In evaluating our results of operations, we
utilize several key measures relating to the performance of our
independent consultants.
Consultants at End of Period or Consultant
Base.
We
define our consultants or consultant base at the end of a period
as the number of consultants that have placed an order within
the past four months as of the end of the period. We use
period-to-period comparisons of our consultant base as an
indicator of the growth of our business. As a result of this
four-month convention, the number of consultants from one month
to the next may vary significantly due to the timing of certain
key events, promotions and product launches.
Average Number of Consultants.
The average number of consultants is
calculated based on the number of consultants at the end of each
month during the period, divided by the number of months in the
period. We use period-to-period comparisons of our average
number of consultants as an indicator of the growth of our
business, and this number is more directly correlated with net
sales than the ending consultant number for a given period.
Consultant
Productivity.
Management also regards consultant
productivity as an important measure of our ability to generate
net sales on a cost-efficient basis. Consultant productivity
refers to the amount purchased by each consultant during the
period and is calculated by dividing net sales during the period
by the average number of consultants during that period.
U.S. dollar productivity is impacted by fluctuations in
exchange rates. We believe that productivity in local currency
is a better indicator of our performance. In a period of rapid
growth of the consultant base, productivity can be impacted by
the number of new consultants whose average order size is
typically lower than that of established consultants. A
component of productivity is the activity rate of our
consultants. The activity rate is defined as the percentage of
our consultants included in the base who have placed an order
during any given period.
Compensation
of our Multi-level Direct Selling Network
Consultants earn income by purchasing products
from us at wholesale prices and selling to consumers at
suggested retail prices. In addition, consultants who sponsor a
certain number of recruits and meet certain minimum sales levels
can become managers or lineage leaders. The compensation of a
manager or lineage leader includes overrides, which are equal to
a percentage of the sales generated by consultants recruited
directly or indirectly by them. The overrides are paid to
motivate and compensate the managers to train, recruit and
develop downline consultants. Additionally, managers are also
incented to perform collection efforts on our behalf, as
overrides paid on a consultant's downline productivity are
paid only upon the collection of our receivables. The overrides
represent a significant portion of our selling, general and
administrative expense.
Research
& Development — "Fast Follower"
Strategy
Research and development is a key part of new
product introductions that motivate our consultant base and
increase net sales. We have our own in-house development
department staffed with 10 trained professionals. We have
chosen a "fast follower" strategy that allows us to
focus most of our efforts on the development side. We utilize
research and industry developments as well as proven market
concepts and products as a base for our development of new
products. As a result, our R&D expenses are less than 1% of
sales, but we have delivered a very steady stream of value-added
new products, including some first-to-market concepts.
35
Table of Contents
Foreign
Currency Translation
We generate the majority of our net sales through
peso-denominated sales to consultants in Mexico, which is our
largest market. We also have operations in other overseas
markets, each of which generates net sales in its respective
local currency. Because we report our financial results in, and
nearly all of our debt is denominated in, U.S. dollars, we
are exposed to significant foreign currency related risks in
connection with the translation of our activities outside the
United States from local currencies into U.S. dollars and
the translation of currency for the repayment of our debt,
payment of our interest expense and other dollar-denominated
obligations into U.S. dollars.
Results of Operations
Net sales.
We record
net sales based on the wholesale price of product sold to our
consultants. Our net sales represent our net revenue plus the
shipping, handling and other fees paid to us by consultants,
less any commissions paid by us to the consultants on their
personal sales. Approximately 90% of these net sales are
product-related and are commissionable, while 10% are consultant
kits and other sales aids, training materials and certain other
products which are non-commissionable. Sales are recorded upon
shipment by third-party carrier to the consultants. The retail
price of our products is at the high end of the range for
comparable direct selling merchants. Our wholesale price is
determined by the commission earned by the consultant based on
the size of the order.
Cost of Sales.
Our cost of sales primarily represents
the cost to us of the products we sell to our consultants,
including our manufacturing and other production-related
expenses.
Selling, General and Administrative Expense.
Selling, general and administrative
expenses ("SG&A") include sales promotional
expenses, including the cost of events, meetings and prizes,
distribution expenses, and shipping and handling costs, as well
as selling, marketing and administrative expenses, including
general management, finances, human resources and information
technology. SG&A expenses also include override payments to
our lineage leaders who earn a percentage of the sales of the
consultants in their downline and bad debt expense related to
uncollectible accounts receivable.
The following table represents selected
components of our consolidated results of operations, in
millions of dollars and as percentages of net sales.
Years Ended December 31,
Nine Months Ended September 30,
2000
2001
2002
2002
2003
Net sales
$
310.5
100.0
%
$
365.4
100.0
%
$
382.6
100.0
%
$
285.3
100.0
%
$
276.7
100.0
%
Cost of sales
76.7
24.7
84.2
23.0
90.2
23.6
66.1
23.2
63.8
23.1
Gross profit
233.8
75.3
281.2
77.0
292.4
76.4
219.2
76.8
212.9
76.9
Selling, general and administrative expenses
188.8
60.8
224.8
61.6
233.8
61.1
174.9
61.3
188.5
68.1
Restructuring and impairment charges
2.6
0.8
—
—
—
—
—
—
—
—
Income from operations
42.4
13.7
56.4
15.4
58.6
15.3
44.3
15.5
24.4
8.8
Exchange loss, net
(11.7
)
(3.8
)
(9.5
)
(2.6
)
(10.6
)
(2.8
)
(9.8
)
(3.4
)
(7.8
)
(2.8
)
Interest expense, net
(15.7
)
(5.0
)
(13.4
)
(3.7
)
(11.4
)
(2.9
)
(8.8
)
(3.0
)
(14.1
)
(5.1
)
Loss on early extinguishment of debt
(0.5
)
(0.2
)
—
—
—
—
—
—
(6.6
)
(2.4
)
Other income (expense), net
1.6
0.5
(0.1
)
—
0.1
—
0.2
—
(0.3
)
(0.2
)
Income (loss) from continuing operations
    before income taxes and cumulative effect of accounting change
16.1
5.2
33.4
9.1
36.7
9.6
25.9
9.1
(4.4
)
(1.7
)
Income tax expense
9.7
3.1
17.3
4.7
16.2
4.2
9.7
3.4
1.2
(0.3
)
36
Table of Contents
Years Ended December 31,
Nine Months Ended September 30,
2000
2001
2002
2002
2003
Income (loss) from continuing operations
    before cumulative effect of accounting change
6.4
2.1
16.1
4.4
20.5
5.4
16.2
5.7
(5.6
)
(2.0
)
Loss on discontinued operations, net of income
    tax expense of $0 in 2000, $0.1 in 2001 and 2002
—
—
(0.2
)
—
(1.5
)
(0.4
)
(1.1
)
(0.4
)
(2.5
)
(0.9
)
Income (loss) before cumulative effect of
    accounting change
6.4
2.1
15.9
4.4
19.0
5.0
15.1
5.3
(8.1
)
2.9
Cumulative effect of accounting change, net of
    income tax expense of $0.1 in 2001 and $0 in 2002
—
—
0.1
—
(0.2
)
(0.1
)
(0.2
)
(0.1
)
—
—
Net income (loss)
$
6.4
2.1
%
$
16.0
4.4
%
$
18.8
4.9
%
$
14.9
5.2
%
$
(8.1
)
(2.9
)%
The following tables represent selected
components of our consolidated results of operations by market.
We evaluate market performance based on segment operating
income, excluding reorganization and restructuring charges,
unusual gains and losses, and amortization of goodwill and other
intangible assets. Results for subsidiaries in South America and
the Dominican Republic are combined and included in the
following tables under the caption "All Others." We
expect that in future periods, results for the Dominican
Republic will be included in the U.S. segment. Corporate
expenses, reorganization and restructuring charges, unusual
gains and losses and amortization of goodwill and other
intangible assets are included under the caption
"Corporate, Unallocated and Other."
Corporate,
Unallocated
Dollars in millions
Mexico
United States
Europe
All Others
Total Segments
and Other
Consolidated Total
Nine Months Ended
September 30, 2003
Net sales
$
172.1
$
74.5
$
22.7
$
7.4
$
276.7
$
—
$
276.7
Cost of sales
41.5
16.8
4.7
2.8
65.8
(2.0
)
63.8
Gross profit
130.6
57.7
18.0
4.6
210.9
2.0
212.9
Selling, general and administrative expenses
85.7
46.1
17.5
8.5
157.8
30.7
188.5
Income (loss) from operations
$
44.9
$
11.6
$
0.5
$
(3.9
)
$
53.1
$
(28.7
)
$
24.4
Nine Months Ended
September 30, 2002
Net sales
$
190.5
$
66.9
$
18.6
$
9.3
$
285.3
$
—
$
285.3
Cost of sales
45.8
14.8
4.2
2.8
67.6
(1.5
)
66.1
Gross profit
144.7
52.1
14.4
6.5
217.7
1.5
219.2
Selling, general and administrative expenses
94.7
41.2
14.2
10.3
160.4
14.5
174.9
Income (loss) from operations
$
50.0
$
10.9
$
0.2
$
(3.8
)
$
57.3
$
(13.0
)
$
44.3
37
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Corporate,
Unallocated
Dollars in millions
Mexico
United States
Europe
All Others
Total Segments
and Other
Consolidated Total
Year Ended December 31, 2002
Net sales
$
251.6
$
92.1
$
26.9
$
12.0
$
382.6
$
—
$
382.6
Cost of sales
60.6
21.2
6.3
4.0
92.1
(1.9
)
90.2
Gross profit
191.0
70.9
20.6
8.0
290.5
1.9
292.4
Selling, general and administrative expenses
124.7
55.3
19.4
13.6
213.0
20.8
233.8
Income (loss) from operations
$
66.3
$
15.6
$
1.2
$
(5.6
)
$
77.5
$
(18.9
)
$
58.6
Year Ended December 31, 2001
Net sales
$
247.5
$
79.6
$
26.4
$
11.9
$
365.4
$
—
$
365.4
Cost of sales
59.4
18.3
5.5
3.7
86.9
(2.7
)
84.2
Gross profit
188.1
61.3
20.9
8.2
278.5
2.7
281.2
Selling, general and administrative expenses
116.8
49.8
19.1
14.0
199.7
25.1
224.8
Income (loss) from operations
$
71.3
$
11.5
$
1.8
$
(5.8
)
$
78.8
$
(22.4
)
$
56.4
Year Ended December 31, 2000
Net sales
$
199.8
$
74.1
$
26.9
$
9.7
$
310.5
$
—
$
310.5
Cost of sales
48.8
16.5
6.3
4.0
75.6
1.1
76.7
Gross profit
151.0
57.6
20.6
5.7
234.9
(1.1
)
233.8
Selling, general and administrative expenses
86.6
46.9
20.4
11.7
165.6
23.2
188.8
Restructuring and impairment charges
—
—
—
—
—
2.6
2.6
Income (loss) from operations
$
64.4
$
10.7
$
0.2
$
(6.0
)
$
69.3
$
(26.9
)
$
42.4
See Note 11 to our consolidated financial
statements included elsewhere in this prospectus.
Nine Months Ended September 30, 2003
    Compared to Nine Months Ended September 30,
    2002
Net sales.
Net sales
for the nine months ended September 30, 2003 decreased to
$276.7 million from $285.3 million for the nine months
ended September 30, 2002, a decrease of $8.6 million,
or 3.0%. Net sales measured in local currencies for the first
nine months of 2003 increased 3.8% compared to net sales
measured in local currencies for the first nine months of 2002.
The net sales decrease measured in U.S. dollars compared to
the net sales increase measured in local currencies was
primarily due to weaker average exchange rates of the Mexican
peso to the U.S. dollar during 2003 compared to 2002. Our
average number of consultants for the nine months ended
September 30, 2003 increased to approximately 405,000, or
10.0%, over the average number of consultants for the nine
months ended September 30, 2002. Annualized consultant
productivity measured in U.S. dollars for the first nine
months of 2003 decreased 11.8% compared to annualized consultant
productivity for the first nine months of 2002. Measured in
local currencies, annualized productivity decreased 5.6% for the
nine months ended September 30, 2003, compared to the nine
months ended September 30, 2002.
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Table of Contents
In Mexico, net sales, excluding inter-segment
sales, for the first nine months of 2003 decreased
$18.4 million, or 9.7%, to $172.1 million from
$190.5 million for the first nine months of 2002. Net sales
measured in local currency increased 1.2% for the first nine
months of 2003, compared to the first nine months of 2002. The
increase measured in local currency was primarily due to an
increase in the average number of consultants, partially offset
by a decrease in consultant productivity. The average number of
consultants in Mexico was approximately 261,000 for the first
nine months of 2003, an increase of 6.0% over the comparable
prior year period. Annualized consultant productivity measured
in local currency for the nine months ended September 30,
2003 decreased 4.5% compared to consultant productivity for the
nine months ended September 30, 2002.
In the United States, net sales, excluding
inter-segment sales, for the first nine months of 2003 increased
to $74.5 million from $66.9 million for the first nine
months of 2002, an increase of $7.6 million, or 11.4%, with
increases in both divisions. Net sales in the Hispanic Division
increased 13.6% to $50.3 million for the first nine months
of September 30, 2003, compared to the first nine months of
2002, due to a larger consultant base, offset by reduced
consultant productivity. The average number of consultants in
the Hispanic Division for the period was approximately 48,000,
an increase of 29.6% over the comparable prior year period.
Annualized consultant productivity in the Hispanic Division
decreased 12.4% for the first nine months of 2003 compared to
the first nine months of 2002. The number of active ordering
consultants in the Hispanic Division decreased during the
period. Net sales in the General Division increased 7.0% to
$24.1 million for the nine months ended September 30,
2003, compared to the nine months ended September 30, 2002
as a result of a 5.4% increase in consultant productivity and an
increase in the average number of consultants. The average
number of General Division consultants during the period
increased 1.2% to approximately 30,000 consultants for the nine
months ended September 30, 2003.
In Europe, net sales, excluding inter-segment
sales, increased to $22.7 million for the nine months ended
September 30, 2003, from $18.6 million for the nine
months ended September 30, 2002, an increase of
$4.1 million, or 22.0%, in part due to stronger average
exchange rates compared to the U.S. dollar. In local
currencies, net sales increased 1.4% for the first nine months
of 2003, compared to the first nine months of 2002. The average
number of consultants for the nine months ended
September 30, 2003 was approximately 18,000, an increase of
11.9% over the comparable prior year period. Consultant
productivity measured in local currencies decreased 9.4% for the
nine months ended September 30, 2003 compared to the nine
months ended September 30, 2002.
Net sales in the other markets decreased to
$7.4 million for the nine months ended September 30,
2003, compared to $9.3 million for the nine months ended
September 30, 2002, a decrease of $1.9 million, or
20.4%. The decrease in net sales was primarily due to weaker
average exchange rates of South American currencies during 2003
compared to 2002 and decreased net sales measured in local
currency in the Dominican Republic, partially offset by
increased net sales measured in local currency in Brazil.
Measured in local currencies, net sales increased 1.4% for the
nine months ended September 30, 2003 compared to the nine
months ended September 30, 2002.
Gross profit.
Consolidated gross profit for the nine
months ended September 30, 2003 decreased to
$212.9 million from $219.2 million for the nine months
ended September 30, 2002, a decrease of $6.3 million,
or 2.9%. Gross profit as a percentage of net sales (gross
margin) increased to 76.9% for the nine months ended
September 30, 2003 from 76.8% in the comparable prior year
period. The increase in gross margin for the nine months ended
September 30, 2003 compared to the nine months ended
September 30, 2002 was primarily due to increased gross
margin in Europe and favorability in the "Corporate,
Unallocated and Other" segment, partially offset by
decreased gross margin in the United States and the All Others
markets.
In Mexico, gross margin for the nine months ended
September 30, 2003 decreased to 75.9% from 76.0% for the
nine months ended September 30, 2002.
In the United States, gross margin for the nine
months ended September 30, 2003 decreased to 77.4% from
77.9% for the nine months ended September 30, 2002. The
decrease in gross margin was
39
Table of Contents
primarily the result of unfavorable direct cost
variances during the nine months ended September 30, 2003,
compared to favorable direct cost variances during the nine
months ended September 30, 2002.
In Europe, gross margin for the nine months ended
September 30, 2003 increased to 79.3% from 77.4% for the
comparable prior year period due to the favorable impact of
exchange rates on U.S. dollar-denominated inventory
purchases, partially offset by reduced gross margin as a result
of the mix of product offerings.
Selling, general and administrative expenses.
SG&A expenses for the nine months
ended September 30, 2003 increased to $188.5 million,
compared to $174.9 million for the nine months ended
September 30, 2002, an increase of $13.6 million, or
7.8%. SG&A expenses, as a percentage of net sales, increased
to 68.1% for the nine months ended September 30, 2003 from
61.3% for the nine months ended September 30, 2002 due
primarily to increased selling, general and administrative
expense in the "Corporate, Unallocated and Other"
segment.
In Mexico, SG&A expenses for the nine months
ended September 30, 2003 decreased by $9.0 million, or
9.5%, to $85.7 million, compared to $94.7 million for
the nine months ended September 30, 2002. SG&A expenses
increased, as a percentage of net sales, in Mexico to 49.8% for
the nine months ended September 30, 2003, compared to 49.7%
for the nine months ended September 30, 2002. The increase
in SG&A expenses as a percentage of net sales was primarily
due to increases in override and promotional expenses, partially
offset by decreased administrative expenses. Sales promotional
expenses increased as a percentage of net sales due to the
timing and nature of promotional activities and override
expenses increased due to better collection of receivables.
Administrative expenses decreased due to the employment of cost
containment measures and less expense related to the allowance
for uncollectible accounts.
In the United States, SG&A expenses for the
nine months ended September 30, 2003 increased by
$4.9 million, or 11.9%, to $46.1 million from
$41.2 million for the nine months ended September 30,
2002. SG&A expenses, as a percentage of net sales, in the
United States were 61.9% for the nine months ended
September 30, 2003 compared to 61.6% for the nine months
ended September 30, 2002. The increase in SG&A expenses
as a percentage of net sales was primarily attributable to
increased sales promotional and override expenses, partially
offset by reduced selling expenses during the nine months ended
September 30, 2003 compared to the nine months ended
September 30, 2002. Sales promotional expenses increased
due to more planned promotional spending in 2003 and expenses
related with a General Division summer trip in 2003 which was
not held in 2002. Override expense increased due to the relative
sales mix. Selling expenses, as a percentage of net sales,
decreased due to headcount vacancies and reductions.
In Europe, SG&A expenses for the nine months
ended September 30, 2003 increased by $3.3 million, or
23.2%, to $17.5 million from $14.2 million for the
nine months ended September 30, 2002. SG&A expenses, as
a percentage of net sales, in Europe were 77.1% for the nine
months ended September 30, 2003, compared to 76.3% for the
nine months ended September 30, 2002. The increase in
SG&A expenses as a percentage of net sales was due to
increased sales promotional expenses in an effort to increase
sponsoring and the consultant base and increased override
expenses due to better collections and a change in the program,
partially offset by decreased administrative expenses due to
incrementally less expense related to the reserve for
uncollectible accounts in Italy and information technology
expenses during the nine months ended September 30, 2003
compared to the same period of the prior year.
SG&A expenses in our other markets for the
nine months ended September 30, 2003 decreased by
$1.8 million, or 17.5%, compared to the nine months ended
September 30, 2002. As a percentage of net sales, SG&A
expenses were 114.9% for the nine months ended
September 30, 2003, compared to 110.8% for the nine months
ended September 30, 2002.
SG&A expenses in the "Corporate,
Unallocated and Other" segment increased $16.2 million
primarily as the result of costs related to our recapitalization
recorded during the second quarter of 2003 and certain
nonrecurring severance charges recorded during the nine months
ended September 30, 2003.
40
Table of Contents
During the nine months ended September 30,
2003, we completed a recapitalization of its operations by
issuing new debt (see "Liquidity and Capital
Resources").
Exchange gain
(loss).
Foreign exchange loss was
$7.8 million for the nine months ended September 30,
2003, compared to $9.8 million for the nine months ended
September 30, 2002, a decrease of $2.0 million, or
20.4%. During the nine months ended September 30, 2003, we
recognized $9.3 million of exchange losses on the
remeasurement of U.S. dollar-denominated debt. This loss was
partially offset by $0.6 million of exchange gains related
to option contracts and $0.9 million of exchange gains on
other foreign currency transactions. During the nine months
ended September 30, 2002, we recognized $2.2 million
of exchange losses related to forward contracts,
$1.2 million of exchange gains related to option contracts,
$4.6 million of exchange losses on the remeasurement of
U.S. dollar-denominated debt, $5.2 million of exchange
losses on U.S. dollar-denominated intercompany payables in
Brazil as the result of devaluation of the Brazilian real and
$1.0 million of exchange gains on other foreign currency
transactions.
Interest expense.
Net interest expense (including amortization of deferred
financing fees) for the nine months ended September 30,
2003 increased to $14.1 million from $8.8 million for
the nine months ended September 30, 2002, an increase of
$5.3 million, or 60.2%. The increase was primarily due to a
greater average amount of debt outstanding during the nine
months ended September 30, 2003 compared to the nine months
ended September 30, 2002.
Loss on extinguishment of debt.
On May 23, 2003, we repurchased
our outstanding 11 3/4% Subordinated Notes due
April 30, 2008 (the "Old Notes") in the aggregate
principal amount of $75.2 million at a premium of
approximately $4.4 million. Additionally, we repaid
$7.4 million under our existing credit agreement ("Old
Credit Agreement"). In connection with the redemption of
the Old Notes and the termination of the Old Credit Agreement,
we wrote off approximately $2.2 million of capitalized
deferred financing fees. The total expense related to the
extinguishment of the previous debt was $6.6 million and
was recorded in the nine months ended September 30, 2003.
Income tax expense.
Income tax expense decreased to
$1.2 million for the nine months ended September 30,
2003 from $9.7 million for the nine months ended
September 30, 2002, a decrease of $8.5 million, or
87.6%. During the nine months ended September 30, 2003, we
reported a pretax loss of $4.4 million and income tax
expense of $1.2 million. Our Mexican subsidiaries reported
pretax income and income tax expense for the nine months ended
September 30, 2003. The income tax expense was partially
offset by an income tax benefit in the U.S. subsidiary
based on pretax net loss. Additionally, our European and other
subsidiaries recorded valuation allowances against pretax net
losses for the nine months ended September 30, 2003. For
the nine months ended September 30, 2002, our effective tax
rate was 37.5% due to the release of $2.3 million of
valuation allowances against certain deferred tax assets in the
United States and the impact of the enactment of changes in
Mexico's future corporate statutory rates on net deferred
tax liabilities of $1.2 million during the first quarter of
2002. These benefits to the effective tax rate were offset by
valuation allowances against certain operating losses in Europe
and other subsidiaries.
Loss on discontinued operations.
During the nine months ended
September 30, 2003, losses on discontinued operations were
$2.5 million, an increase of $1.4 million compared to
a loss of $1.1 million in the nine months ended
September 30, 2002.
Net (loss) income.
Net loss was $8.1 million for the
nine months ended September 30, 2003, compared to net
income of $14.9 million for the nine months ended
September 30, 2002, a $23.0 million unfavorable
difference. The decrease in income was due to a
$6.3 million decrease in gross profit, a $13.6 million
increase in selling, general and administrative expenses, a
$5.3 million increase in interest expense, a
$6.6 million loss on extinguishment of debt, a
$0.5 million unfavorable change in other and a
$1.4 million increase in losses on discontinued operations,
partially offset by a $2.0 million decrease in exchange
loss, an $8.5 million decrease in income tax expense and
the absence of $0.2 million in cumulative effect of
accounting change in 2003.
41
Table of Contents
Year Ended December 31, 2002 Compared
    to Year Ended December 31, 2001
Net Sales.
Net sales
for 2002 increased to $382.6 million from
$365.4 million in 2001, an increase of $17.2 million,
or 4.7%. In local currencies, net sales increased 8.6% in 2002
compared to 2001. The number of our average ending consultants
worldwide increased 9.3% to approximately 376,000 consultants in
2002, an increase of 32,000 consultants over the 2001 average
ending number of consultants. Consultant activity decreased
approximately 1.4% as 49.3% of all consultants were considered
active in 2002, compared to 50.0% in 2001. In general,
consultants are considered to be active ordering consultants at
any one time if they place an order within the month immediately
preceding such time. Consultant productivity decreased 4.4% in
2002 compared to 2001, due primarily to weaker local currencies,
partially offset by increased productivity in our United States
market due to planned program changes.
In Mexico, net sales, excluding intersegment
sales, for 2002 increased 5.5% compared to net sales for 2001 as
measured in local currency. However, due to weaker average
exchange rates, net sales measured in U.S. dollars
increased 1.7% to $251.6 million for 2002 from
$247.5 million for 2001. The year-over-year increase was
due to an increase in the average number of consultants,
partially offset by reduced productivity. The increase in the
consultant base was the result of a continued focus on
sponsoring through promotions, low-cost kits and opportunity
meetings. The reduction in productivity was due to the weaker
average exchange rates and liquidity problems of the consultants
and their clients due to the difficult macroeconomic situation
in Mexico. In Mexico, the average number of consultants in 2002
increased to approximately 252,000, 9.9% over the 2001 average
number of consultants. Consultant productivity decreased 7.5% in
2002 compared to 2001.
In the United States, net sales, excluding
intersegment sales, for 2002 increased to $92.1 million
from $79.6 million in 2001, an increase of
$12.5 million, or 15.7%. The U.S. selling market has
established two distinct selling divisions to focus on the
individual characteristics of the Hispanic Division and the
General Division. The establishment of two distinct selling
divisions allows us to focus on independent marketing strategies
and to provide specialized recruiting, training and product
offerings, which has contributed to the increased net sales.
Sales in the Hispanic Division increased 19.7% to
$61.2 million and sales in the General Division increased
8.6% to $30.9 million during 2002 compared to net sales in
2001. In the Hispanic Division, the year-over-year increase was
driven by increases in the number of consultants, the number of
active consultants and consultant productivity. In the General
Division, the year-over-year increase was driven by an increase
in consultant productivity, partially offset by a smaller
consultant base. During the second quarter of 2002, we
implemented program changes in the United States to increase the
minimum order size in order for the consultant to achieve the
maximum 50% commission rate. As a result of this change in the
program, productivity in both the General and Hispanic Divisions
increased. In the General Division many promotions in 2001 were
geared toward increased activity rather than productivity. The
promotional focus in 2002 was on productivity, which also
contributed to the year-over-year productivity increase.
However, a result of increasing the minimum order size was an
increase in consultant losses which lead to a decrease in the
consultant base. In the Hispanic Division, the average number of
consultants increased 12.1% to 39,000 compared to the 2001
average. Hispanic Division consultant productivity increased
6.8% in 2002 compared to 2001 productivity. The Hispanic
Division focused on aggressive sponsoring promotions and
promotional kits in order to increase the number of consultants.
Additionally, in 2002, consultant activity increased 6.3% in the
Hispanic Division compared to 2001, with 60.7% of all
consultants considered to be active in 2002. The Hispanic
Division also reported increases in the number of leaders. In
the General Division, consultant productivity increased 16.5%
and the average number of consultants decreased 6.8% to
approximately 29,000 consultants in 2002.
In Europe, net sales, excluding intersegment
sales, for 2002 increased to $26.9 million from
$26.4 million in 2001, an increase of $0.5 million, or
1.9%. Measured in local currencies, net sales in 2002 decreased
3.6% compared to net sales in 2001. The increase in net sales
measured in U.S. dollars was the result of the
strengthening of the euro and Swiss franc compared to the
U.S. dollar, partially offset by a decrease in the average
number of consultants, and reduced consultant productivity in
local currencies. In Europe, the average number consultants
decreased 2.6% to approximately 16,000 consultants. In Europe,
the decrease in the base was the result of a higher turnover due
to a low growth economy. Consultant
42
Table of Contents
productivity increased 5.0% in 2002, compared to
2001, due to the strengthening of local currencies compared to
the U.S. dollar. Measured in local currencies, consultant
productivity decreased 1.1% in 2002 compared to 2001
productivity.
Gross Profit.
Gross
profit in 2002 increased to $292.4 million from
$281.2 million in 2001, an increase of $11.2 million,
or 4.0%. Gross profit as a percentage of sales (gross margin)
decreased to 76.4% from 77.0%.
In Mexico, gross margin decreased nominally to
75.9% in 2002 compared to 76.0% in 2001 due primarily to
incrementally greater charges related to the reserve for slow
moving inventory in 2002 and the weakening of the peso compared
to the U.S. dollar, partially offset by a more favorable
product mix. Excluding charges for the reserve for slow moving
inventory in 2002, gross margin would have been approximately
76.3% in 2002, compared to 76.0% in 2001. The percentage of
commissionable sales compared to total sales remained constant
at approximately 91.0%.
In the United States, gross margin remained
constant at 77.0% between 2002 and 2001. In 2002, sales of new
products contributed a greater gross margin compared to 2001.
This was offset by a lower gross margin contribution from
non-resale sale products. Charges for the reserve for slow
moving inventory were relatively constant between 2002 and 2001.
In Europe, gross margin in 2002 decreased to
approximately 76.6% compared to 79.2% in 2001 primarily due to
more aggressive promotional activity implemented in an effort to
generate sales.
Selling, General and Administrative
Expenses.
SG&A expenses in 2002
increased to $233.8 million from $224.8 million in
2001, an increase of $9.0 million, or 4.0%. SG&A
expenses, as a percentage of net sales, decreased to 61.1% in
2002 from 61.5% in 2001, due to the discontinuation of
amortization of goodwill and trademarks pursuant to SFAS
No. 142. See "— New Accounting
Pronouncements". In 2001, we recorded $3.5 million of
charges related to amortization of intangible assets.
In Mexico, SG&A expenses increased to
$124.7 million in 2002, from $116.8 million in 2001.
As a percentage of net sales, SG&A expenses increased to
49.6% in 2002 compared to 47.2% in 2001. The primary factors for
the increase in SG&A expenses as a percentage of net sales
were selling expenses, variable freight expenses and
administrative expenses. Selling expenses increased due
primarily to an increase in the number of regional sales
managers. As a percentage of net sales, variable freight
expenses increased 1.1% due to increased orders and higher
average packaging costs. Administrative expenses increased
primarily due to an additional $3.4 million of bad debt
expense in 2002, compared to 2001, due to declining consultant
liquidity as a result of the general economic condition.
Excluding the charge for bad debt expense, administrative
expense was relatively constant as a percentage of sales in 2002
and 2001.
In the United States, SG&A expenses increased
to $55.3 million in 2002 from $49.8 million in 2001,
an increase of $5.5 million, or 11.0%. However, as a
percentage of net sales, SG&A expenses decreased to 60.0%
from 62.6% primarily due to decreases in sales promotional
expenses and administrative expenses. Sales promotional expenses
decreased as a percentage of net sales due to the mix of events.
Administrative expenses decreased as a percentage of net sales
due to an increase in net sales as most of these expenses are
fixed. However, administrative expenses were relatively constant
in total. In the year 2002, we incurred $1.5 million of
transaction related fees. In 1998, we incurred $1.2 million
related to transaction fees in connection with the acquisition
from Gillette. We had $0.0 in transaction related costs in 1999,
2000 and 2001. Certain other variable expenses, such as period
distribution and freight out, increased in total in 2002, but
were relatively constant as a percentage of net sales.
In Europe, SG&A expenses increased to
$19.4 million in 2002 from $19.1 million in 2001, an
increase of $0.3 million. As a percentage of net sales,
SG&A expenses decreased to 72.1% in 2002 from 72.3% in 2001.
Administrative expenses increased as a percentage of net sales
and in total due to larger charges related to the reserve for
uncollectible accounts in Italy and incrementally higher
information technology expenses in Germany in 2002 compared to
2001. The increase in administrative expenses, as a percentage
of net sales, was offset by reduced sales promotional and
override expenses, as a percentage of net sales, in 2002
compared to 2001.
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Table of Contents
SG&A expenses in South America and Thailand
decreased to $13.6 million in 2002, compared to
$14.0 million in 2001, primarily due to the favorable
impact on expenses of currency devaluation of South American
currencies compared to the U.S. dollar, and decreased
incremental charges related to the reserve for uncollectible
accounts in our Brazilian subsidiary in 2002 compared to 2001.
SG&A expenses in the corporate, unallocated and other
categories decreased $4.3 million in 2002, compared to
2001, primarily due to the discontinuation of intangible
amortization pursuant to SFAS No. 142 and administrative
cost savings in our corporate headquarters. During 2001, we
wrote off $0.2 million of intangible assets as we
determined that the undiscounted cash flows were less than the
carrying amount of the assets due to a downturn in the political
and economic environment of Argentina. This item, combined with
the $0.1 million loss on sale of assets, yields a total of
$0.3 million of loss on sale or write-down of assets in
2001.
Exchange Gain or
Loss.
Our net foreign exchange loss in
2002 was $10.6 million compared to $9.5 million in
2001, an increase in exchange losses of $1.1 million, or
10.5%. Our foreign exchange gains and losses primarily result
from our operations in Mexico and South America. The net
exchange loss has three primary elements: gains or losses on
forward currency and option contracts, unrealized and realized
gains or losses on the remeasurement of
U.S. dollar-denominated debt, and gains or losses on
transactions denominated in foreign currencies.
In 2002, we continued to use forward contracts to
protect against potential devaluation of the Mexican peso by
selling Mexican pesos and buying U.S. dollars.
Additionally, during 2002, we modified our hedging program to
include the use of foreign currency option contracts
("option contracts" or "options") to hedge
foreign currency exposures to the Mexican peso. In order to
execute the option contracts and to offset the current
outstanding forward contracts to sell Mexican pesos, we entered
into forward contracts to buy Mexican pesos. We purchase
exchange rate put options which give us the right, but not the
obligation, to sell Mexican pesos at a specified
U.S. dollar exchange rate ("strike rate"). The
option contracts provide protection in the event the Mexican
peso weakens beyond the option strike rate. In conjunction with
the put options, and as part of a zero-cost option collar
structure, we sold Mexican peso call options, which give the
counterparty the right, but not the obligation, to buy Mexican
pesos from us at a specified strike rate. The effect of these
contracts would be to limit the benefit we would otherwise
derive from the strengthening of the Mexican peso beyond the
strike rate.
During 2002, we recognized $2.6 million of
exchange losses related to forward contracts and
$0.9 million of exchange gains related to option contracts
(including the reclassification of other comprehensive loss into
exchange loss). As we utilize hedge accounting pursuant to SFAS
No. 133 for forward and option contracts to hedge certain
forecasted transactions, certain losses are deferred as a
separate component of other comprehensive loss and are
recognized in income at the same time that the underlying hedged
exposure is recognized in income. As of December 31, 2001,
we had deferred losses of $3.7 million as a component of
other comprehensive loss. During 2002, we deferred an additional
$1.8 million of losses on forward exchange contracts and
$1.3 million of exchange gains on option contracts as a
component of other comprehensive loss. Pursuant to SFAS
No. 133, the losses and gains are recognized into income at
the same time that the underlying hedged exposure is recognized
in income. During the year ended December 31, 2002, we
reclassified $1.6 million of losses on forward contracts
and $0.5 million of exchange gains on option contracts from
other comprehensive loss into exchange loss on the consolidated
statement of income. Additionally, during the year ended
December 31, 2002, we reclassified $3.1 million of
losses on forward contracts and $0.4 million of exchange
gains on option contracts from other comprehensive loss into
cost of sales in the consolidated statements of income.
During 2002, the Mexican peso devalued 13.5%,
which resulted in a $5.2 million loss on the remeasurement
of U.S. dollar-denominated debt, most of which was
unrealized. We recognized $3.7 million of other exchange
losses on other foreign currency transactions, most of which was
unrealized, primarily due to the weakening of the South American
currencies.
During 2001, we recognized a total of
$12.2 million of exchange losses related to forward
contracts (including the reclassification of other comprehensive
loss into exchange loss). During 2001, we deferred
$5.5 million of losses as a component of other
comprehensive loss pursuant to SFAS No. 133. Of this
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$5.5 million, $0.8 million was
recognized as a component of exchange loss and $1.0 million
was recognized as cost of sales, in the consolidated statements
of operations, resulting in $3.7 million of exchange losses
deferred as a component of other comprehensive loss at
December 31, 2001. As the Mexican peso strengthened in
2001, we recognized $2.8 million of exchange gains on the
remeasurement of U.S. dollar-denominated debt in 2001.
Additionally, we recognized $0.1 million of net exchange
losses on other transactions denominated in foreign currencies.
Interest Expense.
Interest expense decreased to $11.4 million in 2002 from
$13.4 million in 2001, a decrease of $2.0 million, or
14.9%. The decrease was due to a lower debt balance, as total
debt decreased approximately $8.7 million in 2002 from
2001, and lower average interest rates. Interest rates on LIBOR
based borrowings decreased from 3.6% at December 31, 2001
to 3.1% at December 31, 2002.
Income Tax Expense.
Income tax expense decreased to $16.2 million in 2002 from
$17.3 million in 2001, a decrease of $1.1 million, or
6.4%. Our effective income tax rate from continuing operations
decreased to 44.0% in 2002 from 51.8% in 2001. The reduced
effective tax rate was primarily the result of the release of
valuation allowances against certain deferred tax assets in the
United States and the impact of the enactment of changes in
Mexico's future corporate statutory rates on net deferred
tax liabilities partially offset by valuation allowances against
certain pretax expenses in the United States. Excluding the
impact of the release of the valuation allowance of
$2.3 million and the impact of the enactment of changes in
the Mexico rate of $1.2 million, the effective tax rate
would have been 53.5% in 2002.
Loss on Discontinued Operations.
During the year ended
December 31, 2002, losses on discontinued operations were
$1.5 million, an increase of $1.3 million, compared to
$0.2 million during the year ended December 31, 2001.
Net Income.
Net
income increased to $18.8 million in 2002 from
$16.0 million in 2001, an increase of $2.8 million, or
17.5%. The increase was due to a $11.2 million increase in
gross profit, a $0.2 million favorable change in other
income (expense), a $2.0 million decrease in interest
expense, a $1.1 million decrease in tax expense, offset by
an $9.0 million increase in selling, general and
administrative expenses, a $1.3 million increase in loss
from discontinued operations, a $1.1 million increase in
exchange loss and $0.2 million loss on the cumulative
effect of accounting change, compared to a $0.1 million
gain on the cumulative effect of accounting change in the prior
year.
Year Ended December 31, 2001 Compared
    to Year Ended December 31, 2000
Net Sales.
Net sales
for 2001 increased to $365.4 million from
$310.5 million in 2000, an increase of $54.9 million,
or 17.7%. Our average ending number of consultants worldwide
increased 18.6% to approximately 344,000 consultants in
2001, an increase of 54,000 consultants over the 2000 average.
Our consultant productivity decreased 0.4% between 2001 and
2000. Consultant productivity in Mexico increased 3.5%.
In Mexico, net sales, excluding intersegment
sales, for 2001 increased to $247.5 million from
$199.8 million in 2000, an increase of $47.7 million,
or 23.9%. Sales in Mexico in local currency increased by 22.3%
over 2000 net sales. The year-to-year increase was driven by an
increase in the average number of consultants, an increase in
consultant productivity and an increase in average consultant
branches, or leaders. Mexico defines a branch or leader as a
consultant with twelve or more active consultants in her
downline. The average number of leaders in 2001 increased 16.4 %
compared to the 2000 average. In Mexico, the average number of
consultants in 2001 increased to approximately 229,000, or 19.6%
over the 2000 average.
In the United States, net sales, excluding
intersegment sales, for 2001 increased to $79.6 million
from $74.1 million in 2000, an increase of
$5.5 million, or 7.4%. During the latter part of 2000, the
U.S. business established two distinct selling divisions to
focus on the individual characteristics of the Hispanic Division
and the General Division. The focus on the distinct needs of the
consultants in each of the selling divisions contributed to the
overall sales increase. Net sales in the Hispanic Division
increased 8.1% and net sales in the General Division increased
6.4% compared to 2000 sales. The year-to-year increase was
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also driven by an overall increase in the number
of consultants and an increase in the percentage of active
consultants, partially offset by a decrease in productivity. In
the United States, the average number of consultants in 2001
increased to approximately 66,000, or 7.8% above the 2000
average. The percentage of ordering consultants increased to
53.5 % of all consultants, as compared to 49.6% in 2000.
Consultant productivity decreased 7.0% over consultant
productivity in 2000.
In Europe, net sales, excluding intersegment
sales, for 2001 decreased to $26.4 million from
$26.9 million in 2000, a decrease of $0.5 million, or
1.9%. The decline in net sales is primarily attributed to
unfavorable exchange rates due to the weakening of local
currency compared to the U.S. dollar. If exchange rates
remained constant between 2000 and 2001, net sales would have
increased nominally. In Europe, the average number of
consultants was relatively consistent at an average of
17,000 consultants each year.
Gross Profit.
Gross
profit in 2001 increased to $281.2 million from
$233.8 million in 2000, an increase of $47.4 million,
or 20.3%. Gross profit as a percentage of sales (gross margin)
increased to 77.0% in 2001 from 75.3% in 2000.
In Mexico, gross margin improved primarily due to
reduced product costs, while prices increased in line with
inflation. During 2001, the peso strengthened 5.2% compared to
the U.S. dollar in 2000. The strengthening of the peso resulted
in reduced product costs as we benefited from foreign currency
gains as some inventory and components are purchased in
U.S. dollar-denominated transactions. These gains were
partially offset by derivative losses on forward contracts used
to purchase inventory and accounted for using hedge accounting.
Mexico's fourth quarter 2000 gross margin included certain
adjustments related to changes in cost accounting estimates,
totaling $3 million. These changes resulted in increased
margins of 76.3% in the fourth quarter of 2001 compared to 67.3%
in the fourth quarter of 2000 and 76.0% for the year ended
December 31, 2001 compared to 75.6% for the year ended
December 31, 2000.
In the United States, the gross margin decreased
as a result of a more aggressive promotional mix. In 2001, the
U.S. business sold fewer regular resale items and more
promotional and non-resale items. In 2001, 53.3% of resale items
sold were promotional products, compared to 45.0% in 2000.
Regular resale items typically contribute a greater margin than
promotional or non-resale items.
In Europe, gross margin in 2001 increased to
approximately 79.2% compared to 76.6% in 2000 primarily due to
the favorable impact of exchange rates on product costs.
Selling, General and Administrative
Expenses.
SG&A expenses in 2001
increased to $224.8 million from $188.8 million in
2000, an increase of $36.0 million, or 19.1%. SG&A as a
percentage of net sales increased in 2001 to 61.6% from 60.8% in
2000.
In Mexico, SG&A as a percentage of net sales
increased to 47.2% for 2001 compared to 43.3% in 2000. The
primary factors for the increase in SG&A as a percentage of
net sales were sales promotional expenses, distribution costs
and administrative expenses. Sales promotional expenses
increased because there was additional promotional activity in
2001 in an effort to generate sales. Distribution costs
increased proportionally more than sales due to the shipment of
more small packages. Administrative expense increased primarily
due to additional expenses related to reserves for uncollectible
accounts receivable. Due to declining consultant liquidity,
Mexico charged $7.7 million to bad debt expense during
2001, of which $3.8 million was charged during the fourth
quarter.
In the United States, SG&A, as a percentage
of net sales, decreased to 62.6% for 2001 from 63.3% for 2000.
Selling expenses increased proportionally more than sales due to
the implementation of the expanded e-commerce platform in 2001.
In 2001, there was approximately $1.2 million of increased
incremental e-commerce related expenses. The percentage increase
in selling expenses was partially offset by a decrease in sales
promotional expense and administrative expense, as a percentage
of net sales. Expenditures on major events were scaled back,
which resulted in a decrease in sales promotional expenses, and
cost savings measures were employed in 2001 in an effort to
reduce administrative expense.
In Europe, SG&A expenses in 2001 decreased to
72.3% of net sales compared to 75.8% in 2000, primarily as a
result of our repositioning and restructuring activities in
Europe in the second half of 2000.
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Developing markets, particularly Brazil, incurred
additional SG&A expenses in 2001 compared to 2000 due to the
growing nature of the business and an increase in the allowance
for bad debts as a result of declining consultant liquidity and
economic difficulties. Corporate expenses increased
$1.8 million because of increased compensation expenses in
2001, primarily related to bonuses, compared to 2000 and
increased infrastructure expenses to support the growing
business.
Restructuring and Impairment
Charges.
There were no restructuring
and impairment charges for 2001 compared to $2.6 million
for 2000. In 2000, we recorded approximately $1.6 million
of restructuring charges and approximately $1.0 million of
asset impairment charges. The restructuring charges in 2000
related to our repositioning activities in Europe, and consisted
primarily of severance costs. The asset impairment charges
consisted of approximately $0.3 million related to our
repositioning activities in Europe (for a total of
$1.9 million for European restructuring in 2000) and
approximately $0.7 million relating to the writedown of
certain capitalized computer software costs in the United
States. There were $0.0 charges for European restructuring in
each of years 1998, 1999 and 2001. This $0.7 million,
together with the $0.1 million of loss on sale of assets
noted on the face of the income statement, yields a total of
$0.8 million of total loss on sale or write-down of assets
in 2000. Such losses were $0.0 in each of 1998 and 1999. In
2000, we consolidated the sales support and administrative
functions for Austria, Italy, and the Netherlands in Germany.
Field sales personnel continue to perform sales and marketing
functions in those locations. We ceased our Poland operation,
and began serving that territory through a distributor in 2001.
In 1999, we incurred $2.7 million of restructuring costs
related to the closure of our U.S. factory. Restructuring
costs related to this closure were incurred in 1999 only, and
were $0.0 for each of years 1998, 2000 and 2001.
Exchange Gain or
Loss.
Our net foreign exchange loss in
2001 was $9.5 million compared to $11.7 million in
2000, a decrease in exchange loss of $2.2 million. Our
foreign exchange gains and losses primarily result from our
operations in Mexico. The net exchange loss has three primary
elements: gains or losses on forward currency contracts,
unrealized and realized gains or losses on the remeasurement of
U.S. dollar-denominated debt, and gains or losses on
transactions denominated in foreign currencies.
Effective January 1, 2001, we adopted SFAS
No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133, as amended and
interpreted, establishes accounting and reporting standards for
derivative instruments and hedging activities and requires such
instruments to be measured and recorded at fair value. The
derivative instruments we utilized did not qualify for hedge
accounting under applicable standards prior to adoption of SFAS
No. 133, and accordingly such instruments were
marked-to-market with gains and losses included as a component
of exchange loss in the statement of operations for the year
ended December 31, 2000. Under SFAS No. 133, certain
derivative contracts do not qualify for hedge accounting and the
resulting fair value is recorded as a component of exchange
loss. Under SFAS No. 133, our use of forward contracts and
option contracts to hedge certain forecasted transactions
qualified for hedge accounting as of January 2001. Unrealized
gains and losses from such derivative instruments are deferred
as a separate component of other comprehensive income, and are
recognized in income at the same time that the underlying hedged
exposure is recognized in income. This accounting treatment
results in the matching of gains and losses from certain forward
exchange contracts with the corresponding gains and losses
generated by the underlying hedged transaction. We had
unrealized foreign exchange and hedging gains of
$2.4 million, and $0.7 million in 1999 and 2001,
respectively, and incurred a loss of $2.9 million in 2000.
We had $0.0 unrealized foreign exchange gains or losses in 1998.
In 2001, we continued to use forward contracts to
protect against potential devaluation of the Mexican peso by
selling Mexican pesos and buying U.S. dollars. Throughout
2001, the forward currency contract pricing reflected the
market's expectation that the peso would devalue relative
to the dollar. However, in 2001, the peso to U.S. dollar
exchange rate strengthened, resulting in exchange losses of
$12.2 million related to forward contracts. Upon
implementation of SFAS 133 on January 1, 2001, we had
certain forward contracts not designated as hedges. During 2001,
we recognized foreign exchange losses totaling
$11.4 million on certain forward contracts not designated
as hedges under SFAS No. 133. As we utilized hedge
accounting pursuant to SFAS No. 133 for forward contracts
to hedge certain forecasted
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transactions, certain losses were deferred as a
separate component of other comprehensive income and recognized
in income at the same time that the underlying hedged exposure
was recognized in income. During 2001, $5.5 million of
losses were deferred and $0.8 million was recognized as a
component of exchange loss and $1.0 million was recognized
as cost of sales, resulting in $3.7 million of exchange
losses deferred as a component of other comprehensive income at
December 31, 2001. The contracts were remeasured each month
and the fair value of the contracts was included in current
liabilities. As the Mexican peso strengthened in 2001, we
recognized $2.8 million of exchange gains on the
remeasurement of U.S. dollar-denominated debt in 2001.
Additionally, we recognized $0.1 million of net unrealized
and realized exchange losses on other transactions denominated
in foreign currencies.
In 2000, the peso to U.S. dollar exchange
rate was stable, resulting in $10.0 million of exchange
losses on forward contracts. The remeasurement of
U.S. dollar-denominated debt in 2000 resulted in an
exchange loss of $0.7 million, as the peso weakened against
the U.S. dollar at year-end. Net realized and unrealized
losses on other foreign currency transactions in Mexico were
$0.6 million.
Interest Expense.
Interest expense decreased to $13.4 million in 2001 from
$15.7 million in 2000, a decrease of $2.3 million, or
14.6%. The decrease was due to a lower debt balance, as total
debt decreased approximately $15.9 million from 2000 to
2001, and lower average interest rates.
Other Income
(Expense).
Other expense in 2001 was
nominal compared to other income for 2000 of $1.6 million,
which consisted primarily of income related to the recovery of
the effect of inflation from a receivable due from the Mexican
government related to taxes.
Income Tax Expense.
Income tax expense increased to $17.3 million in 2001 from
$9.7 million in 2000, an increase of $7.6 million, or
78.4%. The increase in income tax expense is the result of
increased income generated by Jafra Mexico and Jafra US in 2001
compared to 2000 and approximately $0.6 million of tax
provision related to certain tax adjustments in Europe. In 2001,
our effective income tax rate decreased to 51.9% from a 60.2%
effective income tax rate in 2000. The decrease in the effective
income tax rate was driven by taxable income generated by our
European subsidiary in 2001, compared to a tax loss without any
tax benefit in 2000. This decrease in the effective income tax
rate was partially offset by higher effective income tax rates
for Jafra Mexico and Jafra US.
Net Income.
Net
income increased to $16.0 million in 2001 from $6.4 million
in 2000, an increase of $9.6 million, or 150.0%. The
increase was due to a $47.4 million increase in gross
profit, a $2.6 million decrease in restructuring and
impairment charges, a $2.2 million decrease in exchange
loss, a $2.3 million decrease in interest expense, a
$0.5 million decrease in loss on early extinguishment of
debt and a $0.1 million gain on the cumulative effect of
accounting change, net of tax, partially offset by a
$36.0 million increase in selling, general and
administrative expenses, an increase on loss from discontinued
operations of $0.2 million, a $1.7 million decrease in
other, net income (expense), and a $7.6 million increase in
income tax expense.
New Accounting Pronouncements
Effective January 1, 2001, the Company
adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as
amended and interpreted, established accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. All derivatives, whether designated in
hedging relationships or not, are required to be recorded on the
balance sheet at fair value. If the derivative is designated in
a fair-value hedge, the changes in the fair value of the
derivative and the underlying hedged item are recognized
concurrently in earnings. If the derivative is designated in a
cash-flow hedge, changes in the fair value of the derivative are
recorded in other comprehensive income (loss) ("OCI")
and are recognized in the statement of operations when the
hedged item affects earnings. SFAS No. 133 defined new
requirements for designation and documentation of hedging
relationships as well as ongoing effectiveness assessments in
order to use hedge accounting. For a derivative that does not
qualify as a hedge, changes in fair value are recognized
concurrently in earnings. As of January 1, 2001, the
Company recorded a net gain of $126,000 (net of a tax effect of
$82,000) as a cumulative transition adjustment to earnings. This
adjustment relates
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to derivatives not designated as hedges prior to
adoption of SFAS No. 133, and represents the difference
between the carrying value as measured by the difference in the
spot rate to the forward rate and the fair value as determined
by forward rates of such instruments at January 1, 2001.
In June 2001, the Financial Accounting Standards
Board ("FASB") approved two new statements: SFAS
No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets."
SFAS No. 141 requires combinations entered into after
June 30, 2001 to be accounted for using the purchase method
of accounting. SFAS No. 142 requires that goodwill not be
amortized, but be tested for impairment at least annually. SFAS
No. 142 was effective for fiscal years beginning after
December 15, 2001 for all goodwill and other intangible
assets recognized in an entity's statement of financial
position at that date, regardless of when those assets were
initially recognized. We adopted SFAS No. 142 on
January 1, 2002. In accordance with such adoption, we
identified all reporting units in conjunction with the
provisions of SFAS No. 142 and allocated all goodwill
accordingly. Prior to June 30, 2002, we completed the
transitional goodwill impairment test required by SFAS
No. 142. Due to general market uncertainty in Colombia, we
revised our projections and recorded an impairment loss of
$0.2 million associated with our Colombia reporting unit.
The impairment loss has been recorded as a cumulative effect of
accounting change in the accompanying consolidated statements of
income. No other impairment was identified in connection with
the annual impairment test. The changes in the carrying amount
of goodwill for the year ended December 31, 2002 are as
follows (in millions):
United
Consolidated
Goodwill
States
Mexico
Europe
All Others
Total
Balance as of December 31, 2001
$
32.2
$
32.4
$
5.9
$
0.1
$
70.6
Translation effect
—
(3.9
)
(0.6
)
0.2
(4.3
)
Impairment losses
—
—
—
(0.2
)
(0.2
)
Balance as of December 31, 2002
$
32.2
$
28.5
$
5.3
$
0.1
$
66.1
Our other intangible assets consist of
trademarks. During the year ended December 31, 2002, we
determined trademarks to have an indefinite life and performed
the transitional impairment test as required under SFAS
No. 142. Based upon the transitional and annual test, we
determined that there was no impairment of trademarks. The
carrying value of trademarks was $44.6 million as of
December 31, 2002.
In accordance with SFAS No. 142, we
discontinued amortization of goodwill and other intangible
assets with an indefinite life. A reconciliation of previously
reported net income to amounts adjusted for the exclusion of
goodwill and trademark amortization, net of the related income
tax effects, where applicable, is as follows (in millions):
Years Ended
December 31,
2000
2001
2002
Net income
$
6.3
$
16.0
$
18.8
Goodwill amortization, net of tax
1.9
1.7
—
Trademark amortization, net of tax
0.9
0.8
—
Adjusted net income
$
9.1
$
18.5
$
18.8
In November 2001, the Emerging Issues Task Force
("EITF") issued EITF Issue No. 01-9,
"Accounting for Consideration Given by a Vendor to a
Customer or a Reseller of the Vendor's Products." This
new guidance provides that consideration from a vendor to a
reseller is generally presumed to be a reduction of the selling
prices of the vendor's products, and, therefore, should be
characterized as a reduction of revenue when recognized in the
vendor's income statement. On January 1, 2002, we
adopted EITF Issue No. 01-9 and reclassified commissions
paid to consultants of $3.8 million and $3.3 million
on their personal sales, previously reported as a component of
selling, general and administrative expenses, as a reduction in
net sales and selling, general and administrative expenses for
the years ended December 31, 2001 and 2000, respectively.
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On January 1, 2002, we adopted SFAS
No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." SFAS No. 144 supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." SFAS
No. 144 retains substantially all of the requirements of
SFAS No. 121, while resolving certain implementation issues
and addressing the accounting for a component of a business
accounted for as a discontinued operation. SFAS No. 144 was
adopted with no significant impact on our financial position or
results of operations.
On January 1, 2003, we adopted Statement of
Financial Accounting Standards ("SFAS") No. 145,
"Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Corrections".
This statement rescinds or modifies existing authoritative
pronouncements including SFAS No. 4 "Reporting Gains
and Losses from Extinguishment of Debt." As a result of the
issuance of SFAS No. 145, gains and losses from extinguishment
of debt are classified as extraordinary items only if they meet
the criteria in Accounting Principles Board ("APB")
Opinion 30, "Reporting the Results of
Operations — Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." Applying
the provisions of APB Opinion 30 distinguishes transactions
that are part of an entity's recurring operations from
those that are unusual or infrequent or that meet the criteria
for classification as an extraordinary item. Based on the
adoption of this principle, we reclassified any gain or loss on
extinguishment of debt that was classified as an extraordinary
item in prior periods presented that does not meet the criteria
in APB Opinion 30 for classification as an extraordinary
item.
On January 1, 2003, we adopted SFAS
No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities", which did not result in any material
impact to our consolidated statements of income. This statement
addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies EITF
Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an
Activity."
During 2002, the FASB issued SFAS No. 148,
"Accounting for Stock Based Compensation —
Transaction and Disclosure, an amendment to FASB Statement
No. 123." This Statement requires more extensive
disclosure, including interim disclosure, related to stock based
compensation for all companies and permits additional transition
methods for companies that elect to use the fair value method
for employee stock compensation. This statement is effective for
fiscal years ending after December 15, 2002. We adopted the
disclosure requirements of SFAS No. 148 without material
impact on our results of operations or financial position. (See
footnote 13 in the accompanying footnotes to the audited
consolidated financial statements of CDRJ Investments (Lux) S.A.
and subsidiaries.)
In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity
. SFAS
No. 150 establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics
of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). SFAS No. 150
is effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after
June 15, 2003. The adoption of SFAS No. 150 on
July 1, 2003 did not have a material impact on the
Company's financial position or results of operations.
In January 2003, the FASB issued Interpretation
No. 46,
Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51, Consolidated Financial
Statements
. FIN 46 requires the consolidation of
variable interest entities by the party considered to be the
primary beneficiary of that entity. The FASB amended FIN 46
in December of 2003. The revised provisions of FIN 46 will
be effective for the company in the first quarter of 2004. This
interpretation may be applied prospectively with a
cumulative-effect adjustment as of the date on which it is first
applied or by restating previously issued financial statements
for one or more years with a cumulative-effect adjustment as of
the beginning of the first year restated. The adoption of
FIN 46 is not expected to have a material impact on the
Company's financial position or results of operations.
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Critical Accounting Policies and
Estimates
Management's Discussion and Analysis of
Financial Condition and Results of Operations are based on our
consolidated financial statements, which have been prepared in
conformity with accounting principles generally accepted in the
United States of America. These principles require the
appropriate application of certain accounting policies, many of
which require management to make estimates and assumptions about
future events and their impact on amounts reported in our
consolidated financial statements and related notes. Since
future events and their impact cannot be determined with
certainty, the actual results may differ from management's
estimates. Such differences could be material to the
consolidated financial statements.
We believe that the application of accounting
policies, and the estimates inherently required therein, are
reasonable. These accounting policies and estimates are
constantly reevaluated, and adjustments are made when facts and
circumstances dictate a change. Historically, the application of
accounting policies has been appropriate, and actual results
have not differed materially from those determined using
necessary estimates.
Our accounting policies are more fully described
in Note 2 to our audited consolidated financial statements
included elsewhere in this prospectus. Certain critical
accounting policies are described below.
Accounts Receivable.
We maintain an allowance for doubtful accounts for estimated
losses resulting from the inability of consultants to make
payments. An allowance is calculated based on historical
experience and the age of the outstanding receivables. If the
financial condition of consultants were to deteriorate,
resulting in an impairment of their ability to make payments,
additional allowances may be required.
Inventory
Obsolescence.
We write down our
inventory to provide for estimated obsolete or unsalable
inventory based on assumptions about future demand for our
products. If future demand is less favorable than our
assumptions, additional inventory write-downs may be required.
Likewise, favorable future demand and market conditions could
positively impact future operating results if inventory that has
been written-down is sold.
Foreign Currency
Contracts.
We enter into foreign
currency forward and option contracts to reduce the effect of
adverse exchange rate fluctuations in the exchange rate of the
Mexican peso to the U.S. dollar. We place forward and
option contracts based on our forecasted cash outflows from
Jafra S.A. over a rolling twelve-month period and do not hedge
transactions that are not included in the twelve-month forecast
on the date the forward or option contract is initiated. As a
matter of policy, we do not hold or issue forward or option
contracts for trading or speculative purposes nor do we enter
into contracts or agreements containing "embedded"
derivative features or involving leveraged derivatives. If the
Mexican peso were to significantly strengthen during the year
compared to the U.S. dollar, we may incur additional losses
on option contracts open as of the balance sheet date. See
"— Interest Rate Risk" and
"— Foreign Currency Risk".
Contingencies.
We
account for contingencies in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 5,
"Accounting for Contingencies". SFAS No. 5
requires that we record an estimated loss from a loss
contingency when information available prior to issuance of our
financial statements indicates that it is probable that an asset
has been impaired or a liability has been incurred at the date
of the financial statements and the amount of the loss can be
reasonably estimated. Accounting for contingencies such as legal
and income tax matters requires management to use judgment. Many
of these legal and tax contingencies can take years to be
resolved. Generally, as the time period increases over which the
uncertainties are resolved, the likelihood of changes to the
estimate of the ultimate outcome increases. We believe that the
accruals for these matters are adequate.
Income Taxes.
Deferred income tax assets have been established for net
operating loss carryforwards of certain foreign subsidiaries and
foreign tax credits originating in the United States, which are
reduced by a valuation allowance. The net operating loss
carryforwards expire in varying amounts over a future period of
time. Realization of the income tax carryforwards is dependent
on generating sufficient
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taxable income prior to expiration of the
carryforwards. Although realization is not assured, management
believes it is more likely than not that the net carrying value
of the income tax carryforwards will be realized. The amount of
the income tax carryforwards that is considered realizable,
however, could change if estimates of future taxable income
during the carryforward period are adjusted.
Impairment of Long-Lived Assets and
Goodwill.
Long-lived assets are
reviewed for impairment, based on undiscounted cash flows,
whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. If this
review indicates that the carrying amount of the long-lived
assets is not recoverable, we will recognize an impairment loss,
measured by the future discounted cash flow method. Goodwill is
evaluated for impairment based on SFAS No. 142,
"Goodwill and Other Intangible Assets".
SFAS No. 142 requires that goodwill not be amortized,
but be tested for impairment annually.
Liquidity and Capital Resources
Overview
We have historically funded expenditures for
operations, administrative expenses, capital expenditures and
debt service obligations with internally generated funds from
operations, with working capital needs being satisfied from time
to time with borrowings under our old credit agreement. We
believe that we will be able to meet our debt service
obligations and fund our operating requirements in the future
with cash flow from operations and borrowings under our senior
credit facilities as put in place in May 2003, although no
assurance can be given in this regard. We continue to focus on
working capital management, including the collection of accounts
receivable, decreasing inventory levels, and management of
accounts payable.
The May 2003 Recapitalization
In May 2003 we recapitalized our Mexican
operations and refinanced our then outstanding indebtedness. In
connection with these transactions:
•
We formed Jafra Worldwide as a subsidiary of
    Jafra S.A. to act as our intermediate holding company of Jafra
    US, Jafra Mexico and our other businesses.
•
We formed Jafra Distribution (Mexico), an
    affiliate of Jafra Mexico and an indirect wholly-owned
    subsidiary of Jafra Worldwide, to operate our distribution
    business in Mexico and to act as the Mexican borrower under our
    new senior credit facilities and the issuer of the Mexican
    portion of our senior subordinated notes.
•
Jafra US and Jafra Distribution (Mexico) entered
    into new senior credit facilities, consisting of a
    $50.0 million senior secured term loan facility and a
    $40.0 million senior revolving credit facility, and
    borrowed the full amount of the term loan. See "Description
    of Our Indebtedness — Senior Credit Facilities".
•
Jafra Distribution (Mexico) and Jafra US issued
    $120 million and $80 million, respectively, in
    aggregate principal amount of our 10 3/4% Senior
    Subordinated Notes due 2011, or our "10 3/4%
    Notes", and used a portion of the proceeds from such
    issuance, together with borrowings under the term loan facility
    described above, to repay the indebtedness of Jafra US and
    Jafra Mexico then outstanding and to consummate other corporate
    transactions.
•
Jafra US and Jafra Mexico made compensating
    payments in an aggregate amount of approximately
    $10.4 million to holders of options to acquire the capital
    stock of CDRJ Investments (Lux) S.A. and, through a series of
    inter-company transactions, the remaining proceeds from the
    issuance of our 10 3/4% Notes and borrowings under our
    senior credit facilities were paid and distributed to CDRJ
    Investments (Lux) S.A. CDRJ Investments (Lux) S.A. then
    commenced liquidation proceedings and made an initial
    liquidating distribution to our shareholders of approximately
    $157.6 million in cash.
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Prior to the closing of the sale of the common
stock offered hereby, we expect to make a final liquidating
distribution of up to $20 million in cash to the holders of
shares of CDRJ Investments (Lux) S.A. We expect to fund this
distribution by drawing on the revolving portion of our senior
credit facilities.
In addition, the shareholders of CDRJ Investments
(Lux) S.A. will receive one share of our common stock in
exchange for each share of CDRJ Investments (Lux) S.A. held at
this time. Further, upon the completion of the liquidation, each
of the outstanding options to acquire the capital stock of CDRJ
Investments (Lux) S.A. will be converted on a one-for-one basis
into options to acquire capital stock of Jafra S.A. While these
options will generally continue to be governed by the same terms
and conditions as prior to the liquidation, the exercise prices
of the outstanding options have been adjusted downward such that
the ratio of the original exercise price per share of the
options to the market value per share immediately following the
recapitalization transactions described above is identical to
the ratio of the original exercise price per share of the
options to the market value per share of the stock of CDRJ
Investments (Lux) S.A. immediately prior to the commencement of
the liquidation process. As a result of these adjustments, the
exercise prices of our outstanding options were reduced. Prior
to the closing of the sale of common stock offered hereby, CDRJ
Investments (Lux) S.A. will be liquidated.
Liquidity
On May 20, 2003, Jafra US and Jafra
Distribution (Mexico) issued $200 million aggregate principal
amount of the 10 3/4% Notes pursuant to an indenture dated
May 20, 2003, or our "10 3/4% Notes
Indenture", and entered into a $90 million senior
credit agreement, or our "Senior Credit Agreement".
The 10 3/4% Notes represent the several obligations of
Jafra US and Jafra Distribution (Mexico) in the amount of
$80 million and $120 million, respectively. The
10 3/4% Notes mature in 2011 and bear a fixed interest rate
of 10 3/4% payable semi-annually.
Jafra US is a direct wholly-owned subsidiary
of Jafra Worldwide and Jafra Distribution (Mexico) is an
indirect wholly-owned subsidiary of Jafra Worldwide. Jafra
Worldwide has fully and unconditionally guaranteed the
obligations under the 10 3/4% Notes on a senior
subordinated basis on the terms provided in the 10 3/4%
Notes Indenture. Each of Jafra US and Jafra Distribution
(Mexico) has fully and unconditionally guaranteed the
obligations of the other under the 10 3/4% Notes on a
senior subordinated basis, subject to a 30-day standstill period
prior to enforcement of such guarantees. Each
U.S. subsidiary of Jafra US is required to fully and
unconditionally guarantee the U.S. portion of 10 3/4%
Notes jointly and severally, on a senior subordinated basis.
Each Mexican subsidiary of Jafra Distribution (Mexico) is
required to fully and unconditionally guarantee the Mexican
portion of the 10 3/4% Notes jointly and severally, on a
senior subordinated basis. Jafra Distribution (Mexico) currently
has no Mexican subsidiaries. Jafra Mexico has also fully and
unconditionally guaranteed the obligation of Jafra Distribution
(Mexico) under the 10 3/4% Notes. Each subsidiary of Jafra
Mexico is required to fully and unconditionally guarantee the
Mexican portion of the 10 3/4% Notes jointly and severally,
on a senior subordinated basis.
The 10 3/4% Notes are unsecured and are
generally not redeemable for four years. Thereafter, the notes
will be redeemable on a pro rata basis at premiums declining to
par in the sixth year. Prior to May 16, 2006, Jafra US
and Jafra Distribution (Mexico) at their option may concurrently
redeem the 10 3/4% Notes in an aggregate principal amount
equal to up to 35% of the original aggregate principal amount of
the 10 3/4% Notes, with funds in an aggregate amount not
exceeding the aggregate cash proceeds of one or more equity
offerings, at a redemption price of 110.75% plus accrued and
unpaid interest. We expect to redeem up to 35% of the
outstanding 10 3/4% Notes with the net proceeds of the sale
by us of our common stock offered by us hereby. See "Use of
Proceeds."
In addition, Jafra US and Jafra Distribution
(Mexico) entered into the Senior Credit Agreement, which
provides for senior credit facilities in an aggregate principal
amount of $90 million, consisting of a $50 million
senior secured term loan facility maturing in 2008 and a
$40 million senior secured revolving credit facility, also
maturing in 2008, of which a portion is available in the form of
letters of credit. On May 20, 2003, Jafra US borrowed
$20 million and Jafra Distribution (Mexico) borrowed
$30 million of the loans under the term facility. No
amounts were outstanding under the revolving credit facility at
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September 30, 2003. Borrowings under the
term loan facility are amortized in quarterly installments.
Amounts outstanding under the senior credit facilities bear
interest at a rate equal to, at our option, (1) an
alternate base rate plus an applicable margin or (2) an
adjusted LIBOR rate plus an applicable margin. As of
September 30, 2003, these applicable margins were 3.00% and
4.00% for base rate loans and LIBOR loans, respectively, subject
in each case to periodic adjustment based on certain levels of
financial performance. Borrowings under the Senior Credit
Agreement are secured by substantially all of our assets.
Both the 10 3/4% Notes Indenture and the
Senior Credit Agreement contain certain covenants that limit our
ability to incur additional indebtedness, pay cash dividends and
make certain other payments. These covenants also require us to
maintain certain financial ratios including a minimum EBITDA to
cash interest expense coverage ratio and a maximum debt to
EBITDA ratio. As of September 30, 2003, we were in
compliance with all debt covenants.
On May 23, 2003, with proceeds from the
issuance of our 10 3/4% Notes and borrowings under the
Senior Credit Agreement, Jafra US and Jafra Mexico redeemed
our old notes in the aggregate outstanding principal amount of
$75.2 million at a premium of approximately $4.4 million.
Additionally, Jafra US and Jafra Mexico repaid
$7.4 million under the old credit agreement and terminated
the old credit agreement. In connection with the redemption of
our old notes and the termination of our old credit agreement,
we wrote off approximately $2.2 million of capitalized
deferred financing fees. Total costs related to the redemption
of our old notes and the repayment of amounts outstanding under
our old credit agreement were $6.6 million and were
recorded as a component of net (loss) income on the
accompanying consolidated statements of operations.
After the redemption of our old notes and
repayment of all outstanding amounts under our old credit
agreement, the shareholders resolved to liquidate CDRJ
Investments (Lux) S.A. As a result, CDRJ Investments (Lux) S.A.
made an initial liquidating distribution of $157.6 million
to its shareholders of record at May 20, 2003.
Additionally, we reserved $1.4 million to pay expenses
associated with the liquidation, any remaining amounts of which
will be distributed to the shareholders at the conclusion of the
liquidation. Jafra US and Jafra Mexico also made special
payments to the holders of the options and certain members of
management and non-employee directors. Prior to the closing of
the sale of our common stock offered hereby, we expect to make a
final liquidating distribution of up to $20 million in cash
to the holders of shares of CDRJ Investments (Lux) S.A. We
expect to fund this distribution by drawing on the revolving
portion of our senior credit facilities. CDRJ Investments (Lux)
S.A. will then be liquidated.
We capitalized $14.4 million of costs
related to the issuance of the 10 3/4% Notes and the Senior
Credit Agreement as deferred financing fees. These capitalized
expenses are being amortized on a basis that approximates the
interest method over the term of the 10 3/4% Notes and the
Senior Credit Agreement. As of September 30, 2003,
approximately $0.7 million of the deferred financing fees
were amortized.
Prior to our May 2003 recapitalization, Jafra
Mexico was a party to an unsecured bank loan agreement. As of
September 30, 2003, Jafra Mexico had repaid all amounts
outstanding under the bank loan agreement and had terminated the
agreement.
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Schedule of Debt and Operating Lease
Obligations
The following schedules detail the payment
schedule for debt and operating lease obligations as of
September 30, 2003 on an actual basis and on a pro forma
basis, assuming the sale of the shares of common stock offered
by us hereby, the application of the net proceeds to us
therefrom as described in "Use of Proceeds" and the
payment of the final liquidating distribution to shareholders of
CDRJ Investments (Lux) S.A. as described in "Certain
Relationships and Related Party Transactions." had occurred
as of that date:
Payments Due by Period
As of December 31, 2002
Actual Contractual Obligations
Total
2003
2004-2005
2006-2007
Thereafter
(Dollars in thousands)
11 3/4% Senior Subordinated Notes due 2008
$
75,180
$
—
$
—
$
—
$
75,180
Old term facility
8,375
5,875
2,500
—
—
Old revolving credit facility
—
—
—
—
—
Old unsecured bank facility
828
614
214
—
—
Operating leases
17,115
3,555
6,983
6,410
167
Total
$
101,498
$
10,044
$
9,697
$
6,410
$
75,347
Payments Due by Period
(Pro forma as of September 30,
2003)
Contractual Obligations
Total
2003
2004-2005
2006-2007
Thereafter
(Dollars in thousands)
10 3/4% Senior Subordinated Notes due 2011
$
$
$
$
$
Senior secured term facility
Revolving credit facility
Existing unsecured bank facility Operating leases
Total
We believe, but no assurance can be given, that
our existing cash, cash flow from operations and availability
under our senior credit facilities will provide sufficient
liquidity to meet our cash requirements and working capital
needs over the next year. In certain foreign markets, we have
seen evidence of reduced ability of our consultants to purchase
our products, which we refer to as reduced consultant liquidity.
Reduced consultant liquidity could result in future reduced cash
flows from operations, which may require us to use available
funds under the senior credit facilities.
Outsourcing of Manufacturing
Functions
We entered into a manufacturing agreement, dated
as of June 10, 1999, with a third-party contractor. Subject
to the terms and conditions of the manufacturing agreement, the
contractor agreed to manufacture all of our requirements for
certain cosmetic and skin care products for an initial term of
five years expiring July 1, 2004. On December 8, 2003,
we notified the other party to the agreement that we do not
intend to renew the agreement upon its expiration in 2004. The
manufacturing agreement provides for price renegotiations by the
contractor if our quarterly or annual purchase volume falls
below specified minimums. The manufacturing agreement requires
the contractor to maintain insurance to cover costs associated
with any product liability or product recall caused by the acts
or omissions of the contractor. In
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addition, we are obligated to purchase materials
acquired by the contractor based upon product forecasts provided
by us if the contractor is unable to sell such materials to a
third party. There have been no such purchases to date. The
contractor is responsible for obtaining the inventories,
manufacturing the inventories at its current location in Chino,
California, complying with applicable laws and regulations, and
performing quality assurance functions. As of mid-2004, we
expect that most of the products currently produced by this
third party will be manufactured at our Mexican facility.
During the fourth quarter of 2000, the contractor
obtained $1.0 million of advances from us in exchange for
an unsecured promissory note. The note bears interest at an
annual rate of 9% and is payable in monthly installments
commencing on February 15, 2001. In April 2002, the
unsecured promissory note was amended to advance an additional
$0.3 million to the contractor. As of the date of this
prospectus, the note has been paid in full.
Restructuring Activities
During 2000, we paid out approximately
$1.0 million in charges related to year 2000 repositioning
activities in Europe consisting primarily of severance costs.
During 2002, the remaining $0.2 million was paid out
against the remaining accrual.
Cash Flows
Net cash used in operating activities was
$2.5 million for the nine months ended September 30,
2003 compared to net cash provided by operating activities of
$23.2 million for the nine months ended September 30,
2002, a $25.7 million decrease. Net cash used in operating
activities for the nine months ended September 30, 2003
consisted of $18.7 million provided by net loss plus
depreciation, amortization, and other non-cash items included in
net income, offset by $21.2 million used in changes in
operating assets and liabilities. The significant elements of
net cash used in changes in operating assets and liabilities
during the nine months ended September 30, 2003 were an
increase in inventories of $11.4 million, an increase in
prepaid and other assets of $3.4 million and an increase in
income taxes of $5.3 million. During the nine months ended
September 30, 2003, the Company paid $13.1 million in
compensation expense, $6.6 million for the extinguishment
of debt and $2.3 million of other expenses included within
net income (loss) related to the refinancing of the Company.
Net cash used in investing activities was
$5.6 million for the nine months ended September 30,
2003, of which $5.0 million was used for capital
expenditures. Capital expenditures in 2003 are expected to be
approximately $11.0 million.
Net cash used in financing activities was
$9.1 million for the nine months ended September 30,
2003, and consisted of $200.0 million of issuance of new
subordinated notes, $50.0 million of new term loan, offset
by $75.2 million repurchase of subordinated debt due 2008,
$9.6 million repayment under term loan facilities,
$159.0 million distribution to shareholders and
$14.4 million of capitalized deferred financing fees.
The effect of exchange rate changes on cash was
$0.7 million for the nine months ended September 30,
2003 and related primarily to the weakening of the Mexican peso
and South American currencies, partially offset by the
strengthening of the Euro compared to the U.S. dollar.
Net cash provided by operating activities was
$43.5 million for the year ended December 31, 2002,
consisting of $48.8 million provided by net income adjusted
for depreciation and other non-cash items included in net
income, less $5.3 million used in changes in operating
assets and liabilities. The significant elements of the net cash
used in changes in operating assets and liabilities were a
$14.4 million increase in accounts receivable, partially
offset by $5.6 million increase in prepaid expenses and
other current assets, and $1.8 million increase in other
non-current assets. Net cash provided by operating activities
was $29.8 million for the year ended December 31,
2001, consisting of $36.7 million provided by net income
adjusted for depreciation, amortization, and other non-cash
items included in net income, less $6.9 million used in
changes in operating assets and liabilities. The significant
elements of the net cash
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used in changes in operating assets and
liabilities in 2001 were a $15.7 million increase in
accounts receivable and a $1.0 million decrease in accounts
payable and accrued liabilities, partially offset by a reduction
of $2.8 million in prepaid expenses and other current
assets and a $7.4 million increase in income tax
payable/prepaid.
Net cash used in investing activities was
$11.3 million for the year ended December 31, 2002,
compared to $11.7 million for the year ended
December 31, 2001, a decrease of $0.4 million. In
2002, investing activities consisted primarily of capital
expenditures of $11.0 million, primarily in our United
States and Mexico subsidiaries. A significant portion of the
2002 capital expenditures related to information technology and
production equipment. In 2001, investing activities consisted
primarily of capital expenditures of $5.1 million in Jafra
US, $6.0 million in Jafra Mexico, and $0.1 million in
other subsidiaries.
Net cash used in financing activities was
$8.7 million for the year ended December 31, 2002
compared to $15.9 million for the year ended
December 31, 2001, a decrease of $7.2 million. In
2002, we made net repayments of $6.1 million under the term
loan facility, $1.8 million under the existing revolving
credit facility and $0.8 million of the existing bank debt.
In 2001, we made net repayments of $12.7 million under the
existing revolving credit facility and $4.5 million under
the existing term loan facility. In 2001, the cash used in
financing activities was partially offset by net proceeds of
$1.3 million from an unsecured bank loan agreement at Jafra
Mexico.
The effect of exchange rate changes on cash was
$2.4 million for the year ended December 31, 2002
compared to $1.2 million for the year ended
December 31, 2001 relating to fluctuations in the exchange
rate of the Mexican peso and South American currencies,
primarily the Brazilian real and the Argentine peso.
Foreign Operations
As a group doing more than 76% of our business in
international markets in 2002, we are subject to foreign taxes
and intercompany pricing laws, including those relating to the
flow of funds between our subsidiaries pursuant to, for example,
purchase agreements, licensing agreements or other arrangements.
Regulators in the United States, Mexico and in other foreign
markets may closely monitor our corporate structure and how we
effect intercompany fund transfers.
Net sales outside of the United States aggregated
approximately 73% and 77% of our total net sales for the nine
months ended September 30, 2003 and 2002, respectively. In
addition, as of September 30, 2003,
non-U.S. subsidiaries comprised approximately 71% of our
consolidated total assets. Accordingly, we have experienced and
continue to be exposed to foreign exchange risk. In 2002, we
entered into foreign currency forward contracts in Mexican pesos
and in 2002 and 2003, we entered into foreign currency option
contracts in Mexican pesos to reduce the effect of potentially
adverse exchange rate fluctuations in Mexico.
Net sales outside of the United States aggregated
76%, 78% and 76% of our total net sales for the fiscal years
2002, 2001 and 2000, respectively. In addition, as of
December 31, 2002, international subsidiaries comprised
approximately 71% of our consolidated total assets. Accordingly,
we have experienced and continue to be exposed to foreign
exchange risk. We have implemented a hedging program to protect
against potential devaluation of the Mexican peso. See
"— Foreign Currency Risk".
Our subsidiaries in Mexico generated
approximately 62% and 66% of our net sales for the nine months
ended September 30, 2003 and 2002, respectively,
substantially all of which were denominated in Mexican pesos. At
September 30, 2003, the subsidiaries in Mexico had
$149.3 million of U.S. dollar-denominated third party
debt. Gains and losses from remeasuring such debt to the
U.S. dollar from the peso are included as a component of
net loss. The Mexico subsidiaries recognized losses of
$9.3 million and $4.6 million for the nine months
ended September 30, 2003 and 2002, respectively, on the
remeasurement of this U.S. dollar-denominated debt and a
net gain of $0.6 million of exchange gains and
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$1.0 million of exchange losses on foreign
currency forward and option contracts for the nine months ended
September 30, 2003 and 2002, respectively.
Our Mexican operations generated approximately
66% of our net sales for 2002 compared to 68% for 2001,
substantially all of which was denominated in Mexican pesos.
During 2002, the peso weakened against the U.S. dollar. Net
sales for 2002 would have increased $9.4 million, or 3.7%,
from the reported amounts if average exchange rates in 2002
remained the same as in 2001.
Mexico has experienced periods of high inflation
in the past and has been considered a hyperinflationary economy.
Since January 1, 1999, we have accounted for our Mexican
operations using the peso as our functional currency. Because
the functional currency in Mexico is the Mexican peso, gains and
losses of remeasuring such debt to the U.S. dollar from the
peso are included as a component of net income. We recognized a
loss of $9.3 million and $4.6 million for the nine
months ended September 30, 2003 and 2002, respectively, on
the remeasurement of this U.S. dollar-denominated debt and
a net gain of $0.6 million and a net loss of
$1.0 million on foreign currency forward and option
contracts for the nine months ended September 30, 2003 and
2002, respectively. In 2002, the remeasurement of
U.S. dollar-denominated debt resulted in an exchange loss
of $5.2 million, most of which was unrealized. Jafra Mexico
had $32.4 million of U.S. dollar-denominated
third-party debt and $21.9 million of
U.S. dollar-denominated intercompany current payables as of
December 31, 2002.
We are also exposed to foreign exchange risks due
to our operations in South America. During 2002, most South
American currencies devalued against the U.S. dollar.
Measured in U.S. dollars, South America sales decreased 23%
in 2002 compared to 2001. If currencies had remained stable
between 2002 and 2001, net sales would have increased 27%.
Effective January 1, 2002, we adopted the
euro as the functional currency for our European subsidiaries,
except for Switzerland.
Off-Balance Sheet Arrangements
The company has no off-balance sheet arrangements.
Quantitative and Qualitative Disclosures About
Market Risk
We are exposed to certain market risks arising
from transactions in the normal course of our business, and from
interest obligations on our indebtedness. These risks are
principally associated with interest rate and foreign exchange
fluctuations, as well as changes in our credit standing.
Interest Rate Risk
We have U.S. dollar-denominated debt
obligations in both the United States and Mexico that will have
fixed and variable interest rates and will mature on various
dates through 2011. We also have Mexican peso-denominated debt
obligations in Mexico that have fixed interest rates and mature
on various dates through 2005.
As of December 31, 2002, we had
$8.4 million of variable interest rate debt outstanding. If
variable interest rates had increased by 10%, we would have
incurred $0.1 million of additional interest expense during
2002. As of September 30, 2003, we had $48.8 million
of variable interest rate outstanding. If variable interest
rates had increased by 10%, we would have incurred approximately
$0.1 million additional interest expense during the third
quarter of 2003.
Foreign Currency Risk
We operate globally, with manufacturing
facilities in Mexico and distribution facilities in various
locations around the world. With the exception of most
intercompany product sales between European subsidiaries, all
intercompany product sales are denominated in U.S. dollars. In
addition, 76% of our 2002 revenue and 73% of our revenue for the
first nine months of 2003 was generated in countries with a
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functional currency other than the
U.S. dollar. As a result, our earnings and cash flows are
exposed to fluctuations in foreign currency exchange rates.
As part of our overall strategy to reduce the
risk of adverse exchange rate fluctuations in Mexico, we entered
into foreign currency exchange and option contracts. Prior to
March 2002, we purchased forward exchange contracts
("forward contracts" or "forwards") to hedge
our foreign currency exposures to the Mexican peso. In March
2002, in accordance with previously approved policies, we
modified our hedging program to include the use of foreign
currency option contracts ("option contracts" or
"options"). In order to offset our current outstanding
forward contracts to sell Mexican pesos, we entered into forward
contracts to buy Mexican pesos. Also, on that date, we entered
into a series of U.S. dollar option contracts. The exchange rate
at which the option contracts may be exercised is based upon the
market rate at the time the contracts are placed. We purchased
exchange rate put options, which give us the right, but not the
obligation, to sell Mexican pesos at a specified
U.S. dollar exchange rate ("strike rate"). These
contracts provide protection in the event the Mexican peso
weakens beyond the option strike rate. In conjunction with the
put options, and as part of a zero-cost option collar structure,
we sold Mexican peso call options, which give the counterparty
the right, but not the obligation, to buy Mexican pesos from us
at a specified strike rate. The effect of these call options
would be to limit the benefit we would otherwise derive from the
strengthening of the Mexican peso beyond the strike rate. As the
volatility of the U.S. dollar/ Mexican peso exchange rate
increased throughout 2002, the scope of our unhedged currency
risk has increased. As of the date of this prospectus, the
hedging contracts we are acquiring, which expire in 2004,
protect us only against 18% or greater devaluation in the
Mexican peso, a range that tends to expand with increased
volatility in the U.S. dollar/ Mexican peso rate such as has
occurred during 2002. Consequently, the existing zero-cost
collars will not protect us against (i) fluctuations in
exchange rates within this expanding range or (ii) against
a prolonged, gradual decline in the value of the Mexican peso
against the U.S. dollar.
We place forward contracts and option contracts
based on forecasted U.S. dollar cash outflows from Jafra
Mexico over a rolling twelve-month period and do not hedge
transactions that are not included in the twelve-month forecast
on the date the forward contract is initiated. As a matter of
policy, we do not hold or issue forward contracts or option
contracts for trading or speculative purposes, nor do we enter
into contracts or agreements containing "embedded"
derivative features nor are we a party to leveraged derivatives.
We regularly monitor our foreign currency exposures and ensure
that contract amounts do not exceed the amounts of the
underlying exposures. In addition, as we generally purchase
hedging instruments on a rolling twelve-month basis, there can
be no assurance that instruments protecting us to the same or a
similar extent will be available in the future on reasonable
terms, if at all. Unprotected declines in the value of the
Mexican peso against the U.S. dollar will adversely affect
our ability to pay our dollar-denominated expenses.
Prior to adoption of SFAS No. 133, the
forward contracts we utilized did not qualify for hedge
accounting under the applicable accounting standards, and
accordingly such instruments were marked-to-market with gains
and losses included as a component of exchange loss in the
statements of income for the year ended December 31, 2000.
However, under SFAS No. 133, our use of forward and option
contracts to hedge certain forecasted transactions does qualify
for hedge accounting. Gains and losses from such derivative
instruments arising subsequent to January 1, 2001 are
deferred as a separate component of other comprehensive loss,
and are recognized in income at the same time that the
underlying hedged exposure is recognized in income. This
accounting treatment results in the matching of gains and losses
from such forward and option contracts with the corresponding
gains and losses generated by the underlying hedged
transactions. Under SFAS No. 133, certain of our forward
and option contracts do not qualify for hedge accounting and,
therefore, are remeasured based on fair value, with gains and
losses included as a component of net income.
The outstanding foreign currency option contracts
have a notional value denominated in Mexican pesos of
743,000,000 and 523,000,000 in put and call positions at
September 30, 2003 and December 31, 2002,
respectively. The outstanding foreign currency option contracts
at September 30, 2003 mature at various dates through
December 31, 2004. Notional amounts do not quantify market
or credit exposure or represent assets or liabilities of the
Company, but are used in the calculation of cash settlements
under the contracts.
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The following tables provide information about
the details of the Company's option contracts as of
September 30, 2003 (in thousands except for average strike
price):
Coverage in
Mexican
Average Strike
Fair Value in
Foreign Currency
Pesos(1)
Price
U.S. Dollars(1)
Maturity Date
At September 30, 2003:
Purchased Puts (Company may sell Peso/buy USD)
Mexican Peso
229,000
11.07–12.91
$
252
Oct.–Dec. 2003
Mexican Peso
110,000
11.54–12.75
69
Jan.–Mar. 2004
Mexican Peso
170,000
12.03–12.35
49
Apr.–Jun. 2004
Mexican Peso
100,000
12.41–12.59
15
Jul.–Aug. 2004
Mexican Peso
134,000
12.28–12.38
(28
)
Oct.–Dec. 2004
743,000
$
357
Written Calls (Counterparty may buy Peso/sell USD)
Mexican Peso
229,000
10.15–10.75
$
(247
)
Oct.–Dec. 2003
Mexican Peso
110,000
10.26–10.62
(102
)
Jan.–Mar. 2004
Mexican Peso
170,000
10.19–10.93
(152
)
Apr.–Jun. 2004
Mexican Peso
100,000
10.49–10.93
(33
)
Jul.–Aug. 2004
Mexican Peso
134,000
11.13–11.22
33
Oct.–Dec. 2004
743,000
$
(501
)
The outstanding foreign currency option contracts
had a notional value denominated in Mexican pesos of 523,000,000
in put and call positions at December 31, 2002 and matured
at various dates through December 31, 2003. Notional
amounts do not quantify the Company's market or credit
exposure or represent the Company's assets or liabilities,
but are used in the calculation of cash settlements under the
contracts.
The following table provides information about
the details of our option contracts as of December 31, 2002
(in thousands except for average strike price):
Coverage in
Mexican
Average
Fair Value in
Foreign Currency
Pesos
Strike Price
U.S. Dollars(1)
Maturity Date
At December 31, 2002:
Purchased puts (Company may sell peso/buy USD)
Mexican peso
149,000
10.31-10.48
$
(113
)
Jan.-Mar. 2003
Mexican peso
100,000
11.05-12.19
77
Apr.-June 2003
Mexican peso
150,000
11.76-12.79
131
July-Aug. 2003
Mexican peso
124,000
12.51-12.91
21
Oct.-Dec. 2003
523,000
$
116
Written calls (Counterparty may buy peso/sell
    USD) Mexican peso
149,000
9.01-9.02
$
(207
)
Jan.-Mar. 2003
Mexican peso
100,000
9.50-9.84
(144
)
Apr.-June 2003
Mexican peso
150,000
9.69-10.19
(112
)
July-Aug. 2003
Mexican peso
124,000
10.15-10.19
(55
)
Oct.-Dec. 2003
523,000
$
(518
)
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(1)
The Fair Value of the option contracts presented
    above, an unrealized gain of $144,000 and $402,000 at
    September 30, 2003 and December 31, 2002,
    respectively, represents the carrying value and was recorded in
    other receivables in the consolidated balance sheets.
Prior to entering into foreign currency hedging
contracts, we evaluate the counterparties' credit ratings.
Credit risk represents the accounting loss that would be
recognized at the reporting date if counterparties failed to
perform as contracted. We do not currently anticipate
non-performance by such counter parties.
Jafra Distribution (Mexico) had U.S.
dollar-denominated debt of $149.3 million at
September 30, 2003 and Jafra Mexico had
U.S. dollar-denominated debt of $32.4 million and
$35.6 million at December 31, 2002 and 2001,
respectively. The value of the peso to the U.S. dollar
decreased by 6.0% and 13.5% during the first nine months of 2003
and during 2002, respectively, and Jafra Mexico incurred
$9.3 million and $5.2 million foreign currency
transaction losses, respectively, related to the remeasurement
and repayment of U.S. dollar-denominated debt.
Based upon the $149.3 million of Jafra
Distribution (Mexico) pro forma debt as of December 31,
2002 and September 30, 2003, a 10% decline in the peso to
U.S. dollar exchange rate would result in a $15.0 million
exchange loss.
Based upon the $4.2 million of net
inter-company payables outstanding at December 31, 2002, a
10% decline in the peso to U.S. dollar exchange rate would
result in a $0.4 million exchange loss with respect to
these payables. Based upon the $1.0 million of net
inter-company payables outstanding at September 30, 2003, a
10% decline in the peso to U.S. dollar exchange rate would
result in an insignificant exchange loss with respect to these
payables. These losses or gains would be classified as
unrealized until the inter-company payables are repaid, at which
time they would be realized. The timing of such repayment is
within the discretion of management.
Inflation
Our business is exposed to risks arising from
Mexico's history of high levels of inflation, and may
continue to be exposed to such risks in the future. We adjust
the wholesale pricing of our products in local currency to
mitigate these risks. See "Risk Factors — Mexico
may experience high levels of inflation in the future which
could adversely affect our results of operations."
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BUSINESS
General
We are a direct seller of skin and body care
products, color cosmetics, fragrances and other personal care
products. We sell our Jafra brand products through a multi-level
direct selling network of over 400,000 independent consultants,
who market and sell our products to their customers. Our largest
markets are Mexico and the United States, which together
contributed approximately 90% of our total net sales in 2002 and
are among the world's largest direct selling markets. We
have a leading market share as a direct seller of skin care
products, color cosmetics and fragrances in Mexico, where Jafra
is among the most recognized cosmetics brand names. We introduce
new products each year in many of our product categories to
motivate and excite our consultants. In developing and
introducing new products, we employ a "fast follower"
strategy to minimize research costs and focus our development
efforts on products that have proven successful in the
marketplace. Our independent consultant base grew 14% to 401,000
in 2002 over 2001, and 4% during the nine months ended
September 30, 2003 over the comparable period in 2002.
During the year ended December 31, 2002, we generated net
sales of $382.6 million, of which $251.6 million
represents sales in Mexico, $92.1 million represents sales
in the United States and $38.9 million represents sales in
Europe and other markets. We also generated Consolidated EBITDA,
as defined in the indenture governing our 10 3/4% Senior
Subordinated Notes due 2011, or our 10 3/4% Notes, of
$63.6 million for the year ended December 31, 2002 and
$45.7 million for the nine months ended September 30,
2003.
We believe that the global direct selling market
provides substantial sales opportunity and has robust growth
prospects. The World Federation of Direct Selling Associations
estimates that in 2002, global direct selling was an
$85.6 billion industry, as measured by the retail value of
all products and services sold. Globally, direct selling
increased at a compound annual growth rate of approximately 5%
from 1991 to 2002. In 2002, total consumer goods direct sales in
our largest markets, Mexico and the United States, were
$1.2 billion and $28.6 billion, respectively. These
markets ranked fourth and first, respectively, in terms of
largest markets for total direct sales in 2002. Consumer goods
direct sales in Mexico and the United States increased at a
compound annual growth rate of 9.4% and 5.8%, respectively, from
1998 to 2002. Within the United States direct selling market, we
focus on the Hispanic community, which comprises over 13% of the
entire U.S. population, and which is expected to increase
its buying power at a compound annual growth rate of 9.2% from
2003 through 2008.
Our business strategy is focused on expanding and
retaining our loyal and motivated consultant base, the growth of
which has been a significant driver of our net sales growth. Our
multi-level direct selling business model is a source of organic
growth that aligns our consultants' income opportunities
with our strategy of continuing to grow our consultant base, net
sales and cash flow. We focus on providing our independent
consultants with a portfolio of premium quality skin care and
beauty products, superior customer service, and excellent
marketing and training support. Our established, cost-effective
distribution infrastructure allows us to generate high levels of
operating profitability and requires relatively low capital
investment and working capital to support and expand our
business. We believe that these strengths of our business model
have given us a competitive advantage in attracting and
retaining a productive consultant base, which in turn has
contributed to our success and positions us well for ongoing
growth in net sales and profitability.
We were founded 48 years ago in Southern
California and were acquired in April 1998 from The Gillette
Company by an affiliate of Clayton, Dubilier & Rice,
Inc., a New York-based private investment firm, along with a
newly formed management team highly experienced in the direct
selling industry. Since our acquisition, we have grown our
consultant base more than 95% from approximately 205,000 to
approximately 401,000 consultants as of December 31, 2002.
Our net sales have grown from $241.9 million to
$382.6 million from 1998 to 2002 largely as a result of
this growth in our consultant base.
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Strategy
Continue Core Strategy of Expanding and
Retaining Consultant Base.
We
intend to continue to drive growth in our business by focusing
on sponsoring and retaining loyal consultants. We believe that
the attractive income opportunities offered by our multi-level
compensation structure and our operational and cultural focus on
providing support to our consultants have been instrumental in
achieving robust consultant and net sales growth over the past
five years. We believe the emphasis we place on providing our
consultants with superior customer service, training, effective
sales and marketing materials, brochures, and new product
demonstrations, will continue to differentiate us from our
competitors. Additionally, we intend to continue to stimulate
net sales growth by motivating our consultant base at local
recognition events and by offering travel rewards, gifts and
other incentives to our most productive consultants.
Capitalize on Leading Market Position and
Brand Equity in Mexico.
We believe
our leading market position and the strength of the Jafra brand
in Mexico position us to benefit from favorable demographic
trends and will facilitate our efforts to continue to expand our
consultant base and capture additional market share. Currently,
the average age of a Jafra consultant is 35, while over 50% of
the Mexican population is under the age of 20 and two-thirds are
under the age of 30. As the Mexican population ages and more
adults seek career and income opportunities, we believe that our
brand equity and the scale of our consultant base will position
Jafra as an attractive career opportunity and facilitate
consultant recruitment.
Continue Successful U.S. Divisional
Strategy.
We will continue to
pursue our successful strategy of differentiating ourselves from
other direct selling companies by focusing on demographic
characteristics of our consultants and their target customers.
In late 2000, we bifurcated our operations in the United States
into a Hispanic Division and a General Division. The
establishment of two separate divisions in the United States has
allowed us to customize our marketing efforts. We have focused
on those separate segments of the population and will continue
to provide our U.S. Spanish and non-Spanish speaking
consultants with tailored recruiting programs, training
materials, seminars and product presentations. In particular, we
believe we will continue to benefit from the growth of the
U.S. Hispanic population and its increasing buying power.
We believe these trends will continue to benefit our sales and
recruitment efforts. Our divisional approach to the U.S. market
facilitates the interaction of our consultants with their
customers and contributed to the 16% net sales growth of our
U.S. business during fiscal 2002 and an 11% increase in net
sales during the first nine months of fiscal 2003 as compared
with the comparable fiscal 2002 period.
Maintain Strong New Product Pipeline.
The development and introduction
of new products and line extensions are fundamental to our
direct selling business model in that they serve to motivate our
consultants by providing them with new and exciting products to
demonstrate and market to their customers. As part of each of
our consecutive two-month marketing and promotion cycles, we
regularly introduce line extensions, such as new colors within
our existing color cosmetics lines, and new products that employ
the latest technology and capitalize on the face-to-face
interaction between consultants and their customers. In the
development of new products, we employ a "fast
follower" strategy that minimizes research costs and
focuses development efforts on innovative, efficacious products
that have already proven successful in the marketplace.
Leverage Brand Strength into Complementary
Categories and Markets.
Since our
acquisition in 1998, we have primarily focused on growing our
loyal consultant base and establishing a cost-effective
distribution infrastructure and superior support structure for
our consultants. We have recently begun to assess incremental
growth opportunities through the development of new products in
complementary categories that leverage the Jafra brand equity
and ultimately could increase our consultants' average
order size. Our measured strategy is to cost-effectively develop
selective products in complementary categories with our
consultants' core customer in mind and that will
specifically lend themselves to the one-on-one meetings and
product demonstrations that are fundamental to our direct
selling business model. We also continue to evaluate the
possibility of expanding into other direct selling markets and
evaluate acquisition opportunities.
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Continue to Identify Operating Efficiencies
and Benefit from Economies of
Scale.
From the time of our
acquisition in 1998 to December 31, 2002, we have increased
our gross profit margin by approximately 5.3 percentage
points from 71.1% to 76.4% and reduced selling, general and
administrative expenses, less one-time charges related to our
May 2003 recapitalization, as a percentage of net sales by
approximately 3.3 percentage points from 64.4% to 61.1%,
primarily by reducing manufacturing and overhead costs,
streamlining our marketing efforts and improving our working
capital management. We intend to continue to pursue additional
opportunities to realize cost savings and operating efficiencies
in order to increase profitability. We recently announced our
intention to relocate our skin care and body care manufacturing
facilities to Mexico. Further, we believe our direct selling
business model will continue to generate significant organic
growth and that the resulting scale will afford us increasing
opportunities to leverage our fixed cost base and increase
efficiencies in our purchasing, manufacturing, marketing,
training and technology functions.
Products
We continuously introduce new and revitalized
products based on changes in consumer demand and technological
advances in order to enhance the quality, image and price
positioning of our products. During 2002, we launched 129 new
products, of which 74 related to our new color line launch.
Research and development is conducted at the Jafra Skin, Body
and Color Laboratory, located in the Westlake Village,
California facility. Amounts incurred on research activities
relating to the development of new products and improvement of
existing products were $1.5 million in the year ended
December 31, 2002, $1.8 million in the year ended
December 31, 2001 and $1.9 million in the year ended
December 31, 2000.
Employees in the Research and Development
Department formulate products and analyze them for chemical
purity and microbial integrity. A separate, small-scale pilot
batch is produced and tested prior to full scale manufacture. We
continue to invest in the globalization and upgrading of our
product lines by adding new formulations and contemporary
fragrances. Through globalized product development,
manufacturing and packaging, we believe that we have enhanced
the consistency and quality of our products in all geographic
regions and across all product lines.
The following table sets forth the net sales of
our principal product lines for the years ended
December 31, 2000, 2001 and 2002 (dollar amounts in
millions):
2000
2001
2002
Net Sales by
Percentage
Net Sales by
Percentage
Net Sales by
Percentage
Product Line
of Total
Product Line
of Total
Product Line
of Total
($ in millions)
Net Sales
($ in millions)
Net Sales
($ in millions)
Net Sales
Skin care
$
62.5
20.6
%
$
66.4
18.7
%
$
66.3
17.9
%
Color cosmetics
80.1
26.4
91.9
25.9
97.6
26.3
Fragrances
101.6
33.5
123.1
34.7
124.9
33.7
Body care and personal care
28.1
9.2
35.0
9.9
40.5
10.9
Other products(1)
31.2
10.3
38.3
10.8
41.3
11.2
Subtotal before shipping fees and commissions
303.5
100.0
%
354.7
100.0
%
370.6
100.0
%
Shipping fees and commissions
7.0
10.7
12.0
Total
$
310.5
$
365.4
$
382.6
(1)
Includes sales aids (e.g., party hostess gifts,
    demonstration products, etc.) and promotional materials.
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The following are some of our most popular
products in our principal markets:
Product Name
Description
Skin Care:
Royal Jelly Milk Balm Moisture Lotion
Enhances skin texture and encourages cell
    revitalization.
Time Protector
Daytime moisturizer for mature and prematurely
    aged skin.
Elasticity Recovery Hydrogel
Special care product targeted at enhancing and
    retaining skin elasticity.
Optimeyes
Eye cream to help reduce the appearance of fine
    lines, wrinkles, puffiness and dark circles.
Intensive Retinol Treatment
Slow release Retinol treatment designed to
    encourage youthful appearance of skin.
Malibu Miracle Mask
Combination exfoliating and hydrating facial mask.
Color Cosmetics:
Treatment lipstick
Moisturizing lipstick with time released
    ceramides available in 38 different shades.
Powder eye shadow
Crease resistant formula in 2 or 3 shade compact
    available in 51 different shades.
Mascara
Eyelash enhancer in moisturizing, volumizing and
    waterproof formulas available in 2 shades.
Foundation
Makeup in oil control, moisturizing and
    long-lasting formulas available in 26 different shades.
Powder blush
Jet-milled conditioning formula available in
    17 different shades.
Fragrance:
Eau d'Aromes
Light daytime fragrance for women.
Private Reserve JF9
Men's fragrance of woods, spices and
    aromatic greens.
Navigo
Complementary men's and women's
    fragrances.
Reflections
Fresh citrus floral fragrance for the modern
    woman.
Pastel
Deep floral fragrance for total body.
Body Care and Personal Care:
Royal Almond Body Oil
Almond-based fragrance oil for total body
    hydration.
SPF 40 Sunblock
Maximum protection sun block.
Tender Moments Baby Massage Cream
Massage lotion.
Peppermint Foot Balm
Mint fragranced lotion for softening and
    stimulating tired feet.
Stretch Mark Cream
Product designed to improve the appearance of
    skin striations.
Skin Care.
We sell
personalized skin programs in a free matrix skincare system that
allows individuals to select a regimen to meet individual needs.
Skin care products include cleansers, skin fresheners, masks,
and moisturizers for day and night. In addition to basic skin
care products, we offer specialty products to enhance skin
texture and encourage cell revitalization, including our premier
product,
Royal Jelly Milk Balm Moisture Lotion
, and
products for maturing skin
(Time Protector
and
Time
Corrector)
, eye care
(Optimeyes)
and elasticity
(Elasticity Recovery Hydrogel).
Many of these special
care products use the most recent advances in ingredient
technology. We are committed to maintaining contemporary
formulas and routinely evaluating and updating our product
offerings. During 2002, we
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continued to promote the skin care line and added
a new staple skin care product,
Makeup Remover for Eyes and
Lips.
Due to consumer demand,
Royal Jelly Vitamins
were re-launched to promote health and beauty through
internal wellness. Also, we had continued success with
Intensive Retinol Treatment
, capsules that release
measured doses of retinol into the skin. In 2003, we launched
two new products that address skin pigmentation problems: a
pigment fade wand and a skin brightening serum.
Color Cosmetics.
Our
range of color cosmetics for the face, eyes, lips, cheeks and
nails contribute significantly to our results. We internally
develop lipstick formulas, foundations and mascaras. In 1999, we
implemented a new color palette strategy by introducing seasonal
color products, through innovative fashion color statements in
the spring and fall shade product offerings. This has been a
consistent strategy for 2000, 2001 and 2002, and has continued
to drive the sales of color products. In 2001, we undertook a
major restage of our entire color line.
Fragrances.
Direct
selling is a significant distribution channel for fragrances,
and our new scents have enabled us to participate on an
increasingly larger scale in this channel. In 1996, we
introduced
Adorisse
, a contemporary women's
fragrance, and
Fm Force Magnetique
, a prestige men's
fragrance. We further extended our fragrance line in 1997 with
Le Moiré
for women and
Legend for Men
. In
1998, we launched three new fragrances for women:
Sensations,
a youthful fragrance,
Joie de Vivre
, a lifestyle
fragrance, and
Reflections
, a signature fragrance. One
fragrance was also launched for men in 1998,
Epic
, an
aspirational fragrance. In 1999, we introduced
Chosen
, a
prestige fragrance for women, as well as a special 20th
anniversary fragrance for the Mexico market. The fragrance
category includes line extensions such as body lotions, shower
gels, deodorants, after-shave lotions and shave creams for some
of the most popular fragrances. We have a continued strategy of
introducing new fragrances each year. In 2001,
Sphera
was
introduced for women and
Victus
was introduced for men.
In 2002, three new fragrances were launched.
Navigo
was
launched as a master brand and two fragrances were launched
simultaneously for men and women.
JF9 Black
, a sub brand
of
JF9
, was launched for a limited time. In 2003, we
launched six fragrance brands: One new men's fragrance,
J-Sport
, was introduced, and we re-launched the
Hamilton
fragrance for men, which had been discontinued.
We also introduced an extension of the women's fragrance
brand
Le Moiré
, called
Le Moiré
(cerisse)
. Additionally, two new teen fragrances,
Ternura
and
Traversura
, were launched in Mexico along with a
new baby fragrance called
One 2 Four
.
Body Care and Personal Care.
We market a broad selection of body,
bath, sun and personal care products, including deodorants and
shampoos. Our premier body care product,
Royal Jelly Body
Complex
, contains "royal jelly" (a substance
produced by queen bees) in an oil-free deep moisturizing formula
with natural botanical extracts and vitamins. Other offerings in
the body care line include sunscreens, hand care lotions,
revitalizing sprays, and bath products. While we vary our
product offerings and continue to develop new products, our
Royal Almond
and
Precious Protein
products have
been top sellers for many years. In 2002, we leveraged the
success of the
Royal Almond
brand by introducing
Royal
Ginger
, a scent extension to the body care family. Also, we
launched the
Define Your Body
line of four products, a
complete line of technologically advanced body treatment
products. We continued to build on the success of the
Jafra
Spa
line with the launches of the Spa fragrances and the
Scalp Massage and Hair Treatment
. The
Tender Moments
baby line was enhanced with the launch of
pediatrician-tested
Baby Bottom Balm
, formulated with
soothing ingredients. In a collaborative effort with Kevin
Charles, founder of the Kevin Charles Salon Spa, we launched a
new hair care line of salon quality products. Developed by us,
tested and perfected by Kevin Charles in his exclusive salon,
these products cleanse, nourish, protect and style hair. In
2003, Jafra continued to promote body and personal care products
with limited life fragrance-driven line extensions, that
leverage successful existing fragrance brands. For women, these
introductions included a soap, body spray mist, for a limited
time, and moisturizing hair fragrance under the
Adorisse
name as well as
Chosen
body spray mist and a
Le
Moire
body wash. For men, we introduced
JF9 Black
soap, after shave, shaving cream and deodorant as well as a
J-Sport
soap. In 2003, we also introduced a line of
peppermint scented foot care products.
Other Products.
We
are considering expanding our product line to include
nutritional and wellness products. Any decision to offer such
products will include consideration of the attendant risks,
including potential products liability.
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Marketing
Strategy and Product Positioning.
We position our products to appeal to
a relatively wide range of market categories, demographic groups
and lifestyles. Our products generally price at the higher end
of the mass market category, but slightly below prestige brands.
Product Strategy.
Our product strategy is to provide
customers with exciting and prestige quality product lines that
fit into our value-added demonstration sales techniques and
promote the sale of multiple products per home visit. To that
end, we develop integrated products and actively promote
cross-selling among categories, thus encouraging multi-product
sales and repeat purchases. Product variety and modernization
are keys to our success. We continue to look for ways to expand
product offerings and broaden our appeal in the marketplace.
This led to the development of the Retinol capsules and our new
color line.
Marketing Material & Corporate Image.
We support our identity and corporate
image through our energetic network of consultants and
word-of-mouth. We use a sophisticated and integrated promotional
approach that includes meetings, marketing literature, and the
Internet to create strong corporate imagery and support
corporate identity.
Independent Sales Force
Our self-employed sales force is composed of
approximately 400,000 consultants worldwide as of
September 30, 2003. Approximately 88,000 of these
consultants are in the United States and the Dominican Republic,
256,000 are in Mexico, 36,000 are in Brazil, 2,000 are in
Argentina and 18,000 are in Europe. Of the
78,000 consultants in the United States, 29,000 are in the
General Division and 49,000 are in the Hispanic Division. These
consultants are not agents or employees of Jafra; they are
independent contractors or dealers. They purchase products
directly from us and sell them directly to their customers.
More seasoned senior consultants, who have
experience managing their own consultant networks, recruit and
train our field level organization. We sell substantially all of
our products directly to our consultants. Each consultant
conducts her Jafra sales operations as a stand-alone business,
purchasing Jafra goods and reselling them to customers, as well
as offering free personal care consultations. Our independent
sales force constitutes our primary marketing contact with the
general public.
Selling.
The primary
role of a Jafra consultant is to sell Jafra products. Although
the majority of our sales occur as a result of person-to-person
sales, we also encourage our consultants to arrange sales
parties at customers' homes. Sales parties permit a more
efficient use of a consultant's time, allowing the
consultant to offer products and cosmetic advice to multiple
potential customers at the same time, and provide a comfortable
selling environment in which clients can learn about skin care
and sample the Jafra product line. Such parties also provide an
introduction to potential recruits and the opportunity for
referrals to other potential clients, party hostesses and
recruits.
We do not require consultants to maintain any
inventory. We believe that inventory requirements can be onerous
to consultants. Instead, Jafra consultants can wait to purchase
products from us until they have a firm customer order to fill.
Consultants generally personally deliver orders to their
customers. By delivering products directly to the customer, the
Jafra consultant creates an additional sales opportunity.
Recruiting.
We
believe that we enjoy a competitive advantage in recruiting
consultants due to our lower start-up costs and our policy of
providing retail discounts. Other major attractions to
prospective recruits include flexible hours, increased
disposable income, an attractive incentive program (including
international travel, national and regional meetings, awards and
free products), personal and professional recognition, social
interaction, product discounts and career development
opportunities.
We also emphasize our commitment to
consultants' personal and professional training, thereby
building consultants' management and entrepreneurial skills.
Consultant Management and Training.
To become a manager, a consultant must
sponsor a specified number of recruits and meet certain minimum
sales levels. Once a consultant becomes a
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manager, she is eligible to earn commissions on
her personal sales plus overrides on the sales of her downline
consultants. A manager continues to gain seniority in the Jafra
sales force by meeting the prescribed recruitment and sales
requirements at each level of management. At more senior levels,
managers may have several junior managers who in turn sponsor
and manage other managers and consultants. The most successful
managers have many such downline managers and consultants, and
earn commissions on their personal sales plus overrides on their
downline group's sales.
Training for new consultants focuses first on the
personalized selling of the Jafra product line, beginning with
skin care and the administration of a Jafra business. Training
is conducted primarily by our consultant managers. Managers
train their downline consultants at monthly meetings using
materials prepared by us. In training managers, we seek to
improve leadership and management skills, while teaching
managers to motivate downline consultants to higher sales levels.
Income Opportunities and Recognition.
Consultants earn income by purchasing
products from us at wholesale prices and selling to consumers at
suggested retail prices. Once a consultant becomes a manager,
her compensation also includes overrides, or percentage of the
sales of the consultants they have recruited. The overrides are
paid to motivate and compensate the managers to train, recruit
and develop downline consultants. Additionally, managers often
perform collection efforts on our behalf as the overrides paid
on a consultant's downline productivity are paid only upon
the collection of our receivables. We believe that our structure
of discounts, commissions and overrides to consultants is
generous.
We believe that public recognition of sales
accomplishments serves the dual purpose of identifying
successful role models and boosting consultant morale. Each year
we sponsor major events in each of our geographic markets to
recognize and reward sales and recruiting achievements and
strengthen the bond between the independent sales force and us.
Consultants and managers must meet certain minimum levels of
sales and new consultant sponsorship in order to receive
invitations to attend these events.
International Operations
Our international operations are subject to
certain customary risks inherent in carrying on business abroad,
including the risk of adverse currency fluctuations, the effect
of regulatory and legal restrictions imposed by foreign
governments, and unfavorable economic and political conditions.
Due to the challenging macroeconomic environment
that has affected our results in selected markets in which we
operate, we recently adopted a strategic plan to focus on the
strengths of our Mexican, U.S. and European markets. We
terminated our operations in certain markets in South America
and Thailand in 2003. These markets recorded losses of
$1.8 million, $0.6 million, $0.7 million and
$0.8 million for the years ended December 31, 2002,
2001, 2000 and 1999, respectively, and a gain of
$0.2 million for the year ended December 31, 1998.
During the nine months ended September 30, 2003, we ceased
operations in Venezuela, Colombia, Chile and Peru. At the same
time, we reevaluated our strategy relative to Brazil and
Argentina, which are good direct selling markets. During the
fourth quarter of 2003, we completed an aggressive restructuring
in Brazil and Argentina, which includes cost cutting and new
product management strategies. We intend to pursue the continued
development of these markets which present a strategic
opportunity, but we will carefully continue to evaluate the
risks and rewards of doing so.
Our most important markets to date are Mexico and
the United States, which represented approximately 66% and 24%,
respectively, of total 2002 consolidated net sales. We have
entered into foreign currency forward exchange and option
contracts to help mitigate the risk that a potential currency
devaluation in Mexico would have on our operations and
liquidity. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations —
Quantitative and Qualitative Disclosures About Market
Risk — Foreign Currency Risk."
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Manufacturing
We own an approximately 38,000 square foot
manufacturing facility in Naucalpan, Mexico, which is near
Mexico City. This facility produces color cosmetics and most of
our fragrances. Until June of 1999, we produced skin care and
personal use products at our Westlake Village, California
manufacturing facility. In June of 1999, we outsourced our U.S.
product manufacturing functions to a third-party contractor.
We and the third-party contractor entered into a
manufacturing agreement, dated as of June 10, 1999. Subject
to the terms and conditions of the manufacturing agreement, the
contractor has agreed to manufacture all of our requirements for
certain cosmetic and skin care products for an initial term of
five years expiring July 1, 2004. On December 8, 2003,
we notified the third-party contractor that we do not intend to
renew the contract upon its expiration in 2004. The
manufacturing agreement provides for price renegotiations by the
contractor if our quarterly or annual purchase volume falls
below specified minimums. The manufacturing agreement requires
the contractor to maintain insurance to cover costs associated
with any product liability or product recall caused by the acts
or omissions of the contractor. In addition, we are obligated to
purchase materials acquired by the contractor based upon product
forecasts provided by us if the contractor is unable to sell
such materials to a third-party. The contractor is solely
responsible for obtaining the inventories, manufacturing the
inventories at its current location in Chino, California,
complying with applicable laws and regulations, and performing
quality assurance functions. As of mid-2004, we expect that most
of the products currently produced by this third party will be
manufactured at our Mexican facility.
We purchase from other third-party suppliers
certain finished goods and raw materials for use in our
manufacturing operations. In general, we do not have written
contracts with our other suppliers. Finished goods and raw
materials used in our products, such as glass, plastics, and
chemicals, generally are available stock items or can be
obtained to our specifications from more than one potential
supplier.
Distribution
As of September 30, 2003, we use four
primary distribution centers in the United States, Mexico and
Europe. The U.S. warehouses in Bridgeport, New Jersey and
Westlake Village, California currently stock the entire Jafra
product line. In Mexico, we have historically outsourced
virtually all of our distribution to third-parties. However, in
January 2002, we opened a distribution center in Mexico and
terminated the third-party distribution function. This
distribution center services all consultants in Mexico. In
addition, we have a distribution center in Kaufbeuren, Germany
that services all of our European Markets. Management believes
that its facilities are adequate to meet demand in its existing
markets for the foreseeable future.
Typically, owned or leased distribution centers
are located in an area that allows for direct delivery to
consultants by either post or carrier. Maintaining a short
delivery cycle in direct selling is an important competitive
advantage.
Competition
We sell all of our products in highly competitive
markets. The principal bases of competition in the cosmetics
direct selling industry are price, quality and range of product
offerings. On the basis of information available to it from
industry sources, management believes that there are a
significant number of companies (including both direct sales and
cosmetic manufacturing companies) that sell products that
compete with our products. Several direct sales companies
compete with us in sales of cosmetic products, and at least two
such competitors, Mary Kay and Avon, are substantially larger
than us in terms of total independent salespersons, sales volume
and resources. In addition, our products compete with cosmetics
and toiletry items manufactured by cosmetic companies that sell
their products in retail or department stores. Several of such
competitors are substantially larger than us in terms of sales
and have substantially more resources. We also face competition
in recruiting independent salespersons from other direct selling
organizations whose product lines may or may not compete with
our products.
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We believe that our senior management team with a
strong direct selling track record, motivated direct sales
force, prestige quality product lines, product development
capabilities, geographic diversification, short delivery cycle,
and manufacturing technology are significant factors in
establishing and maintaining our competitive position.
Patents and Trademarks
Our operations do not depend to any significant
extent upon any single trademark other than the
Jafra
trademark, and one of our most significant products,
Royal Jelly
, is not protected by any registered
trademark. Some of the trademarks we use, however, are
identified with and important to the sale of our products. Some
of our more important trademarks are:
Adorisse
(a
contemporary women's fragrance),
Eau D'Aromes
(revitalizing fragrance spray),
JF9
(a men's
prestige fragrance),
Legend for Men
(a men's premium
fragrance),
Le Moiré
(a contemporary women's
fragrance), and
Optimeyes
(eye treatment lotion). Our
operations do not depend to any significant extent on any single
or related group of patents, although we have applied for or
received patent protection in our major markets for certain skin
creams, dispensers and product containers, nor do they rely upon
any single or related group of licenses, franchises or
concessions. We have in the past licensed know-how from Gillette
relating to the design, development and manufacture of our
products and are permitted to continue to use such know-how in
connection with our products.
In 1998, a former employee of Gillette filed
applications to register the Jafra trademark in Algeria,
Bangladesh, China, Cyprus, Egypt, Gambia, Ghana, Guyana, India,
Kenya, Malawi, Morocco, Nigeria, OAPI, Pakistan, Sierra Leone,
Syria, Sudan, Surinam, Tanzania, Tunisia, Zambia, and Zimbabwe,
jurisdictions in which we do not currently operate. In 1998,
Gillette obtained a court order prohibiting this employee from
transferring or licensing such trademark applications and
registrations and requiring that the trademark applications and
registrations be assigned to Gillette. Gillette has since
completed the relevant documentation relating to the transfer of
these trademarks to us. We have filed the documents obtained
from this former employee in those jurisdictions in which the
documentation will be accepted in order to secure the
abandonment and cancellation of this employee's
applications and registrations. If we are not able to secure
cancellation or abandonment of the applications and
registrations in these jurisdictions, we may be prohibited from
distributing our products in these jurisdictions.
Management Information Systems
During 2001, we redefined our Internet strategy
and continued to develop and implement an expanded e-commerce
system. The expanded e-commerce platform became operational in
the United States during June 2001, with the consultant adoption
rate of 31% of order volume at year end 2002. In Mexico, an
e-commerce platform was launched during the second half of 2001.
We also selected a new platform to run our core operations in
the United States. The U.S. business replaced the order entry,
fulfillment, commission and override processing and financial
system software with Enterprise Resource Planning
(ERP) software from JD Edwards. Wave 1 of this
implementation to the financial systems was implemented in April
of 2002. Waves 2 and 3, which relate to the order entry and
remaining commercial systems, were implemented in the fourth
quarter of 2003. In Mexico, approximately 26% of orders and 7%
of new consultant contracts in December 2003 were submitted via
e-commerce.
Seasonality
Our net sales, as measured in local currencies,
during the fourth quarter of the year are typically slightly
higher than in the other three quarters of the year due to
seasonal holiday purchases.
Environmental Matters
Our operations are subject to various federal,
state, local and foreign laws and regulations governing
environmental, health and safety matters. Some of our operations
require environmental permits and controls and these permits are
subject to modification, renewal and revocation by issuing
authorities.
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Violations of or liabilities under environmental
laws or permits could result in fines or penalties, obligations
to clean up contaminated properties or claims for property
damage or personal injury. We believe that we are in material
compliance with all such laws, regulations and permits, and
under present conditions, we do not foresee that such laws and
regulations will have a material adverse effect on our business,
financial condition or results of operations.
Employees
As of December 31, 2003, we had 862
full-time employees, of which 245 were employed in the United
States and 617 in other countries. We also had 282 outside
contract employees.
Litigation
We are subject from time to time to various
litigation and claims arising in the ordinary course of our
business. We do not believe that any known litigation or claims
pending against us would, if determined in a manner adverse to
us, have a material adverse effect on our business, financial
condition or results of operations.
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MANAGEMENT
Directors and Executive Officers
The following chart sets forth certain
information regarding our directors and executive officers:
Name
Age
Position
Ronald B. Clark
67
Chairman and Chief Executive Officer; Director
Gonzalo R. Rubio
60
President and Chief Operating Officer; Director
Ralph S. Mason, III
53
Vice Chairman, Executive Vice President and
    General Counsel
Michael A. DiGregorio
49
Senior Vice President and Chief Financial Officer
Alan Fearnley
53
Senior Vice President of Strategic Planning and
    Business Development
Eugenio Lopez Barrios
62
President of Mexican Operations
Jose Luis Peco
59
President of European Operations
Beatriz Gutai
44
President of U.S. — Hispanic Division
Dyan Lucero
54
President of U.S. — General Division
Donald J. Gogel
54
Director
Steven D. Goldstein
52
Director
Thomas E. Ireland
54
Director
Siri Marshall
55
Director
David A. Novak
35
Director
Ann Reese
50
Director
Edward H. Rensi
59
Director
Kenneth D. Taylor
69
Director
None of our officers has any family relationship
with any director or other officer. "Family
relationship" for this purpose means any relationship by
blood, marriage or adoption, not more remote than first cousin.
Ronald B. Clark
has
served as a director and the Chairman and Chief Executive
Officer since joining Jafra in May 1998. From 1997 to 1998,
Mr. Clark served as President of Richmont Europe (Mary Kay
Holding Company). Mr. Clark joined Mary Kay in 1992 as
President, Mary Kay Europe in 1992. Before joining Mary Kay,
Mr. Clark spent 2 years as Executive Vice President of
Primerica Corp., 4 years as President of Jafra Cosmetics
International, Inc., and 6 years as Vice President of Avon
Products, Inc. He joined Avon Products, Inc. in 1959.
Mr. Clark's employment agreement provides that he
shall be a member of our board of directors during the term of
his employment.
Gonzalo R. Rubio
has
served as a director and the President and Chief Operating
Officer since joining Jafra in May 1998. From 1992 to 1997,
Mr. Rubio served first as an Area Vice President and later
President of the European operations of Mary Kay Inc. Before
joining Mary Kay, Mr. Rubio was employed by Avon Products
Inc., where he spent five years as Area Director for Europe, two
years as International Operations Director and five years as
Area Director for Latin America. He joined Avon Products Inc. in
1970. Mr. Rubio's employment agreement provides that
he shall be a member of our board of directors during the term
of his employment.
Ralph S. Mason III
has served as our Vice Chairman,
Executive Vice President and General Counsel since joining Jafra
in May 1998. Prior to that, Mr. Mason was the senior and
founding partner at Mason, Taylor & Colicchio, a law
firm in Princeton, New Jersey, which he joined in 1990. Prior to
founding Mason, Taylor & Colicchio, Mr. Mason spent
13 years practicing law in New York and New Jersey.
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Michael A. DiGregorio
has served as Senior Vice President
and Chief Financial Officer of Jafra since June of 1999. In his
nine years with Jafra, his previous responsibilities included
Financial Director and General Manager of Jafra Mexico and
President of U.S. Operations. In addition, Mr. DiGregorio
has been the CFO of two other public companies: Atlantis
Plastics, where he was CFO from 1993 to 1995, and The Wackenhut
Corporation, where he was CFO from 1990 to 1993. Between 1978
and 1998, Mr. DiGregorio spent a total of 14 years
with The Gillette Company.
Alan Fearnley
has
served as Senior Vice President of Strategic Planning and
Business Development of Jafra since July of 2001. From 1998 to
2001, Mr. Fearnley served as Senior Vice President of
Global Marketing of Jafra. From 1997 to 1998, Mr. Fearnley
served as Vice President of Marketing for Dermalogica. Prior to
that, Mr. Fearnley took a year's sabbatical to attend
the Sloan Fellowship Masters Program at the London Business
School. During this sabbatical, Mr. Fearnley also served as
a consultant to various companies. Before attending the Sloan
Fellowship program, Mr. Fearnley spent eight years with The
Gillette Company, where he held a variety of managerial and
executive positions within Jafra Cosmetics International. From
1975 through 1986, Mr. Fearnley worked for Avon Cosmetics
in its European headquarters.
Eugenio Lopez Barrios
has served as President of Mexican
Operations since joining Jafra in June 1998. Prior to joining
Jafra, Mr. Barrios was President of Mary Kay Mexico from
1993 to 1998. Before joining Mary Kay, Mr. Barrios spent
33 years with Avon Products Inc., where he served from 1959
to 1989 starting in many different positions and ending as Vice
President of Sales of Avon Mexico and from 1991 to 1993 as
Managing Director of Avon Ecuador.
Jose Luis Peco
has
served as President of European Operations of Jafra since
joining Jafra in June 1998. Prior to joining Jafra,
Mr. Peco spent five years with Mary Kay Cosmetics,
where he served as Vice President of European Operations and as
President of Mary Kay Cosmetics — Iberia. Before
joining Mary Kay, Mr. Peco spent 22 years at Avon
Products Inc., where he held a variety of managerial positions
in Europe.
Beatriz Gutai
has
served as General Manager of the Hispanic Division of United
States Operations since September of 2000. Prior to that time,
Ms. Gutai served as Vice President of Sales for the
Hispanic Division and in various positions in sales management,
programs, and events since joining Jafra in 1982.
Dyan Lucero
has
served as General Manager of the General Division of United
States Operations since September of 2000. Prior to that time,
Ms. Lucero served as Vice President of Sales for the
General Division and in various positions in sales management
and business development since joining Jafra in 1972.
Donald J. Gogel
has
been a director of Jafra since January 1998. Since 1998,
Mr. Gogel has served as Chief Executive Officer of
CD&R; since prior to 1997 he has served as President and a
director of CD&R and since 1989 he has been a principal of
CD&R. Mr. Gogel is also a limited partner of CD&R
Associates V Limited Partnership ("Associates
V"), the general partner of CD&R Fund V, and
President and Chief Executive Officer and a shareholder and
director of CD&R Investment Associates II, Inc.
("Investment Associates II"), a Cayman Islands
exempted company that is the managing general partner of
Associates V. Mr. Gogel is a director of Kinko's,
Inc., a corporation in which Fund V has an investment, and
a director of Global Decisions Group, LLC, a limited liability
company in which an investment fund managed by CD&R has an
investment, and Turbochef, Inc. Mr. Gogel serves as a
member of the compensation committee of the board of directors
of Turbochef, Inc.
Steven D. Goldstein
has been a director of Jafra since
July 1998. Since February of 1998, Mr. Goldstein has served
as President and Chief Executive Officer of Chaycon Inc. From
November of 2000 to July of 2001, Mr. Goldstein served as
Chairman and Chief Executive Officer of More Benefits, Corp.
From December 1997 to November of 2000, Mr. Goldstein
served as Chairman and Chief Executive Officer of Invenet, LLC.
Prior to joining Invenet, LLC, Mr. Goldstein was employed
as President, Credit of Sears, Roebuck & Co. Prior to
1997, Mr. Goldstein was employed by American Express Co.,
serving most recently as the Chairman and Chief Executive
Officer of American Express Bank.
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Thomas E. Ireland
has been a director of Jafra since
March 1998 and is a principal of CD&R, a limited partner of
Associates V and a shareholder and a director of Investment
Associates II. Before joining CD&R in 1997,
Mr. Ireland served as a senior managing director of Alvarez
& Marsal, Inc. Mr. Ireland also serves on the board of
directors of the Maine Coast Heritage Trust. Mr. Ireland is
a director of Remington Arms Company, Inc. and its parent RACI
Holding, Inc., a corporation in which an investment fund managed
by CD&R has an investment.
Siri Marshall
has
been a director of Jafra since July 1999. Ms. Marshall has
been employed by General Mills since prior to 1997 and currently
serves as its Senior Vice President, Corporate Affairs and
General Counsel and Secretary. She is also a director of Snack
Ventures Europe, a joint venture between General Mills and
PepsiCo.
David A. Novak
has
been a director of Jafra since January 1998. Mr. Novak is a
principal of CD&R, a limited partner of Associates V, and a
shareholder of Investment Associates II. Prior to joining
CD&R in 1997, Mr. Novak worked in the Private Equity
and Investment Banking Divisions of Morgan Stanley & Co.
Incorporated and for the Central European Development
Corporation. Mr. Novak also serves on the board of
directors of Italtel Holdings.
Ann Reese
has been a
director of Jafra since July 1998. Ms. Reese has been the
Executive Director of Center for Adoption Policy Studies since
October 2000. From 1999 to December 2000, Ms. Reese was a
professional employee of CD&R. From prior to 1997 to March
1998, Ms. Reese was Chief Financial Officer of ITT Corp., a
company in the hotel and gaming businesses and previously in
insurance and manufacturing. Ms. Reese has been nominated
to the board of Xerox.
Edward H. Rensi
has
been a director of Jafra since July 1998. For more than the
prior five years, Mr. Rensi has been employed by McDonalds
Corp. USA, serving most recently as President and Chief
Executive Officer. Mr. Rensi also serves as a director of
Snap-On Inc. and I.S.C. Corporation, and serves as a member of
the compensation committee of the board of directors of Snap-On
Inc. and I.S.C. Corporation.
Kenneth D. Taylor
has been a director of Jafra since
July 1998 and has been the Chairman of Global Public Affairs,
Inc. since prior to 1997.
At present, all directors will hold office until
their successors are elected and qualified, or until their
earlier removal or resignation.
Composition of the Board After This
Offering
Our business and affairs are managed under the
direction of our board of directors. The board is currently
composed of 10 directors, of whom two are officers of our
company, and      of whom are
independent directors under the applicable rules of the New York
Stock Exchange. Prior to the closing of this offering, our board
of directors will be divided into three classes serving
staggered three-year terms. The terms of office of each class
expire at different times in annual succession, with one class
being elected at each year's annual meeting of
shareholders. We currently anticipate that the classes will be
composed as follows:
•
will
    be Class I directors whose terms will expire at the 2005
    annual meeting of stockholders;
•
will
    be Class II directors whose terms will expire at the 2006
    annual meeting of stockholders; and
•
will
    be Class III directors whose terms will expire at the 2007
    annual meeting of stockholders.
In addition, in order to ensure compliance with
the independence requirements of the New York Stock Exchange and
applicable law, the composition of the board may change prior to
and following the offering. It is our intention to be in full
and timely compliance with all applicable rules of the New York
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Stock Exchange and applicable law, including with
respect to the independence of directors. We anticipate that we
will be considered a "controlled company" under
applicable New York Stock Exchange rules following the offering.
During the period that we are a "controlled company"
under applicable New York Stock Exchange rules, we may not be
subject to certain New York Stock Exchange rules relating to
director independence.
Upon the closing of this offering, the director
designation, observer and other rights granted to CD&R
Fund V under its Stock Subscription Agreement will
terminate. See "Certain Relationships and Related Party
Transactions."
Certain Committees of the Board of
Directors
Audit Committee.
We
have an audit committee consisting
of           ,           and           .
Each member of the audit committee satisfies the requirements
for independence under the applicable New York Stock Exchange
regulations. Our audit committee financial expert
is                               .
The audit committee has responsibility for, among other things:
•
the selection of our independent auditors for
    recommendation to our shareholders,
•
reviewing and approving the scope of the
    independent auditors' audit activity and extent of
    non-audit services,
•
reviewing with management and the independent
    accountants the adequacy of our basic accounting systems and the
    effectiveness of our internal audit plan and activities,
•
reviewing with management and the independent
    accountants our financial statements and exercising general
    oversight of our financial reporting process, and
•
reviewing litigation and other legal matters that
    may affect our financial condition and monitoring compliance
    with our business ethics and other policies.
Compensation Committee.
We have a compensation committee
consisting
of           ,
and           .
The compensation committee has responsibility for, among other
things, all compensation arrangements for executive officers and
making awards under our equity compensation plans.
Nominating and Governance
Committee.
We have a nominating and
governance committee consisting
of           ,           and           .
The nominating and governance committee has responsibility for,
among other things, identifying individuals qualified to become
board members consistent with certain criteria approved by the
board, and selecting, or recommending that the board select, the
director nominees for the next annual meeting of shareholders.
Compensation of Directors
During 2003, each of our non-employee and
non-CD&R directors received a retainer of $40,000, for
serving on our board of directors and was reimbursed for his or
her out-of-pocket expenses incurred in connection with attending
board meetings. In addition, during 2003 each non-employee and
non-CD&R director also received a one time special bonus of
$50,000 as an acknowledgment of his or her efforts in connection
with the May 2003 Recapitalization. Members of our board did not
receive any additional compensation for their services in such
capacity. We pay no additional remuneration to our officers or
the principals or employees of CD&R for serving as directors.
Jafra S.A., Directors Stock Incentive
    Plan
Prior to the completion of the offering, we
expect that our board will adopt and our shareholders will
approve the Jafra S.A. Directors Stock Incentive Plan for the
non-employee and non-CD&R members of our board of directors.
Under the plan, our board of directors will be
able to award an eligible director shares of our common stock or
options to purchase shares of our common stock, which, in each
case, may be fully
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vested at the time of grant or may be subject to
such vesting or other restrictions, and having such other terms
and conditions, as the board deems appropriate.
The director stock incentive plan will permit an
eligible director to elect to defer receipt of all or any part
of his or her annual retainer fee or meeting fees payable with
respect to a calendar year following the year in which the
election is made. A director who elects to defer fees will be
credited with a number of "phantom" shares of common
stock equal to the amount of the deferred fee divided by the
fair market value per share of common stock on the date the fee
would otherwise have been payable (rounded to the nearest 100th
of a share). If any dividends other than stock dividends are
paid on the common stock, the director will be credited with
additional phantom shares of common stock equal to the dividend
that would have been paid on the director's phantom shares
divided by the fair market value per share of our common stock
on the dividend payment date. The board will adjust the number
of phantom shares credited if there is a change in the number or
kind of outstanding shares of common stock by reason of any
recapitalization, reorganization, merger, consolidation, stock
split or any similar change affecting the common stock
(including a stock dividend).
A director who elects to defer any portion of his
or her fees will also make elections with respect to
(i) whether aggregate amounts credited will be distributed
in cash, shares or a combination thereof, (ii) if
distributions will commence immediately following the date he or
she ceases to be a director or on the first business day of any
calendar year following the calendar year in which he or she
ceases to be a director and (iii) whether the distribution
will be made in one lump sum payment or in installments. A
director may also elect to receive a distribution of all or a
portion of the amounts with which he or she has been credited as
of a date at least one full year after the date when he or she
initially elected to defer fees, but any director who does so
will cease to be eligible to make any additional deferrals for
the two immediately following calendar years.
A director to whom phantom shares of common stock
have been credited will have only the rights of a general
unsecured creditor of our company and will have no rights as a
stockholder of our company with respect to phantom shares with
which he or she has been credited until the common stock
underlying the phantom shares is delivered.
A maximum
of            shares
may be issued under the directors stock incentive plan, subject
to appropriate adjustments in the event of certain corporate
transactions, including reorganizations, stock dividends or
stock splits. Options awarded under the directors stock
incentive plan will generally not be assignable or transferable
other than by will or by the laws of descent and distribution,
except for certain transfers to the director's family
members or to entities of which the director or his or her
family members are the sole beneficiaries or owners, and all
awards and rights will be exercisable during the life of the
director only by the director or his or her legal
representative. The board may permit a director to defer the
receipt of shares he or she might otherwise receive upon
exercise of an option, upon such terms and conditions as the
board determines appropriate.
The directors stock incentive plan will not have
a stated term. The plan will be administered, and may be amended
or terminated by, the board of directors; however, no amendment
or termination of the plan may adversely affect the rights of
any director participating in the plan without his or her
consent.
Federal Income Tax
    Consequences
The following is a brief description of the
material U.S. federal income tax consequences generally
arising with respect to options awarded and the deferral of fees
under the directors stock incentive plan.
The award of an option will create no tax
consequences for the director receiving the option or for us.
When a director exercises an option, he or she will generally
recognize ordinary income equal to the difference between the
exercise price and the fair market value of the shares acquired
on the date of exercise, and we will generally be entitled to a
tax deduction in the same amount.
A director who defers retainer fees will
generally not recognize ordinary income with respect to the
deferred fees when they are so deferred, but will generally
recognize ordinary income equal to the
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amount of the cash or the fair market value of
the shares distributed in the year in which the cash or shares
are distributed. We will generally be entitled to a deduction in
an amount equal to the ordinary income recognized by the
director.
Compensation of Executive Officers
The following table sets forth the compensation
earned by Jafra's Chief Executive Officer and the four
additional most highly compensated executive officers of Jafra
(each, a "named executive officer") for each of the
last three fiscal years.
Summary Compensation Table
All Other
Compensation
Name and Principal Position
Year
Salary($)
Bonus($)(2)
($)(3)
Ronald B. Clark
2003
$
699,386
$
3,220,264
$
34,969
Chairman and Chief
2002
674,848
370,319
53,184
Executive Officer
2001
648,729
391,872
43,691
Gonzalo R. Rubio
2003
582,807
3,149,620
44,570
President and Chief
2002
562,358
308,591
44,446
Operating Officer
2001
540,555
326,550
36,408
Ralph S. Mason, III
2003
524,556
2,618,504
—
Vice Chairman, Executive
2002
506,148
277,746
6,616
Vice President and General Counsel
2001
486,557
293,910
6,554
Jaime Lopez Guirao(1)
2003
523,503
1,201,752
78,000
President of Global Operations
2002
505,135
277,190
64,757
2001
484,202
293,322
56,434
Michael A. DiGregorio
2003
397,223
1,041,477
32,404
Senior Vice President and Chief
2002
337,465
185,182
35,714
Financial Officer
2001
323,877
163,300
27,432
(1)
Mr. Guirao's employment with us will
    terminate effective March 6, 2004.
(2)
2003 bonus includes special one-time bonus
    payments in connection with our recapitalization in May 2003.
    See "Certain Relationships and Related Party
    Transactions — May 2003 Recapitalization." The
    portion of each named executive officer's total 2003 bonus
    listed above attributable to this special one-time
    recapitalization bonus is as follows: Mr. Clark,
    $2,796,454; Mr. Rubio, $2,796,454; Mr. Mason,
    $2,300,636; Mr. Guirao, $884,523; and Mr. DiGregorio,
    $786,477.
(3)
Amounts shown in this column constitute our
    contributions under our 401(k) and Supplemental Savings Plans
    and in the case of Mr. DiGregorio and Mr. Guirao,
    reimbursement of certain automobile expenses.
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FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information for
each named executive officer with regard to the aggregate value
of options held as of December 31, 2003. Such options were
granted to the named executive officers pursuant to the Amended
and Restated Jafra Cosmetics International, Inc. Stock Incentive
Plan. No options were exercised by such named executive officers
during the year ended December 31, 2003.
Number of Securities
Value of Unexercised In-the-
Underlying Unexercised
Money Options at
Options at December 31, 2003
December 31, 2003($)(1)
Name
Exercisable
Unexercisable
Exercisable
Unexercisable
Ronald B. Clark
14,839
3,489
$
$
Gonzalo R. Rubio
14,839
3,489
Ralph S. Mason, III
11,769
2,767
Jaime Lopez Guirao
4,857
1,143
Michael A. DiGregorio
3,945
795
(1)
Calculated based on a per share price of Jafra
    S.A. common stock of
    $          ,
    equal to the midpoint of the range set forth on the cover page
    of this prospectus, less the per share exercise price.
Employment Agreements
We have employment agreements with each of the
named executive officers. The employment agreements have a
continuous "rolling" term of two years. Pursuant to
their respective agreements, as of their 2003 anniversary dates,
Messrs. Clark, Rubio, Mason, Guirao and DiGregorio receive
annual base salaries of $706,350, $588,610, $529,780, $528,715
and $425,000, respectively. Under the employment agreements, the
board will review the base salary annually and, in its sole
discretion, may increase (but not decrease) such base salary
from time to time based upon, among other things, the
performance of the executive and prevailing industry salary
levels; provided that the executives' base salary will be
automatically increased on each anniversary date by an amount
equal to the average increase in the consumer price index during
the immediately preceding twelve month period, as reported in
the Wall Street Journal. The employment agreements provide for a
target annual bonus equal to 60% of annual base salary (50%, in
the case of Mr. DiGregorio) if Jafra achieves the
performance goals established under its annual incentive plan
for executives. The executives may receive a larger bonus if
such goals are exceeded. The employment agreements further
provide that if we terminate any such named executive
officer's employment without "cause" (as defined
in the employment agreement) or any such executive terminates
his employment for "good reason" (as so defined), the
officer will be entitled to continued payments of his base
salary for the remaining term of his employment agreement and to
payment of a pro rata annual bonus for the year of termination
provided that we achieve the performance objectives established
under our incentive plan applicable for such year. Each of the
employment agreements also contains covenants regarding
nondisclosure of confidential information, noncompetition and
nonsolicitation. The employment agreements for
Messrs. Clark and Rubio each provide that he will be a
member of our board of directors during the term of his
employment. Jafra Worldwide has assumed the obligations of CDRJ
Investment (Lux) S.A. under these employment agreements.
Jafra S.A. Annual Incentive Plan
Prior to the completion of this offering, we
expect that our board of directors will adopt and our
shareholders will approve an annual performance incentive plan
that will provide for the award to our officers of incentive
bonuses. Each year the compensation committee will establish
target incentive bonuses for participants in the annual
incentive plan and will select the eligible participants and
performance criteria for that year for a participant or group of
participants.
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The actual bonus payable to a
participant — which may equal, exceed or be less than
the target bonus — will be determined based on whether
the applicable performance targets are met, exceeded or not met,
and may be decreased or increased based on individual
performance and contributions, or such other factors as the
compensation committee may deem appropriate. The compensation
committee will have the right, in its discretion, to pay to any
participant an annual bonus based on individual performance or
any other criteria that the committee deems appropriate and the
compensation committee may provide for a minimum bonus amount in
any calendar year, regardless of whether performance objectives
are attained.
Bonuses will generally be payable as soon as
practicable after the compensation committee certifies that the
applicable performance criteria have been obtained, or, in the
case of bonuses that are not tied to such performance criteria,
at such time as the compensation committee determines.
If a participant in the plan dies or becomes
disabled prior to the payment of the bonus with respect to the
year in which he or she dies or becomes disabled, the
compensation committee may award to the participant (or his or
her estate or legal representative) all or such pro rata portion
of the bonus that would otherwise have been payable as it
determines appropriate. In addition, the compensation committee
may require that a portion of a participant's annual
incentive bonus will be payable in shares or options awarded
under our Omnibus Plan (as described below).
The annual incentive plan will be administered by
our compensation committee, which may delegate its authority
except to the extent that it relates to the compensation of our
chief executive officer, our four other most highly compensated
executive officers or any other individual whose compensation
the board of directors or the compensation committee believes
may become subject to Section 162(m) of the Code. The
annual incentive plan will expire one day prior to the date of
the first meeting of our stockholders in 2008 at which directors
will be elected. However, our board of directors or the
compensation committee may at any time amend, suspend,
discontinue or terminate the annual incentive plan. The
determination of the compensation committee on all maters
relating to the annual performance incentive plan will be final
and binding.
Federal
Income Tax Consequences
The following is a brief description of the
material U.S. federal income tax consequences generally
arising with respect to the annual incentive plan.
A participant in the annual incentive plan will
generally recognize ordinary income equal to the cash bonus he
or she receives in the year it is paid or made available, and we
will generally be entitled to a deduction of the same amount in
the year to which the bonus relates. If a portion of a
participant's annual bonus is paid in shares or options
under the Omnibus Plan, the federal income tax consequences to
us and the participant will generally be as described below
under the description of the Omnibus Plan.
Section 162(m) of the Internal Revenue Code
generally limits the ability of a public corporation to deduct
compensation greater than $1,000,000 paid with respect to a
particular year to an individual who is, on the last day of that
year, the corporation's chief executive officer or one of
its four other most highly compensated executive officers, other
than compensation that is "performance-based" within
the meaning of Section 162(m). Under a special rule that
applies to corporations that become public through an initial
public offering, this limitation generally will not apply to
compensation that is paid pursuant to the annual performance
incentive plan before the first meeting of our stockholders in
2008 at which directors will be elected.
Amended and Restated Jafra Cosmetics
International, Inc. Stock Incentive Plan
Our board of directors administers the Amended
and Restated Jafra Cosmetics International, Inc. Stock Incentive
Plan. Under this Plan, shares of our common stock may be offered
and sold and options to purchase shares of our common stock may
be granted to our executive officers and other key employees.
Our board may delegate the authority to administer the plan to a
duly constituted committee of our board.
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Under the plan, participants may be offered the
right to purchase shares of our common stock. The purchase price
of the shares will be determined by our board. If a participant
chooses to purchase shares, such participant must agree not to
sell or otherwise dispose of the shares purchased under the
plan, except in compliance with the Securities Act and the
management stock subscription agreement entered into between
such participant and us.
The options issued under the plan allow
participants to purchase shares of our common stock. Options
granted under the plan that are canceled without having been
exercised may be reissued under the plan. As of
September 30, 2003, 42,121 shares have been issued and
84,242 options were outstanding under the plan. Any shares to be
delivered under the Plan upon exercise of options will be
purchased by Jafra U.S. from us pursuant to the Second Amended
and Restated Stock Purchase Warrant Agreement which will be
approved prior to the consummation of the liquidation of CDRJ
Investments (Lux) S.A.
Under the plan, two types of options may be
granted: service options and performance options. Service
options become vested and exercisable in equal annual
installments on each of the first three anniversaries of the
date of grant. Performance options generally become vested and
exercisable upon achievement of certain specified cumulative
earnings targets, except that, to the event not vested sooner,
they become vested on the ninth anniversary of the grant date.
In addition, our board of directors may accelerate the
exercisability of any option at any time and from time to time.
All options granted expire after ten years from the grant date.
The exercise price of the options will be
determined by our board but will not be less than the fair
market value of our common stock at the date of grant. The
exercise price of any options exercised at any time following a
public offering may be paid in full or in part in the form of
shares of our common stock that have been owned by the
participant for at least six months, based on the fair market
value of such shares of common stock on the date of exercise.
In the event of a participant's termination
of service with us or any of our subsidiaries by reason of
death, disability or retirement, vested options shall remain
exercisable until the first to occur of: (i) the day that
is six months after the date of termination of employment or
(ii) the expiration of the term of the options. Unvested
options shall be canceled immediately upon such termination of
service. In the event of the participant's termination of
service with us or any of our subsidiaries for cause, all vested
and unvested options held by a participant shall be forfeited
and terminated immediately upon such termination of service.
In the event a participant's service with us
or any of our subsidiaries is terminated for any other reason,
such participant's vested options shall remain exercisable
solely until the first to occur of: (a) the 30th day
after the earliest of (i) the expiration of CD&R Fund
V's right to purchase the options, (ii) receipt by the
participant of written notice that CD&R Fund V does not
intend to exercise its right to purchase the options, and
(b) the expiration of the term of such options. Those
options that have not become vested and exercisable prior to the
date of termination of service shall be canceled immediately
upon termination of employment.
Note that unless otherwise determined at the time
of grant of an option, each participant's option agreement
provides that upon a termination of the participant's
employment for any reason, we and CD&R Fund V have
successive rights to repurchase for cash any vested option (or
shares of common stock) then held by the participant in
accordance with the terms provided in each such option agreement.
Unless otherwise determined at the time of the
grant of an option, upon a "change in control" (as
defined in the plan) of our company, Jafra Worldwide or Jafra
U.S., each vested and unvested service option, all vested
performance options and a proportionate share of the unvested
performance options (determined on the basis of the portion of
the performance target achieved as of the date of such
transaction) will be canceled in exchange for a payment in cash
of an amount equal to the excess, if any, of the price paid in
the change in control transaction over the exercise price. All
remaining unvested performance options will be canceled. Any
payments made in such event will generally be paid within
30 days after the change in control and will be made in
cash or in shares of capital stock of the acquirer,
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as determined by our board of directors.
Notwithstanding the foregoing, if our board determines before
the change in control either that:
•
all outstanding options will be honored or
    assumed by the acquirer, or
•
alternative options with equal or better terms
    will be made available,
the outstanding options will not be canceled,
their vesting and exercisability will not be accelerated, and
there will be no payment in exchange for the options.
To be approved by our board of directors, any
alternative options must:
•
have substantially equivalent economic value to
    the outstanding options, and
•
must have terms that provide, upon the
    involuntary termination of an optionee's employment within
    two years following the change in control, for either
    (a) unrestricted exercisability and transferability of the
    alternative options; or (b) a payment in exchange for any
    alternative options that equals the difference between the
    exercise price of such alternative options and the fair market
    value of the stock subject to such alternative options at the
    time of the involuntary termination.
Options cannot be transferred or assigned by a
participant other than by will or by the laws of descent and
distribution, except for certain transfers to the
participant's family members or to entities of which the
participant or his or her family members are the sole
beneficiaries, or to us or Clayton, Dubilier & Rice
Fund V Limited Partnership under their right to purchase
options on termination of employment. In addition, options can
be exercised only by a participant or a participant's
estate after death.
Federal
Income Tax Consequences
The following is a brief description of the
material U.S. federal income consequences generally arising
with respect to awards issued pursuant to the Jafra Cosmetics
International, Inc. Stock Incentive Plan.
The purchase of shares of our common stock
pursuant to the plan does not normally give rise to any income,
gain or loss to the purchaser. However, where the purchased
stock is transferred to a particular participant in connection
with the performance of services, the purchase and ownership of
this stock may give rise, either at the time of purchase or in
the future, to taxable ordinary income in an amount equal to the
excess, if any, of the fair market value of the property over
the purchase price. This income is recognized, and the fair
market value determined, at the time of purchase. We will be
entitled to a deduction in an amount equal to the income
recognized by the participant in the year the income is so
recognized.
The grant of a stock option will generally not
give rise to taxable income to the option holder or entitle us
to a deduction. Upon exercising an option, the option holder
will generally recognize ordinary income in an amount equal to
the excess, if any, of the fair market value of our common stock
on the date of exercise over the exercise price, and we will
generally be entitled to a tax deduction in the same amount in
the year the income is so recognized.
Section 162(m) of the Internal Revenue Code
generally limits the ability of a public corporation to deduct
compensation greater than $1,000,000 paid with respect to a
particular year to an individual who is, on the last day of that
year, the corporation's chief executive officer or one of
its four other most highly compensated executive officers, other
than compensation that is "performance-based" within
the meaning of section 162(m). Under a special rule that
applies to corporations that become public through an initial
public offering, this limitation generally will not apply to
compensation that is paid or equity that is issued pursuant to
the Jafra Cosmetics International, Inc. Stock Incentive Plan
before the first meeting of our stockholders in 2008 at which
directors will be elected.
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In connection with the offering, we expect that
our board will amend the Jafra Cosmetics International, Inc.
Stock Incentive Plan to preclude further grants or purchases
under that plan. All future awards will be made pursuant to the
Jafra S.A. 2004 Omnibus Stock Incentive Plan described below.
Jafra S.A. 2004 Omnibus Stock Incentive
Plan
Prior to the completion of the offering, we
expect that our board will adopt and our shareholders will
approve the Jafra S.A. 2004 Omnibus Stock Incentive Plan, or the
Omnibus Plan. The Omnibus Plan will provide for the award to
eligible participants of (i) stock options, including
incentive stock options (within the meaning of Section 422
of the Code); (ii) restricted stock and restricted units;
(iii) stock appreciation rights; (iv) incentive stock
and incentive units; and (v) deferred shares and
supplemental units.
Awards may be made to any directors, officers or
employees of our company or any of our subsidiaries, including
any prospective employee, and any of our advisors. The number of
employees participating in the Omnibus Plan will vary from year
to year. A total
of                 shares
of our common stock will be available for award under the
Omnibus Plan. The per share exercise price of the options is set
by the compensation committee at the time of grant and may not
be less than (i) fair market value or (ii) par value
$2.00 per share. Shares subject to awards that are forfeited,
canceled or otherwise terminated without the issuance of common
stock under the Omnibus Plan or the Amended and Restated Jafra
Cosmetics International, Inc. Stock Incentive Plan will again be
available for future awards under the Omnibus Plan.
If the employment of a participant is terminated
for any reason, all unvested options will be canceled
immediately and vested options must be exercised within a
particular number of days, which number may vary depending on
the reason for the termination. In the event of a
participant's termination of employment for cause, all
vested and unvested options held by a participant shall be
forfeited and terminated immediately upon such termination of
employment.
Awards under the Omnibus Plan will generally not
be assignable or transferable other than by will or by the laws
of decent and distribution, except for certain transfers to the
participant's family members or to entities of which the
participant or his or her family members are the sole
beneficiaries or owners.
The Omnibus Plan will expire on the day prior to
the first meeting of our stockholders in 2008 at which directors
will be elected. However, the board of directors or our
compensation committee may at any time, and from time to time
amend, modify or terminate the Omnibus Plan. The expiration of
the term of the plan, or any amendment, suspension or
termination will not adversely affect any outstanding award held
by a participant without the consent of the participant.
In the event of a change in control (as defined
in the Omnibus Plan), all outstanding stock options shall, at
the discretion of the compensation committee, become fully
exercisable or be canceled in exchange for a payment in cash
equal to the product of (i) the excess of the change in
control price over the option exercise price, and (ii) the
number of shares of common stock covered by such stock options.
All other awards granted under the Omnibus Plan will become
vested and shall be immediately transferable or payable.
Notwithstanding the foregoing, if the compensation committee
determines before the change in control either that all
outstanding awards of options, stock appreciation rights,
restricted stock, restricted stock units, deferred stock and
supplemental units will be honored or assumed by the acquirer,
or alternative awards with equal or better terms will be made
available, such outstanding awards of options, stock
appreciation rights, restricted stock, restricted stock units,
deferred stock and supplemental units will not be canceled,
their vesting and exercisability will not be accelerated, and
there will be no payment in exchange for such awards. Any
alternative awards offered must generally satisfy the
requirements for alternative awards described under the heading
"Amended and Restated Jafra Cosmetics International, Inc.
Stock Incentive Plan." Alternative awards shall not be made
available for incentive stock or incentive units.
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Federal
Income Tax Consequences
The following is a brief description of the
material U.S. federal income tax consequences generally
arising with respect to awards issued pursuant to the Omnibus
Plan.
The grant of an option will generally not give
rise to tax consequences for the option holder or entitle us to
a deduction. Upon exercising an option, other than an incentive
stock option, the option holder will generally recognize
ordinary income equal to the excess, if any, of the closing
price of the shares acquired on the date of exercise over the
exercise price, and we generally will be entitled to a tax
deduction in the same amount in the year the income is so
recognized. Generally, upon exercise of an incentive stock
option, the participant would not recognize income upon exercise
if the participant (i) does not dispose of the shares
within two years after the date of grant or one year after the
transfer of shares upon exercise, and (ii) is an employee
of the company or a subsidiary thereof from the date of grant
and through and until three months before the exercise date. Any
gain would be taxed to the participant as long-term capital
gain, the Company would not be entitled to a deduction, and the
participant would potentially be subject to the alternative
minimum tax.
With respect to the other awards, upon the
payment of cash or the issuance of shares or other property that
is either not restricted as to transferability or not subject to
a substantial risk of forfeiture, the participant will generally
recognize ordinary income equal to the cash or the fair market
value of shares or other property delivered. The fair market
value of the shares delivered will be the product of the number
of shares delivered and the closing price of a share of common
stock on the date of delivery of the shares. We will be entitled
to a deduction in an amount equal to the ordinary income
recognized by the participant in the year the income is so
recognized.
Section 162(m) of the Internal Revenue Code
generally limits the ability of a public corporation to deduct
compensation greater than $1,000,000 paid with respect to a
particular year to an individual who is, on the last day of that
year, the corporation's chief executive officer or one of
its four other most highly compensated executive officers, other
than compensation that is "performance-based" within
the meaning of section 162(m). Under a special rule that
applies to corporations that become public through an initial
public offering, this limitation generally will not apply to
compensation that is paid pursuant to the Omnibus Plan before
the first meeting of our stockholders in 2008 at which directors
will be elected.
Other Benefit Plans and Arrangements
We maintain the Jafra Cosmetics International,
Inc. 401(k) Savings Plan, an employee savings plan which permits
participants to make voluntary contributions by salary deferrals
pursuant to section 401(k) of the Internal Revenue Code. This
plan allows employees to defer up to 100% of their total
compensation, subject to statutory limitations. Employee
contributions of up to 10% of compensation are matched by us at
the rate of 50 cents per dollar. Employees do not vest in the
employer contribution until they have reached two years of
service, at which time they become fully vested. Except for
leased employees, employees covered by collective bargaining
agreements, non-resident aliens with no U.S. source income and
independent contractors or foreign employees on temporary
assignment in the U.S., all of our employees are eligible to
participate in the 401(k) Plan as of the first enrollment period
after the commencement of employment.
We also maintain a supplemental excess benefit
savings plan, which permits participants whose benefits under
the 401(k) plan have been limited by the provisions of the
Internal Revenue Code to make unlimited voluntary contributions.
Employee contributions are matched on the same basis as under
the 401(k) plan, and the vesting provisions are the same.
Employee and employer contributions under such plan are placed
into a "rabbi" trust exclusively for the uses and
purposes of plan participants. We also maintain a special
supplemental savings plan for non-United States source income
pursuant to which certain employees who have non-United States
source income and whose benefits have been limited by provisions
of the Internal Revenue Code may make additional contributions.
Both the supplemental excess benefit savings plan and the
special supplemental savings plan are intended to be unfunded
plans maintained primarily for the purpose of providing deferred
compensation for a select group of management
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or highly compensated employees as described in
Title I of the Employee Retirement Income Security Act of
1974, as amended.
Insider Participation and Compensation
Committee Interlocks
Mr. Ireland is a principal of CD&R, a
limited partner of Associates V (the general partner of
CD&R Fund V), and a shareholder and a director of
Investment Associates II (a general partner of
Associates V). Pursuant to a consulting agreement, CD&R
receives a fee for advisory, management consulting and
monitoring services to Jafra. As a result of an amendment
effective January 1, 2001, the annual fee received by
CD&R was $1,000,000 for the years ended December 31,
2003, 2002 and 2001. This amendment provides for an annual fee
for ongoing services provided to Jafra. As required by the terms
of our lending arrangements, such fees were determined by
arm's-length negotiation and we believe them to be
reasonable. In addition, the amendment adds to CD&R's
services under the agreement financial advisory, investment
banking and similar services with respect to future proposals
for an acquisition, merger, recapitalization, or other similar
transaction directly or indirectly involving Jafra or any of its
subsidiaries. The fee for such additional services in connection
with future transactions would be an amount equal to 1% of the
transaction value for the transaction to which such fee relates.
Such transaction fees may be increased upon approval of a
majority of the members of our board of directors who are not
Jafra employees, employees of CD&R or any affiliate of
CD&R. The amendment also provides that if any employee of
CD&R is appointed to an executive management position (or a
position of comparable responsibility) in Jafra or any of its
subsidiaries, the annual fee will be increased by an amount to
be determined by CD&R, the amount of such increase not to
exceed 100% of the existing annual fee in effect at that time.
We have also agreed to indemnify the members of the board
employed by CD&R and CD&R against liabilities incurred
under securities laws, liabilities to third parties, and
liabilities relating to the provision by CD&R of advisory
management, consulting and monitoring services.
Prior to 2000, Jafra engaged an entity, in which
CD&R fund has a minority investment, to develop its
e-commerce business. During 2000, Jafra paid such entity fees of
$1,798,000. Jafra terminated this agreement and entered into a
settlement and release agreement with such entity in 2000,
pursuant to which such entity agreed to pay Jafra $500,000 in
quarterly installments, together with interest at 9.5% per annum
through October 2005. At December 31, 2002, the balance was
paid in full.
In connection with the consummation of the May
2003 recapitalization transactions CD&R Fund V received
its proportionate share of the aggregate distribution of
approximately $169.0 million in cash as a result of its
share holdings.
See "Certain Relationships and Related Party
Transactions" for additional information regarding the
transaction described above.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS,
MANAGEMENT AND SELLING STOCKHOLDERS
The following table lists all shares of our
common stock that, as of December 31, 2003, were
beneficially owned by certain stockholders known to us to
beneficially own more than 5% of the outstanding shares of
common stock, each of our directors, each of the named executive
officers listed in the Summary Compensation Table, all of our
directors and named executive officers as a group, and other
selling stockholders. The selling stockholders are offering a
total
of                      shares
of our common stock in this offering, assuming no exercise of
the over-allotment option held by the underwriters. For purposes
of this table, because the selling stockholders may in fact sell
all, some or none of their shares in the offering, no definitive
estimate as to the number of shares that will be held by the
selling stockholders after the offering can be provided and the
following table has been prepared based on the assumption that
all shares offered under this prospectus will be sold. For more
information regarding the terms of our common stock, see
"Description of Capital Stock"; for a description
regarding the over-allotment option, see
"Underwriting"; and for information regarding
transactions and relationships with the following listed
beneficial owners, see "Certain Relationships and Related
Transactions."
Shares Outstanding
Shares To Be Sold
Shares Outstanding
Before the Offering
in the Offering
After the Offering
Number(2)
Percent(3)
Number
Percent
Number
Percent
Name and Address of Beneficial
    Owner(1)
Clayton, Dubilier & Rice Fund V Limited
    Partnership(4)
769,600
92.51
Name of Executive Officers and
    Directors
Donald J. Gogel(5)
—
—
Steven D. Goldstein
2,000
*
Thomas E. Ireland(5)
—
—
Siri Marshall
1,667
*
David A. Novak(5)
—
—
Ann Reese
2,500
*
Edward H. Rensi
2,500
*
Kenneth D. Taylor
500
*
Ronald B. Clark(6)
24,003
2.83
Gonzalo R. Rubio(7)
24,003
2.83
Ralph S. Mason, III(8)
19,037
2.26
Jaime Lopez Guirao(9)
7,857
*
Michael A. DiGregorio(10)
5,517
*
All directors and named executive officers as a
    group (13 persons)(11)
89,584
10.16
*
Less than 1%
(1)
In accordance with Rule 13d-3 under the
    Securities Exchange Act of 1934, as amended, a person is deemed
    a "beneficial owner" of a security if he or she has or
    shares the power to vote or direct the voting of such security
    or the power to dispose or direct the disposition of such
    security. A person is also deemed to be a beneficial owner of
    any securities which that person has the right to acquire
    beneficial ownership of within 60 days. More than one
    person may be deemed to be a beneficial owner of the same
    securities. Each of such stockholders has sole voting and
    investment power as to the shares unless otherwise noted.
(footnotes continued on following
page)
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(2)
Represents shares of common stock beneficially
    owned on December 31, 2003. Unless otherwise noted, each
    person has sole voting and investment power with respect to such
    shares.
(3)
Based upon 831,888 shares of common stock
    outstanding as of December 31, 2003.
(4)
CD&R Associates V Limited Partnership, a
    Cayman Islands exempted limited partnership, is the general
    partner of Clayton, Dubilier & Rice Fund V Limited
    Partnership and has the power to direct Clayton, Dubilier &
    Rice Fund V Limited Partnership as to the voting and
    disposition of shares held by Clayton, Dubilier & Rice
    Fund V Limited Partnership. CD&R Investment
    Associates II, Inc., a Cayman Island exempted company, is
    the managing general partner of CD&R Associates V
    Limited Partnership and has the power to direct CD&R
    Associates V Limited Partnership as to its direction of
    Clayton, Dubilier & Rice Fund V Limited
    Partnership's voting and disposition of the shares held by
    Clayton, Dubilier & Rice Fund V Limited Partnership. No
    person controls the voting and disposition of CD&R
    Investment Associates II, Inc. with respect to the shares
    owned by Clayton, Dubilier & Rice Fund V Limited
    Partnership. Each of CD&R Associates V Limited
    Partnership and CD&R Investment Associates II, Inc.
    expressly disclaims beneficial ownership of the shares owned by
    Clayton, Dubilier & Rice Fund V Limited Partnership.
    The business address for each of Clayton, Dubilier & Rice
    Fund V Limited Partnership, CD&R Associates V
    Limited Partnership and CD&R Investment Associates II,
    Inc. is 1403 Foulk Road, Suite 106, Wilmington,
    Delaware 19803. Three of our directors, Donald J. Gogel, Thomas
    E. Ireland and David A. Novak, are principals of entities
    affiliated with Clayton, Dubilier & Rice Fund V Limited
    Partnership. See "Certain Relationships and Related
    Transactions — Investment Funds Managed by Clayton,
    Dubilier & Rice, Inc." for a description of
    relationships and transactions with Clayton, Dubilier & Rice
    Fund V Limited Partnership and its affiliates and
    associates.
(5)
Does not include shares owned by CD&R
    Fund V.
(6)
Includes 14,839 shares as to which
    Mr. Clark has a right to acquire through the exercise of
    stock options.
(7)
Includes 14,839 shares as to which
    Mr. Rubio has a right to acquire through the exercise of
    stock options.
(8)
Includes 11,769 shares as to which
    Mr. Mason has a right to acquire through the exercise of
    stock options.
(9)
Includes 4,857 shares as to which
    Mr. Guirao has a right to acquire through the exercise of
    stock options.
(10)
Includes 3,807 shares as to which
    Mr. DiGregorio has a right to acquire through the exercise
    of stock options, and excludes 660 shares held by the
    trustee of subtrusts established for the benefit of
    Mr. DiGregorio's children.
(11)
Includes 50,111 shares which the named
    executive officers as a group have a right to acquire through
    the exercise of stock options and excludes 660 shares held
    by trustee of subtrusts established for the benefit of
    Mr. DiGregorio's children.
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CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
The May 2003 Recapitalization
In May 2003 we recapitalized our Mexican
operations and refinanced our then outstanding indebtedness. In
connection with these transactions:
•
We formed Jafra Worldwide as a subsidiary of
    Jafra to act as our intermediate holding company of Jafra US,
    Jafra Mexico and our other businesses.
•
We formed Jafra Distribution (Mexico), an
    affiliate of Jafra Mexico and an indirect wholly-owned
    subsidiary of Jafra Worldwide, to operate our distribution
    business in Mexico and to act as the Mexican borrower under our
    new senior credit facilities and the issuer of the Mexican
    portion of our senior subordinated notes.
•
Jafra US and Jafra Distribution (Mexico) entered
    into new senior credit facilities, consisting of a
    $50.0 million senior secured term loan facility and a
    $40.0 million senior secured revolving credit facility, and
    borrowed the full amount of the term loan. See "Description
    of Our Indebtedness — Senior Credit Facilities".
•
Jafra Distribution (Mexico) and Jafra US issued
    our 10 3/4% Senior Subordinated Notes due 2011, or our
    "10 3/4% Notes", in the respective aggregate
    principal amounts of $120 million and $80 million and
    used a portion of the proceeds from such borrowing, together
    with the term loan, to repay the outstanding indebtedness of
    Jafra US and Jafra Mexico and to consummate other corporate
    restructuring transactions.
•
Jafra US and Jafra Mexico made compensating
    payments in an aggregate amount of approximately
    $10.4 million to holders of options to acquire the capital
    stock of CDRJ Investments (Lux) S.A. and, through a series of
    inter-company transactions, the remaining proceeds from the
    issuance of our 10 3/4% Notes and borrowings under our
    senior credit facilities were paid and distributed to CDRJ
    Investments (Lux) S.A.
•
CDRJ Investments (Lux) S.A. then commenced
    liquidation proceedings and made an initial liquidating
    distribution to our shareholders of approximately
    $157.6 million in cash, of which
    approximately            million
    was paid to senior members of our management.
Prior to the closing of the sale of shares
offered hereby, we expect to make a final liquidating
distribution of up to $20 million in cash to shareholders
of CDRJ Investments (Lux) S.A. We expect to fund this payment by
drawing on the revolving portion of our senior credit facilities.
In addition, the shareholders of CDRJ Investments
(Lux) S.A. will receive one share of our common stock in
exchange for each share of CDRJ Investments (Lux) S.A. held at
this time. Further, each of the outstanding options to acquire
the capital stock of CDRJ Investments (Lux) S.A. has been
converted on a one-for-one basis into options to acquire capital
stock of Jafra. While these options will generally continue to
be governed by the same terms and conditions as prior to the
liquidation, the exercise prices of the outstanding options have
been adjusted downward such that the ratio of the original
exercise price per share of the options to the market value per
share immediately following the May 2003 recapitalization
transactions described above is identical to the ratio of the
original exercise price per share of the options to the market
value per share of the stock of CDRJ Investments (Lux) S.A.
immediately prior to the commencement of the liquidation
process. As a result of these adjustments, the exercise prices
of our outstanding options were reduced from $100, $150 and $210
per share to $39.91, $59.86 and $83.80 per share, respectively.
Prior to the closing of the sale of shares offered hereby, the
liquidation of CDRJ Investments (Lux) S.A. will be completed.
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Investment Funds Managed by Clayton, Dubilier
& Rice, Inc.
Overview.
CD&R
Fund V, which is the largest stockholder of CDRJ Investments
(Lux) S.A., is a private investment fund managed by CD&R.
Amounts contributed to CD&R Fund V by its limited
partners are invested at the discretion of the general partner
in equity or equity-related securities of entities formed to
effect leveraged buy-out transactions and in the equity of
corporations where the infusion of capital, coupled with the
provision of managerial assistance by CD&R, can be expected
to generate returns on investments comparable to returns
historically achieved in leveraged buyout transactions. The
general partner of CD&R Fund V is Associates V,
and the general partners of Associates V are Investment
Associates II, CD&R Investment Associates, Inc. and
CD&R Cayman Investment Associates, Inc. Each of
Mr. Gogel, who is President, Chief Executive Officer and a
director of CD&R; President, Chief Executive Officer, and a
shareholder and a director of Investment Associates II; and
a limited partner of Associates V, Mr. Ireland, who is
a principal of CD&R, a limited partner of Associates V
and a shareholder and a director of Investment
Associates II, and Mr. Novak, who is a principal of
CD&R, a limited partner of Associates V, and a
shareholder of Investment Associates II, is a director of
CDRJ Investments (Lux) S.A. See "Management."
CD&R is a private investment firm that is
organized as a Delaware corporation. CD&R is the manager of
a series of investment funds, including CD&R Fund V.
CD&R generally assists in structuring, arranging financing
for and negotiating the transactions in which the funds it
manages invest. After the consummation of such transactions,
CD&R generally provides advisory, management consulting and
monitoring services to the companies in which its investment
funds have invested during the period of such funds'
investments.
Consulting
Agreement.
Pursuant to a consulting
agreement entered into at the closing of the Acquisition, until
the tenth anniversary of the Acquisition or the date on which
CD&R Fund V no longer has an investment in Jafra or until
the termination by either party with 30 days' notice,
CD&R will receive an annual fee (and reimbursement of
out-of-pocket expenses) for providing advisory, management
consulting and monitoring services to the Jafra group. Such
services include, among others, helping Jafra to establish
effective banking, legal and other business relationships and
assisting management in developing and implementing strategies
for improving the operational, marketing and financial
performance of the Jafra group. The annual fee received by
CD&R was $400,000 for the year ended December 31, 2000.
As of January 1, 2001, the annual fee was increased to
$1.0 million based on an amendment to the consulting
agreement. The annual fee received by CD&R for each of the
years ended December 31, 2001, 2002 and 2003 was
$1.0 million. In addition, the amendment adds to
CD&R's services provided to the Jafra group under the
agreement, financial advisory, investment banking and similar
services with respect to future proposals for an acquisition,
merger, recapitalization, or other similar transaction directly
or indirectly involving Jafra or any of its subsidiaries. The
fee for such additional services in connection with future
transactions would be an amount equal to 1% of the transaction
value for the transaction to which such fee relates. Such
transaction fees may be increased upon approval of a majority of
the members of our board of directors who are not employees of
the Jafra group, CD&R or any affiliate of CD&R. The
amendment also provides that if any employee of CD&R is
appointed to an executive management position (or a position of
comparable responsibility) in Jafra or any of its subsidiaries,
the annual fee will be increased by an amount to be determined
by CD&R, the amount of such increase not to exceed 100% of
the existing annual fee in effect at that time. We have also
agreed to indemnify the members of the board employed by
CD&R and CD&R against liabilities incurred under
securities laws, liabilities to third parties, and liabilities
relating to the provision by CD&R of advisory management,
consulting and monitoring services.
In connection with the liquidation of CDRJ
Investments (Lux) S.A., Jafra Worldwide assumed the obligations
of CDRJ Investments (Lux) S.A. under the consulting agreement.
Indemnification
Agreement.
CD&R, CD&R Fund V
and CDRJ Investments (Lux) S.A. entered into an indemnification
agreement, pursuant to which CDRJ Investments (Lux) S.A. has
agreed to indemnify the members of its board of directors, as
well as CD&R, CD&R Fund V, Associates V,
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Investment Associates II and certain of their
members, partners, associates and affiliates to the fullest
extent allowable under applicable law and to indemnify such
persons against any suits, claims, damages or expenses which may
be made against or incurred by them under applicable securities
laws in connection with offerings of securities of Jafra,
liabilities to third parties arising out of any action or
failure to act by Jafra, and, except in cases of gross
negligence or intentional misconduct, the provision by CD&R
of advisory, management consulting and monitoring services.
In connection with the liquidation of CDRJ
Investments (Lux) S.A., Jafra Worldwide assumed the obligations
of CDRJ Investments (Lux) S.A. under the indemnification
agreements.
Stock
Subscription Agreement.
Stock Subscription
Agreements.
Clayton,
Dubilier & Rice Fund V Limited Partnership owns
769,600 shares of our common stock, which it purchased for
an aggregate purchase price of $76,960,000 pursuant to a Stock
Subscription Agreement, dated as of April 30, 1998.
Pursuant to that agreement, Clayton, Dubilier & Rice
Fund V Limited Partnership may designate all of the members
of our board of directors. Clayton, Dubilier & Rice
Fund V Limited Partnership is also entitled to consult with
us with respect to our operations at any time, to have observers
attend meetings of our board of directors and those of our
subsidiaries, and to receive all our quarterly and annual
financial reports and budgets, as well as other documents. In
addition, the stock subscription agreement imposes certain
restrictions on the transfer of the shares of our common stock
owned by Clayton, Dubilier & Rice Fund V Limited
Partnership.
We have not adopted formal procedures to
specifically protect the interests of our minority stockholders
in relation to future transactions with our principal
stockholders. However, our board of directors has adopted
corporate governance guidelines, which require each director to
avoid taking actions or having interests that might result in a
conflict of interest with our interests. Each director is
required to ethically handle all actual or apparent conflicts of
interest between personal and professional relationships,
including promptly informing the corporate secretary if such a
conflict arises and recusing himself or herself from any
discussion or decision affecting his or her personal interests.
Accordingly, our directors who are employees of Clayton,
Dubilier & Rice Inc., will be required to recuse
themselves from any discussion or decision regarding any
transaction with our principal stockholders. These guidelines do
not, by themselves, prohibit transactions with our principal
stockholders.
Agreements with Our Management
Employment
Agreements.
CDRJ Investments (Lux)
S.A. and Jafra U.S. have entered into employment agreements with
various members of management. See "Management". The
employment agreements of Messrs. Clark and Rubio provide
that each will be a member of our board of directors during the
term of his employment.
In connection with the liquidation of CDRJ
Investments (Lux) S.A., Jafra Worldwide assumed the obligations
of CDRJ Investments (Lux) S.A. under the employment agreements.
Management Stock Subscription
Agreements.
CDRJ Investments (Lux)
S.A. has entered into management stock subscription agreements
with each of our management shareholders. Under the management
stock subscription agreements, participants are not permitted to
transfer shares purchased at any time before an underwritten
public offering of our common stock, led by at least one
underwriter of nationally recognized standing except under
limited circumstances. In addition, any sale or other
disposition must also be made in compliance with any applicable
state and foreign securities laws. Further, if we file a
registration statement under the Securities Act with respect to
an underwritten public offering of the common stock,
participants may not sell or distribute any shares of common
stock to the public during the 20 days before and the
180 days after the effective date of the registration
statement, other than as part of the public offering. The
restrictions on transfer will not continue following a public
offering of our common stock.
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Prior to an initial public offering of our common
stock, under certain circumstances, stockholders can require
CDRJ Investments (Lux) S.A. to purchase their shares of common
stock. Management stockholders are subject to a holding period
of at least seven months from the date such shares were
acquired. In May 2001 and June 2001, respectively, CDRJ
Investments (Lux) S.A. purchased all of the common stock of a
former member of management and a director, consisting of an
aggregate of 2,563 shares. In September 2001, a former
member of management exercised options to purchase
210 shares of common stock, and then requested that CDRJ
Investments (Lux) S.A. purchase all of his common stock,
consisting of 526 shares. In July 2000, a former member of
management exercised options to purchase 158 shares of
common stock, and then requested that CDRJ Investments (Lux)
S.A. purchase all of his common stock, consisting of
632 shares. In November 2000, a former member of management
requested that CDRJ Investments (Lux) S.A. purchase all of his
common stock, consisting of 316 shares. CDRJ Investments
(Lux) S.A. repurchased the shares in 2001 at a total cost of
$772,000, or $250 per share, and the shares in 2000 at a total
cost of $199,000, or $210 per share, which represented the
respective estimated fair market values at the time of the
purchases.
As of February 2004, Jafra is in negotiations
with a former member of management to repurchase all of his
common stock, consisting of 3,476 shares. Simultaneously,
Jafra US is in negotiation to repurchase this former member of
management's 5,463 vested stock options.
In connection with the liquidation of CDRJ
Investments (Lux) S.A., Jafra assumed the obligations of CDRJ
Investments (Lux) S.A. under the management stock subscription
agreements.
Jafra Worldwide is acting as liquidator of CDRJ
Investments (Lux) S.A. In that capacity, Jafra Worldwide will
assume all of CDRJ Investments (Lux) S.A.'s contingent and
unknown liabilities that are not satisfied in liquidation.
Management Loans.
Certain members of management, including named executive
officers, financed a portion of the cash purchase price of the
shares of common stock they acquired through loans from the
Chase Manhattan Bank on market terms. To help members of
management obtain such terms for such financing, CDRJ
Investments (Lux) S.A. fully and unconditionally guaranteed up
to 75% of the purchase price for the shares of common stock
purchased by each such member of management. CDRJ Investments
(Lux) S.A. guaranteed loans for $687,300, $687,300, $545,100,
$225,000 and $230,000 extended to Messrs. Clark, Rubio,
Mason, Guirao, and DiGregorio, respectively. In connection with
our May 2003 recapitalization, management repaid these loans in
full.
Certain Management Stock Purchases and
    Option Grants
In July 2000, a member of management purchased
316 shares of common stock at a purchase price of $150 per
share, which was below the estimated fair value at the time of
purchase of $210 per share. CDRJ Investments (Lux) S.A.
recognized compensation expense of approximately $19,000 at the
time of the purchase. In August 2000, certain members of
management purchased an aggregate of 4,108 shares of the
common stock at a purchase price of $210 per share, which
represented the estimated fair value at the time of the
purchase. During 2000, certain members of management were also
granted options to purchase an aggregate of 8,848 shares of
common stock. In February 2001, certain members of management
purchased an aggregate of 474 shares of the common stock at a
purchase price of $210 per share, which represented the
estimated fair value at the time of the purchase. In September
2001, a former member of management purchased 210 shares of
common stock at a purchase price of $150 per share, which was
below the estimated fair value at the time of the purchase of
$250 per share. CDRJ Investments (Lux) S.A. recognized
compensation expense of approximately $21,000 at the time of the
purchase. During 2001, certain members of management were also
granted options to purchase an aggregate of 948 shares of common
stock.
Prior to 2000, Jafra engaged an entity, in which
a CD&R fund has a minority investment, to develop its
e-commerce business. During 2000, Jafra paid such entity fees of
$1,798,000. Jafra terminated this agreement and entered into a
settlement and release agreement with such entity in 2000,
pursuant to
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which such entity agreed to pay Jafra $500,000 in
quarterly installments, together with interest at 9.5% per annum
through October 2005. At December 31, 2002, the balance was
paid in full.
Registration and Participation
Agreement.
Each holder of shares of our common stock and
options to purchase shares of our common stock, including
executive officers and key employees, are entitled to the
following registration rights for the shares of common stock
held by them or issuable upon exercise of options to purchase
our common stock under a Registration and Participation
Agreement, dated as of May 20, 2003, among CDRJ North
Atlantic (Lux) S.A., Clayton, Dubilier & Rice Fund V Limited
Partnership and the other parties thereto, as amended:
•
holders constituting, at any time prior to our
    initial public offering, at least 50% and thereafter, at least
    20%, of the total shares of these registrable securities may
    request that we use our best efforts to register such securities
    for public resale, and
•
if we register any common stock at any time,
    either for our account or for the account of any stockholder,
    including in connection with this offering, the holders of
    registrable securities are entitled to request that we use our
    best efforts to include the number of their shares of common
    stock, which in the opinion of the underwriters, can be sold.
In most cases, we will bear all registration
expenses (other than underwriting discounts), including the fees
and expenses of counsel to the selling stockholders. Because
only Clayton, Dubilier & Rice Fund V Limited
Partnership holds more than 50% of our outstanding common stock,
it is the only shareholder able to initiate the initial
registration by itself. Further, members of management generally
do not have registration rights under the Registration and
Participation Agreement for shares of our common stock issued
upon exercise of options if we have registered such shares under
the Securities Act.
If we file a registration statement under the
Securities Act with respect to a public offering of our common
stock, no holders of our common stock are permitted to effect
any public sale or distribution of any shares of such stock
during the 20 days before and the 180 days after the
effective date of the registration statement (other than as part
of this offering).
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DESCRIPTION OF OUR INDEBTEDNESS
The following description of our indebtedness is
qualified in its entirety by reference to the relevant credit
facility, indenture and related documents governing the relevant
debt described.
10 3/4% Senior Subordinated Notes due
2011
General.
In May
2003, Jafra US and Jafra Distribution (Mexico) issued the
10 3/4% Notes in an aggregate principal amount of
$200.0 million. The 10 3/4% Notes were issued pursuant
the 10 3/4% Notes Indenture among Jafra US, Jafra
Distribution (Mexico), Jafra Worldwide and U.S. Bank
National Association and mature on May 15, 2011. Interest
on the 10 3/4% Notes is paid semi-annually, on May 15
and November 15 of each year. As of September 30,
2003, $200.0 million aggregate principal amount of the
10 3/4% Notes were outstanding.
Guarantees and
Ranking.
The 10 3/4% Notes are
the general unsecured obligations of Jafra US and Jafra
Distribution (Mexico). The 10 3/4% Notes are guaranteed by
Jafra Worldwide and, in the case of the portion of the
10 3/4% Notes issued by Jafra US, by Jafra Distribution
(Mexico), subject to a 30-day standstill and, in the case of the
portion of the 10 3/4% Notes issued by Jafra Distribution
(Mexico), by Jafra Mexico and its Mexican subsidiaries and,
subject to a 30-day standstill, Jafra US. The 10 3/4% Notes
are subordinated in right of payment to all existing and future
senior debt of Jafra US, Jafra Distribution (Mexico) and Jafra
Worldwide and
pari passu
in right of payment with
any future senior subordinated indebtedness of Jafra US, Jafra
Distribution (Mexico) and Jafra Worldwide. The 10 3/4%
Notes are not entitled to the benefit of any sinking fund.
Optional Redemption.
On or after May 15, 2007, Jafra US and Jafra Distribution
(Mexico) may, on a pro rata basis, redeem all or a part of the
10 3/4% Notes at the redemption prices, expressed as a
percentage of the principal amount, set forth in the table
below, plus accrued and unpaid interest, if redeemed during the
twelve-month period beginning on May 15 of the years
indicated below:
Year
Percentage
2007
105.375
%
2008
102.688
%
2009 and thereafter
100.000
%
In addition, at any time prior to May 15,
2006, Jafra US and Jafra Distribution (Mexico) may redeem, on a
pro rata basis, up to 35% of the originally issued aggregate
principal amount of 10 3/4% Notes at a redemption price of
110.750% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date, with the net cash
proceeds of certain equity offerings of Jafra Worldwide or of
any of its direct or indirect parent corporations, provided that
at least 65% of the originally issued principal amount of the
10 3/4% Notes remains outstanding after the occurrence of
such redemption and the redemption occurs within 180 days
of the closing of such equity offering. We expect to use the net
proceeds to us of the sale of the shares offered by us hereby to
redeem up to 35% of the outstanding 10 3/4% Notes. See
"Use of Proceeds."
Change of Control.
In the event of a change of control, which is defined in the
indenture governing the 10 3/4% Notes, each holder of the
10 3/4% Notes will have the right to require Jafra US and
Jafra Distribution (Mexico) to repurchase all or any part of
such holder's 10 3/4% Notes at a purchase price in
cash equal 101% of the principal amount thereof, plus accrued
and unpaid interest to the date of purchase.
Covenants.
The
indenture governing the 10 3/4% Notes contains certain
covenants that, among other things, limit Jafra Worldwide's
ability and the ability of some of Jafra Worldwide's
subsidiaries to:
•
incur indebtedness or issue preferred shares;
•
pay dividends or make distributions in respect of
    capital stock or to make other restricted payments;
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•
make investments;
•
sell assets;
•
create liens without securing the 10 3/4%
    Notes;
•
consolidate, merge, sell or otherwise dispose of
    all or substantially all of the assets;
•
enter into certain transactions with affiliates;
    and
•
designate subsidiaries as unrestricted
    subsidiaries.
Events of Default.
The indenture governing the 10 3/4% Notes also provides for
events of default which, if any of them occurs, would permit or
require the principal of and accrued interest on such
10 3/4% Notes to become or to be declared to be due and
payable.
Senior Credit Facilities
General.
Our senior
credit facilities consist of a $50.0 million senior secured
term loan facility maturing in 2008 and a $40.0 million
senior revolving credit facility, also maturing in 2008, of
which a portion of which is available in the form of letters of
credit. We currently have available $40.0 million under the
revolving credit facility, which we may borrow subject to
customary conditions precedent. Prior to the closing of this
offering, we expect to borrow up to $20 million under the
revolving credit facility to make a final liquidating
distribution to shareholders of CDRJ Investments (Lux) S.A. See
"Certain Relationships and Related Party Transactions."
Guarantees and
Security.
Jafra Worldwide guarantees
all of our obligations under the senior credit facilities, and
each of Jafra Distribution (Mexico) and Jafra US guarantees the
obligations of the other borrower, subject to a 30-day cure
period prior to enforcement of such guarantee. In addition, all
present or future domestic subsidiaries of Jafra US guarantee
its obligations under the senior credit facilities and Jafra
Mexico and all present or future subsidiaries of Jafra
Distribution (Mexico) and Jafra Mexico guarantee the obligations
of Jafra Distribution (Mexico). The senior credit facilities are
secured by substantially all of our assets.
Interest and Fees.
Amounts outstanding under the senior credit facilities bear
interest at a rate equal to, at our option, (1) an
alternate base rate plus an applicable margin or (2) an
adjusted LIBOR rate plus an applicable margin. These applicable
margins are currently 3.00% and 4.00% for base rate loans and
LIBOR loans, respectively, subject in each case to periodic
adjustment based on certain levels of financial performance.
We also pay (1) commitment fees of 0.50% per
annum (subject to periodic adjustment based on certain levels of
financial performance) on the undrawn amount of the new
revolving credit facility, (2) administrative agent's
fees and (3) letter of credit fees, and we will be
responsible to pay certain participation fees in connection with
the syndication of the new credit facilities.
Voluntary
Prepayments.
We can voluntarily prepay
the loans and reduce commitments, in whole or in part, without
premium or prepayment penalties except for breakage costs
incurred in connection with prepayment during a LIBOR interest
period.
Covenants and Events of
Default.
We are subject to covenants
that, among other things, restrict our ability to incur or
guarantee indebtedness, make investments, loans and advances,
dispose of assets, pay dividends, make acquisitions, enter into
mergers, create liens, enter into certain transactions with
affiliates, make fundamental changes to our businesses and amend
the terms of or prepay certain other indebtedness. In addition,
we are required to maintain certain financial covenants,
including to maintain a maximum ratio of total debt to EBITDA,
to maintain a minimum interest expense ratio and not to exceed a
maximum annual amount of capital expenditures. We are also
subject to customary affirmative covenants and events of default.
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DESCRIPTION OF CAPITAL STOCK
Overview
Set forth below is a summary of certain
information concerning Jafra's share capital and certain
material provisions of Jafra's articles of incorporation
and Luxembourg law on commercial companies in effect as of the
date of this prospectus. This summary contains information that
we consider to be material regarding the share capital of Jafra,
but it does not purport to be complete and is qualified in its
entirety by reference to Jafra's articles of incorporation
and the Luxembourg law on commercial companies.
Jafra has
outstanding            shares
with a par value of $2.00, all of which have been paid in full,
representing a subscribed capital amount of
$               .
The total authorized capital of Jafra, including
the outstanding subscribed capital, is set at
$          ,
consisting of a total
of            shares,
par value $2.00. Pursuant to Jafra's articles of
incorporation, the board of directors has been authorized to
issue further shares so as to bring the total capital of Jafra
up to the total authorized capital in whole or in part from time
to time. The ability of our board of directors to approve the
issuance of further authorized, but unissued, shares of our
common stock will expire on the date which is five years from
the date of publication of our amended articles of incorporation
setting forth Jafra's authorized share capital. Our
shareholders may vote at an extraordinary shareholder meeting to
renew the authorization to issue additional share capital,
provided that no such renewal can specify a term of
authorization of more than five years. Future issuances of our
common stock may be subject to the payment of a 1% Luxembourg
capital duty. Jafra intends to issue additional shares,
including issuances from authorized capital from time to time to
directors and employees of the Jafra group under Jafra S.A. 2004
Omnibus Stock Incentive Plan. Following completion of this
offering, the issued share capital of Jafra will consist
of            shares
(not including additional shares issuable upon exercise of
options held by our directors and employees).
Change of Control Related Provisions of Our
Articles of Incorporation and Luxembourg Law
A number of provisions in our articles of
incorporation and under Luxembourg law may make it more
difficult to acquire control of us. These provisions may have
the effect of discouraging a future takeover attempt not
approved by our board of directors but which individual
stockholders may deem to be in their best interests or in which
stockholders may receive a substantial premium for their shares
over then current market prices. As a result, stockholders who
might desire to participate in such a transaction may not have
an opportunity to do so. In addition, these provisions may
adversely affect the prevailing market price of the shares.
These provisions are intended to:
•
enhance the likelihood of continuity and
    stability in the composition of our board of directors;
•
discourage some types of transactions that may
    involve an actual or threatened change in control of us;
•
discourage certain tactics that may be used in
    proxy fights;
•
ensure that our board of directors will have
    sufficient time to act in what the board believes to be in the
    best interests of us and our stockholders; and
•
encourage persons seeking to acquire control of
    us to consult first with our board to negotiate the terms of any
    proposed business combination or offer.
Meetings of Shareholders
Meetings of shareholders may be either ordinary
or extraordinary. At ordinary meetings, shareholders can decide
on most matters, but they cannot decide matters that entail a
modification of the articles. Only at extraordinary meetings,
for which more stringent quorum and majority conditions apply,
can shareholders modify the articles. Among other things, a
merger, liquidation, transformation of Jafra
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into another form of company, increases (unless
decided by the board of directors within the limits of the
authorized capital) or decreases of share capital or issuance of
a new class of shares would all require modification of the
articles. A quorum of 50% and a vote of two-thirds of the shares
present or represented are required to amend the articles. If
the quorum is not achieved, however, then a second meeting may
be called, at which no quorum is required.
Jafra must hold a general meeting every year at
the place and date indicated in the articles. This annual
general shareholders' meeting is an ordinary meeting.
Annual general shareholders' meetings usually have on their
agenda the approval of the annual accounts and related issues,
such as approval of the management report prepared by the board
and of the report of the statutory auditor, and the use of
profits shown on the balance sheet, including the distribution
of dividends. See "— Dividends" for further
details about Jafra's dividend policy.
Ordinary and extraordinary shareholders'
meetings may be called by the board or by the statutory auditor.
The board and the statutory auditor must convene a meeting if
requested in writing by shareholders representing at least 20%
of the subscribed capital of Jafra.
Voting and Quorum Requirements
Matters brought before ordinary
shareholders' meetings must receive a majority of the votes
cast to pass. Extraordinary meetings, which are required to
amend the articles, require a quorum of at least half of the
outstanding shares and may only act with a vote of two-thirds of
the shares present. If the quorum condition is not fulfilled,
however, a second meeting with the same agenda may be called,
for which the same two-thirds majority condition applies but for
which no quorum is required.
A "change of nationality," for purposes
of Luxembourg law, of Jafra would require approval by all the
shareholders. Such a "change of nationality" would
typically consist of a permanent transfer of its registered
office outside of Luxembourg, but would not include a merger
with a non-Luxembourg company in which the non-Luxembourg
company survives. An increase of any obligations of shareholders
set forth in the articles would also require approval of all
shareholders affected.
Directors
Limitations on Liability and Indemnification
of Directors.
Under Luxembourg law,
civil liability of directors both to the company and to third
parties is generally considered to be a matter of public policy.
It is possible that Luxembourg courts would declare void an
explicit or even implicit contractual limitation on
directors' liability to Jafra. Jafra, however, can validly
agree to indemnify the directors against the consequences of
liability actions brought by third parties (including
shareholders if such shareholders have personally suffered a
damage which is independent of and distinct from the damage
caused to Jafra). The articles contain such an agreement.
Classified Board of Directors, Vacancies and
Removal of Directors.
Our articles of
incorporation provide that our board of directors will be
divided into three classes of even number or nearly even number,
with each class elected for staggered three-year terms expiring
in successive years.
There are no restrictions in the articles or
under Luxembourg law as to nationality, residence or
professional qualifications for directors. There is no age limit
nor are directors required to retire by rotation. Directors may
be removed, at any time with or without cause, at any
shareholders' meeting.
Casual vacancies in our board of directors may be
filled only by our board of directors, provided that any
replacement director appointed by the board shall be approved by
vote of the shareholders at the next shareholder meeting to
occur after such replacement director's appointment. Any
director so appointed and approved to fill such a vacancy will
hold office for the remainder of the full term of the class of
directors in which the vacancy occurred (including a vacancy
created by increasing the size of the board) and until such
director's successor shall have been duly elected and
qualified. No decrease in the number of directors will shorten
the term of any incumbent director.
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Powers of the Board.
The board has wide powers to perform
all acts necessary or desirable for accomplishing Jafra's
aims, subject to the powers reserved to shareholders by
Luxembourg law. The board may delegate daily management to one
or more directors, officers, executives, employees or other
persons, provided that any delegation to a member of the board
has been previously authorized by the shareholders at a general
meeting.
Officers
Under Luxembourg law, an employee of Jafra can
only be liable to Jafra for damages brought about by his or her
willful acts or gross negligence. Any arrangement providing for
the indemnification of officers against claims of Jafra would be
contrary to public policy. Employees are liable to third parties
under general tort law and may enter into arrangements with
Jafra providing for indemnification against third party claims.
An indemnification arrangement can never cover a
willful act or gross negligence.
Dividends
Dividends may only be paid out of the
distributable profits and unrestricted reserves of Jafra as
shown in its audited accounts for the most recently completed
financial year, which would consist of the profit (if any) for
such year and retained earnings from prior years after deduction
for losses carried over from prior years and reserves required
by law or the articles. The Luxembourg law on companies requires
Jafra to set up a reserve equal to 10% of the subscribed capital
by allocating yearly at least 5% of its profits to the reserve
account until it reaches the 10% threshold.
Under Luxembourg law, our board of directors may
pay interim dividends because the articles of incorporation
contain a specific provision to that effect. However, formal and
substantive requirements have to be met in order for Jafra to
pay interim dividends. These include a requirement that we
prepare financial statements showing that funds are available
for distribution. The amount of such distribution may not exceed
the profits earned by Jafra since the end of the last financial
year for which the annual accounts have been approved by the
general shareholders' meeting plus retained earnings and
withdrawals from unrestricted reserves and minus carried-forward
losses and amounts to be mandatorily paid to a reserve account.
No interim dividends may be paid out during the first six months
of the company's accounting year nor before the approval of
the annual accounts of the previous accounting year by a general
shareholders' meeting. The board of directors may not make
a decision to pay an interim dividend at any time more than two
months after the date on which the interim accounts referred to
above have been drawn up.
Our Luxembourg statutory auditor must verify
whether the conditions for the payment of interim dividends are
fulfilled.
If an interim dividend exceeds the dividend set
by the shareholders at the annual ordinary shareholders'
meeting, the excess is deemed an advance payment of the next
dividend.
Dividends may be paid in U.S. dollars or in
shares or otherwise as the board may determine in accordance
with Luxembourg law. Payment of any dividends will be made to
holders of common stock at their addresses in the register
maintained by or on behalf of Jafra. We do not expect to pay
dividends for the foreseeable future. See "Dividend
Policy."
Nonresidents of Luxembourg who hold shares may be
subject to Luxembourg statutory withholding tax in respect of
any cash dividends paid. See "Taxation — Certain
Luxembourg Tax Considerations."
Capital Increases; Preemptive Rights
The subscribed capital and the authorized capital
of Jafra may be increased or reduced by the shareholders at a
shareholders' meeting under the same quorum and majority
requirements applicable to
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an amendment of the articles. The board may issue
shares (up to the amount authorized by the articles) without
shareholder approval, and, if so decided by the board,
shareholders will have no pre-emptive rights in connection with
such issuance.
In the event that preemptive rights are not
disallowed by the board, all shareholders will be notified of
the period during which preemptive rights may be exercised, as
determined by the board. Under Luxembourg law, this period must
be at least 30 days. Preemptive rights are transferable and
may be sold, prior to exercise.
Liquidation Rights
The shareholders of Jafra may dissolve Jafra
under the conditions prescribed for modification of the
articles. If such dissolution were to occur, Jafra would then be
liquidated, and after payment of its debts or consignment of the
sums necessary to pay such debts, the shareholders would be
entitled to the remaining assets of Jafra, in proportion to
their holdings.
Form and Transfer of Shares
Shares may be issued in registered or bearer
form, at the option of the shareholder. Shares which have not
been fully paid up must be in registered form. Shares may be
evidenced at the holder's option in certificates
representing two or more shares.
Title to shares in bearer form passes by delivery
of the certificates evidencing the shares. Transfers of
registered shares require either (i) an inscription of the
transfer in the share register of Jafra signed by the transferor
and the transferee or their respective agents or (ii) a
notification of the transfer by the transferor or the transferee
to Jafra which in turn must record such transfer in the share
register maintained by it or on its behalf. Jafra or its
registrar may also enter the transfer in the register on the
basis of correspondence or other documents that establish the
existence of an agreement between the transferor and the
transferee.
It is generally held that contractual
restrictions on the transfer of shares are legal provided they
do not render the shares inalienable for a prolonged period of
time. Currently, the articles provide that, if the board
determines that a proposed transfer of shares would violate a
restriction on transfer agreed to by the owner of such shares or
its predecessor in interest and brought to the attention of the
board, the board may refuse to record such transfer in the share
register of Jafra (with a provision that such refusal will not
result in a situation where a shareholder is forced to continue
to hold shares for an extended period of time).
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there was no public
market for our common stock.
Sale of Restricted Securities
After this
offering,                 shares
of common stock will be outstanding. Of these shares, all of the
shares sold in this offering will be freely tradable without
restriction under the Securities Act, unless purchased by our
"affiliates" as that term is defined in Rule 144
under the Securities Act. The remaining shares of common stock
that will be outstanding after this offering are
"restricted securities" within the meaning of
Rule 144 and Rule 701 under the Securities Act.
Restricted securities may be sold in the public market only if
they are registered under the Securities Act or are sold
pursuant to an exemption from registration under Rule 144
or Rule 701 under the Securities Act, which are summarized
below. Subject to the lockup agreements described below, shares
held by our affiliates that are not restricted securities or
that have been owned for more than one year may be sold subject
to compliance with Rule 144 of the Securities Act without
regard to the prescribed one-year holding period under
Rule 144.
Stock Options
Upon completion of this offering, we intend to
file one or more registration statements under the Securities
Act to register shares of common stock to be issued under our
stock option plans and, as a result, all shares acquired upon
exercise of stock options and other equity-based awards granted
under these plans will also be freely tradable under the
Securities Act unless purchased by our affiliates. A total
of                 shares
of common stock are reserved for issuance under our benefit
plans.
Lock-Up Arrangements
We and our executive officers and directors, and
each of our existing shareholders prior to this offering, have
agreed with the underwriters, subject to exceptions, not to
(1) offer, sell, contract to sell, pledge, hypothecate,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to
purchase, lend, make any short sale or otherwise transfer or
dispose of, directly or indirectly, any shares of common stock,
any options, rights or warrants to purchase any shares of common
stock or any securities convertible into, exercisable or
exchangeable for or that represent the right to receive shares
of common stock or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of the shares of
common stock or other securities described in (1), for
180 days after the date of this prospectus, except with the
prior written consent of Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Credit Suisse First
Boston LLC. This lock-up provision also applies to common stock
owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later
acquires the power of disposition.
Following the lock-up periods, substantially all
of the shares of our common stock that are restricted securities
or are held by our affiliates as of the date of this prospectus
will be eligible for sale in the public market in compliance
with Rule 144 or Rule 701 under the Securities Act.
Registration and Participation
Agreement
Stockholders currently representing substantially
all of the shares of our common stock will have the right to
require us to register shares of common stock for resale in some
circumstances. See "Certain Relationships and Related Party
Transactions."
Rule 144
In general, under Rule 144, as currently in
effect, beginning 90 days after the date of this
prospectus, any person or persons whose shares are aggregated,
including an affiliate, who has beneficially
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owned shares of our common stock for a period of
at least one year is entitled to sell, within any three-month
period, a number of shares that does not exceed the greater of:
•
1% of the then-outstanding shares of common
    stock; and
•
the average weekly trading volume in the shares
    on the New York Stock Exchange during the four calendar weeks
    preceding the date on which the notice of the sale is filed with
    the Securities and Exchange Commission.
Sales under Rule 144 are also subject to
provisions relating to notice, manner of sale, and the
availability of current public information about us.
Under Rule 144(k), a person who is not
deemed to have been one of our affiliates at any time during the
90 days preceding a sale, and who has beneficially owned
the shares for at least two years, including the holding period
of any prior owner other than an "affiliate," is
entitled to sell the shares without complying with the manner of
sale, public information, volume limitation or notice provisions
of Rule 144.
Rule 701
In general, Rule 701 under the Securities
Act may be relied upon for the resale of our common stock
originally issued by us before our initial public offering to
our employees, directors, officers, consultants or advisers
under written compensatory benefit plans, including our stock
option plans, or contracts relating to the compensation of these
persons. Shares of our common stock issued in reliance on
Rule 701 are "restricted securities" and,
beginning 90 days after the date of this prospectus, may be
sold by non-affiliates subject only to the manner of sale
provisions of Rule 144 and by affiliates under
Rule 144 without compliance with the one-year holding
period, in each case subject to the lockup agreements.
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CERTAIN MATERIAL U.S. FEDERAL INCOME TAX
CONSIDERATIONS
The following is a general discussion of the
principal United States federal income tax considerations
relating to the purchase, ownership and disposition of our
common stock by US Holders (as defined below) that purchase
our common stock in this offering and hold our common stock as
capital assets. This discussion is based on the US-Luxembourg
tax treaty, the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations promulgated thereunder
and administrative and judicial interpretations thereof, all as
in effect and available on the date hereof and all of which are
subject to change, possibly with retroactive effect, or to
different interpretation. This discussion is for general
information only and does not address all of the US federal
income tax considerations that may be relevant to specific
US Holders in light of their particular circumstances or to
US Holders subject to special treatment under US federal income
tax law (such as banks, other financial institutions, insurance
companies, tax-exempt entities, retirement plans, regulated
investment companies, real estate investment trusts,
S corporations, partnerships and other pass-through
entities, persons that received our common stock as compensation
for the performance of services, traders or dealers in
securities or currencies, expatriates subject to
Section 877 of the Code, persons subject to the alternative
minimum tax, persons that hold our common stock as part of a
straddle, hedge or conversion transaction, persons that have a
"functional currency" other than the US dollar or
persons that own (or are deemed to own) 10% or more (by voting
power or value) of our stock). This discussion does not address
any US state or local tax considerations or any US federal
estate, gift or alternative minimum tax considerations.
As used in this discussion, the term "US
Holder" means a beneficial owner of our common stock that
is, for US federal income tax purposes, (i) an individual
who is a citizen or resident of the United States, (ii) a
corporation created or organized in or under the laws of the
United States or of any state or political subdivision thereof
or therein, including the District of Columbia, (iii) an
estate the income of which is subject to US federal income
tax regardless of the source thereof or (iv) a trust with
respect to which a court within the United States is able to
exercise primary supervision over its administration and one or
more US persons have the authority to control all of its
substantial decisions, or certain electing trusts that were in
existence on August 19, 1996 and were treated as domestic
trusts on that date.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSIDERATIONS
APPLICABLE TO THEM RELATING TO THE PURCHASE, OWNERSHIP AND
DISPOSITION OF OUR COMMON STOCK, INCLUDING THE APPLICABILITY OF
US FEDERAL, STATE AND LOCAL TAX LAWS OR NON-US TAX LAWS, ANY
CHANGES IN APPLICABLE TAX LAWS AND ANY PENDING OR PROPOSED
LEGISLATION OR REGULATIONS.
Distributions
Subject to the discussion below under
"— Passive Foreign Investment Company
Considerations," the following rules generally will apply
to any cash distribution made by us on our common stock,
including any Luxembourg taxes withheld from such distribution
as described below.
Any cash distribution made by us on our common
stock will be treated as a dividend includible in the gross
income of a US Holder as ordinary income to the extent of
our current and accumulated earnings and profits, as determined
under US federal income tax principles. To the extent the
amount of such distribution exceeds our current and accumulated
earnings and profits as so computed, it will be treated first as
a non-taxable return of capital to the extent of such US
Holder's adjusted tax basis in such common stock and, to
the extent the amount of such distribution exceeds such adjusted
tax basis, will be treated as gain from the sale or exchange of
such common stock.
Legislation enacted in 2003 (the "2003 Tax
Legislation") reduces to 15% the maximum tax rate for
certain dividends received by certain noncorporate taxpayers
through taxable years beginning on or before December 31,
2008, so long as specified holding period requirements are met.
Dividends received from "qualified foreign
corporations" generally qualify for the reduced rate. A
non-US corporation (other than a foreign personal holding
company, foreign investment company or passive foreign investment
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company) generally will be treated as a qualified
foreign corporation with respect to any dividend paid by such
corporation if the stock with respect to which such dividend is
paid is readily tradable on an established securities market in
the United States. Such markets include the NYSE. Accordingly,
unless we are classified as a foreign personal holding company,
a foreign investment company or a passive foreign investment
company, recipients of dividends with respect to shares of our
common stock that are readily tradable on an established
securities market in the United States should be eligible for
the reduced rate prescribed by the 2003 Tax Legislation.
Special rules apply for purposes of determining
the recipient's investment income (which limits deductions
for investment interest) and foreign income (which may affect
the amount of foreign tax credit) and to certain extraordinary
dividends. Each US Holder that is a noncorporate taxpayer is
urged to consult its own tax advisor regarding the possible
applicability of the reduced rate under the 2003 Tax Legislation
and the related restrictions and special rules.
Dividends paid on our common stock will not be
eligible for the "dividends received" deduction
generally allowed to corporate shareholders with respect to
dividends received from US corporations. A US Holder will
be entitled to claim a foreign tax credit only for foreign taxes
(such as withholding taxes), if any, imposed on dividends paid
to such US Holder, and not for taxes, if any, imposed on us or
on any entity in which we have made an investment. We currently
anticipate that after this offering we will be a "United
States-owned foreign corporation." For so long as we are a
United States-owned foreign corporation, distributions with
respect to shares that are taxable as dividends generally will
be treated as foreign source passive income (or, for
US Holders that are "financial service entities"
as defined in the Treasury Regulations, financial service
income) or US source income for U.S. foreign tax credit
purposes, in proportion to our earnings and profits in the year
of such distribution allocable to foreign and US sources,
respectively. For this purpose, we will be treated as a United
States-owned foreign corporation so long as stock representing
50% or more of our voting power or equity value is owned,
directly, or indirectly, by "United States persons."
The rules relating to foreign tax credits are extremely complex,
and US Holders should consult their own tax advisors with regard
to the availability of a foreign tax credit and the application
of the foreign tax credit to their particular situation. A
US Holder that does not elect to claim a US foreign
tax credit may instead claim a deduction for Luxembourg income
tax withheld, but only for a taxable year in which the
US Holder elects to do so with respect to all foreign
income taxes paid or accrued in such taxable year. Each
US Holder is urged to consult its own tax advisor regarding
whether it should elect to claim US foreign tax credits or
deductions with respect to foreign income taxes paid or accrued
and whether and to what extent it is entitled to claim any
US foreign tax credit.
The US dollar value of any distribution made
by us in a non-US currency should be calculated by reference to
the exchange rate in effect on the date of receipt of such
distribution by the US Holder, regardless of whether the
non-US currency is in fact converted into US dollars. If
the non-US currency so received is converted into US dollars on
the date of receipt, such US Holder generally should not
recognize foreign currency gain or loss on such conversion. If
the non-US currency so received is not converted into
US dollars on the date of receipt, such US Holder will have
a basis in the non-US currency equal to its US dollar value
on the date of receipt. Any gain or loss on a subsequent
conversion or other disposition of the non-US currency generally
will be treated as ordinary income or loss to such
US Holder.
Sale, Exchange or Other Disposition of Our
Common stock
Subject to the discussion below under
"— Passive Foreign Investment Company
Considerations," the following rules generally will apply
to any gain or loss upon a sale, exchange or other disposition
of our common stock.
A US Holder generally will recognize gain or
loss for US federal income tax purposes upon a sale,
exchange or other disposition of our common stock in an amount
equal to the difference between the amount realized from such
sale, exchange or disposition and the US Holder's
adjusted tax basis in such common stock. Such gain or loss
generally will be a capital gain or loss and will be long-term
capital gain (generally taxable at a reduced rate for
noncorporate taxpayers) or loss if, on the date of such sale,
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exchange or disposition, such common stock was
held by such US Holder for more than one year. The deductibility
of capital losses by a US Holder is subject to limitations. In
general, gain or loss recognized by a US Holder on the sale,
exchange or other disposition of our common stock will
constitute gain or loss from sources within the United States
for foreign tax credit limitation purposes.
Passive Foreign Investment Company
Considerations
We believe that we are not currently, and we do
not expect to become, a passive foreign investment company
("PFIC") for US federal income tax purposes. However,
because this determination is made annually at the end of each
of our taxable years and is dependent upon a number of factors,
some of which are beyond our control, including the value of our
assets and the amount and type of our income, there can be no
assurance that we will not become a PFIC or that the
US Internal Revenue Service will agree with our conclusion
regarding our current PFIC status. If we are a PFIC in any year,
US Holders could suffer adverse consequences as discussed below.
In general, a corporation organized outside the
United States will be treated as a PFIC for US federal income
tax purposes in any taxable year in which either (i) at
least 75% of its gross income is "passive income" or
(ii) on average at least 50% of the value of its assets is
attributable to assets that produce passive income or are held
for the production of passive income. Passive income for this
purpose generally includes, among other things, dividends,
interest, royalties, rents and gains from commodities and
securities transactions. In determining whether a foreign
corporation is a PFIC, a pro rata portion of the income and
assets of each corporation in which it owns, directly or
indirectly, at least a 25% interest (by value) is taken into
account.
If we are a PFIC in any year during which a US
Holder owns our common stock, such US Holder could be liable for
additional taxes and interest charges upon certain distributions
by us or upon a sale, exchange or other disposition of our
common stock at a gain, whether or not we continue to be a PFIC.
The tax will be determined by allocating such distributions or
gain ratably to each day of the US Holder's holding
period. The amount allocated to the current taxable year and any
taxable year with respect to which we were not a PFIC will be
taxed as ordinary income (rather than capital gain) earned in
the current taxable year. The amount allocated to other taxable
years will be taxed at the highest marginal rates applicable to
ordinary income for such taxable years and, in addition, an
interest charge will be imposed on the amount of such taxes. In
addition, if we are a PFIC, a person who acquires our common
stock from a decedent will be denied the step-up of the tax
basis for US federal income tax purposes for such common
stock to fair market value at the date of such decedent's
death which would otherwise be available with respect to a
decedent dying in any year other than 2010, and, instead, such
person will have a tax basis equal to the lower of the fair
market value or such decedent's tax basis.
The above rules do not apply if a
"mark-to-market" election is available and a
US Holder validly makes such an election. If such election
is made, such US Holder generally will be required to take
into account the difference, if any, between the fair market
value and its adjusted tax basis in our common stock at the end
of each taxable year as ordinary income or ordinary loss (to the
extent of any net mark-to market gains previously included in
income). In addition, any gain from a sale, exchange or other
disposition of our common stock will be treated as ordinary
income, and any loss will be treated as ordinary loss (to the
extent of any net mark-to-market gains previously included in
income). A mark-to-market election is available to a
US Holder only if our common stock are considered
"marketable stock" for these purposes. Generally,
stock will be considered marketable stock if it is
"regularly traded" on a "qualified exchange"
within the meaning of applicable US Treasury regulations. A
class of stock is regularly traded during any calendar year
during which such class of stock is traded, other than in de
minimis quantities, on at least 15 days during each
calendar quarter. The NYSE is a qualified exchange.
The above rules also would not apply if a
US Holder is eligible for and timely makes a valid
"QEF election." If a QEF election is made, such
US Holder generally will be required to include in income
on a current basis its pro rata share of the ordinary income and
net capital gains of the PFIC. In order for a US Holder to
be able to make a QEF election, we would be required to provide
such
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US Holder with certain information. We have
not determined whether we will provide US Holders with the
required information, so no assurance can be given that a QEF
election will be available.
Prospective investors should consult their own
tax advisors regarding the US federal income tax
consequences of an investment in a PFIC.
Reportable Transaction Reporting
Under certain US Treasury regulations,
US Holders that participate in "reportable
transactions" (as defined in the regulations) must attach
to their US federal income tax returns a disclosure
statement on Form 8886. US Holders should consult
their own tax advisors as to the possible obligation to file
Form 8886 with respect to the purchase, ownership or
disposition of our common stock, or any related transaction,
including without limitation, the disposition of any non-US
currency received as a dividend or as proceeds from the sale of
our common stock.
Backup Withholding Tax and Information
Reporting Requirements
A US Holder of common stock may be subject
to US federal backup withholding tax at applicable rates
(currently, at a rate of 28%) with respect to payments made on,
or proceeds from the sale, exchange or other disposition of, our
common stock, unless the holder (i) is an entity (including
corporations, tax-exempt corporations and certain qualified
nominees) that is exempt from withholding and, when required,
demonstrates this fact, or (ii) provides its taxpayer
information number ("TIN") (which for an individual
would generally be the holder's Social Security number),
certifies that the TIN provided is correct and that the holder
has not been notified by the IRS that it is subject to backup
withholding due to underreporting of interest or dividends, and
otherwise complies with applicable requirements of the backup
withholding rules. In addition, such payments received by US
Holders that are not corporations, tax-exempt organizations or
qualified nominees may be subject to information reporting
requirements.
Each US Holder is urged to consult its own
tax advisors regarding the possible applicability of
US federal backup withholding tax and information reporting
rules with respect to payments made on, or proceeds from the
sale, exchange or other disposition of, our common stock.
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CERTAIN MATERIAL LUXEMBOURG TAX
CONSIDERATIONS
The following discussion is for general
information only. Each purchaser is strongly urged to consult
with its own tax advisors to determine possible Luxembourg tax
consequences of a purchase of common stock.
The following summary outlines certain Luxembourg
tax consequences to a person who has never been a resident of
Luxembourg, who does not have a permanent establishment in
Luxembourg, will not hold the common stock in connection with
the conduct of a business in Luxembourg and who at no time has a
"significant interest" in Jafra within the meaning of
applicable Luxembourg tax laws (generally greater than 10%
equity ownership, including stock held by certain family
members) (a "Non-Resident Holder") with respect to the
ownership and disposition of common stock. It does not examine
tax consequences to Luxembourg residents or, to some extent,
former residents.
Sale or Other Disposition of Common
Stock
Non-Resident Holders will not be subject to
income or other taxes imposed by Luxembourg in respect of gains
realized on the sale, exchange or other disposition of common
stock.
Payment of Dividends
Dividends paid on common stock to Non-Resident
Holders are subject to a withholding tax of 20%. Under certain
circumstances, European Union Non-Resident Holders may benefit
from an exemption of withholding tax. Reductions of the
withholding rate may also be provided by tax treaties. The
current income tax treaty between the United States and
Luxembourg generally reduces the rate of withholding for certain
eligible holders to 15%, provided that the holder is entitled to
claim treaty benefits.
Tax must initially be withheld at the non-treaty
rate (currently 20%) and Non-Resident Holders must then submit a
claim for a refund of tax representing the difference between
the tax actually withheld and that due by applying the lower
treaty rate. Certain tax treaties (including the US-Luxembourg
tax treaty), however, provide for a reduced rate of withholding
at the applicable treaty rate. Refund claims must be submitted
within two years of the dividend payment date and are generally
processed within three months. Claims for application of the
lower treaty rate or refund of withholding tax must be made on
an appropriate claim form and be certified by the tax
authorities in the Non-Resident Holder's country of
residence.
Inheritance and Other Taxes
No inheritance tax is payable by a Non-Resident
Holder of common stock except if the deceased holder was a
resident of Luxembourg at the time of death.
*          *          *
The above description is not intended to
constitute a complete analysis of all tax consequences relating
to acquisition, ownership and disposition of common stock.
Prospective purchasers should consult their tax advisors
concerning the tax consequences of their particular situations.
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UNDERWRITING
We intend to offer the shares in the United
States through the underwriters. Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Credit Suisse First Boston LLC are
acting as representatives for the underwriters named below.
Subject to the terms and conditions described in a purchase
agreement among us, the selling stockholders and the
underwriters, we and the selling stockholders have agreed to
sell to the underwriters, and the underwriters severally have
agreed to purchase from us and the selling stockholders, the
number of shares listed opposite their names below.
Number of
Underwriter
Shares
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Credit Suisse First Boston LLC
Banc of America Securities LLC
Total
The underwriters have agreed to purchase all of
the shares sold under the purchase agreement if any of these
shares are purchased, other than those shares covered by the
over-allotment option described below. If an underwriter
defaults, the purchase agreement provides that the purchase
commitments of the non-defaulting underwriters may be increased
or the purchase agreement may be terminated.
We and the selling stockholders have agreed to
indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, and to
contribute to payments the underwriters may be required to make
in respect of those liabilities.
The underwriters are offering the shares, subject
to prior sale, when, as and if issued to and accepted by them,
subject to approval of legal matters by their counsel, including
the validity of the shares, and other conditions contained in
the purchase agreement, such as the receipt by the underwriters
of officer's certificates and legal opinions. The
underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
Commissions and Discounts
The representatives have advised us and the
selling stockholders that the underwriters propose initially to
offer the shares to the public at the initial public offering
price listed on the cover page of this prospectus, and to
dealers at that price less a concession not in excess of
$          per
share. The representatives may allow, and the dealers may
reallow, a discount not in excess of
$          per
share to other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
The following table shows the public offering
price, underwriting discount and proceeds before expenses to
Jafra and the selling stockholders. The information assumes
either no exercise or full exercise by the underwriters of their
over-allotment options.
Per Share
Without Option
With Option
Public offering price
$
$
$
Underwriting discount
$
$
$
Proceeds, before expenses, to Jafra S.A.
$
$
$
Proceeds, before expenses, to the selling
    stockholders
$
$
$
The expenses of the offering, not including the
underwriting discount, are estimated at
$          and
are payable by Jafra S.A.
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Over-allotment Option
The selling stockholders have granted options to
the underwriters to purchase up
to                     additional
shares at the public offering price less the underwriting
discount. The underwriters may exercise these options for
30 days from the date of this prospectus solely to cover
any over-allotments. If the underwriters exercise these options,
each underwriter will be obligated, subject to conditions
contained in the purchase agreement, to purchase a number of
additional shares proportionate to that underwriter's
initial amount reflected in the above table.
Reserved Shares
At our request, the underwriters have reserved
for sale, at the initial public offering price, up
to                    shares
offered by this prospectus for sale to some of our directors,
officers, employees, consultants and related persons. If these
persons purchase reserved shares, this will reduce the number of
shares available for sale to the general public. Any reserved
shares that are not orally confirmed for purchase within one day
of the pricing of the offering will be offered by the
underwriters to the general public on the same terms as the
other shares offered by this prospectus.
No Sales of Similar Securities
We and the selling stockholders and our officers
and directors have agreed, with exceptions, not to sell or
transfer any common stock for 180 days after the date of
this prospectus without first obtaining the written consent of
the representatives. Specifically, we and these other
individuals have agreed not to directly or indirectly
•
offer, pledge, sell, or contract to sell any
    common stock,
•
sell any option or contract to purchase any
    common stock,
•
purchase any option or contract to sell any
    common stock,
•
grant any option, right or warrant for the sale
    of any common stock,
•
lend or otherwise dispose of or transfer any
    common stock,
•
request or demand that we file a registration
    statement related to the common stock, or
•
enter into any swap or other agreement that
    transfers, in whole or in part, the economic consequence of
    ownership of any common stock whether any such swap or
    transaction is to be settled by delivery of shares or other
    securities, in cash or otherwise.
This lockup provision applies to common stock and
to securities convertible into or exchangeable or exercisable
for or repayable with common stock. It also applies to common
stock owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later
acquires the power of disposition.
New York Stock Exchange Listing
We intend to apply to list the shares on the New
York Stock Exchange under the symbol "JFA". In order
to meet the requirements for listing the shares on that
exchange, the underwriters have undertaken to sell a minimum
number of shares to a minimum number of beneficial owners.
Before this offering, there has been no public
market for our common stock. The initial public offering price
will be determined through negotiations among us, the selling
stockholders and the representatives. In addition to prevailing
market conditions, the factors to be considered in determining
the initial public offering price are:
•
the valuation multiples of publicly traded
    companies that the representatives believe to be comparable to
    us,
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•
our financial information,
•
the history of, and the prospects for, our
    company and the industry in which we compete,
•
an assessment of our management, its past and
    present operations, and the prospects for, and timing of, our
    future revenues,
•
the present state of our development, and
•
the above factors in relation to market values
    and various valuation measures of other companies engaged in
    activities similar to ours.
An active trading market for the shares may not
develop. It is also possible that after the offering the shares
will not trade in the public market at or above the initial
public offering price.
The underwriters do not expect to sell more than
5% of the shares in the aggregate to accounts over which they
exercise discretionary authority.
Price Stabilization, Short Positions and
Penalty Bids
Until the distribution of the shares is
completed, SEC rules may limit underwriters and selling group
members from bidding for and purchasing our common stock.
However, the representatives may engage in transactions that
stabilize the price of the common stock, such as bids or
purchases to peg, fix or maintain that price. These transactions
may be effected on the New York Stock Exchange or otherwise.
If the underwriters create a short position in
the common stock in connection with the offering, i.e., if they
sell more shares than are listed on the cover of this
prospectus, the representatives may reduce that short position
by purchasing shares in the open market. The representatives may
also elect to reduce any short position by exercising all or
part of the over-allotment option described above. Purchases of
the common stock to stabilize its price or to reduce a short
position may cause the price of the common stock to be higher
than it might be in the absence of such purchases.
The representatives may also impose a penalty bid
on underwriters and selling group members. This means that if
the representatives purchase shares in the open market to reduce
the underwriter's short position or to stabilize the price
of such shares, they may reclaim the amount of the selling
concession from the underwriters and selling group members who
sold those shares. The imposition of a penalty bid may also
affect the price of the shares in that it discourages resales of
those shares.
Neither we nor any of the underwriters makes any
representation or prediction as to the direction or magnitude of
any effect that the transactions described above may have on the
price of the common stock. In addition, neither we nor any of
the underwriters makes any representation that the
representatives will engage in these transactions or that these
transactions, once commenced, will not be discontinued without
notice.
No Public Offering Outside of the United
States
No action has been or will be taken in any
jurisdiction (except in the United States) that would permit a
public offering of the shares of common stock, or the
possession, circulation or distribution of this prospectus or
any other material relating to our company, the selling
stockholders or shares of our common stock in any jurisdiction
where action for that purpose is required. Accordingly, the
shares of our common stock may not be offered or sold, directly
or indirectly, and neither this prospectus nor any other
offering material or advertisements in connection with the
shares of common stock may be distributed or published, in or
from any country or jurisdiction except in compliance with any
applicable rules and regulations of any such country or
jurisdiction.
Other Relationships
Certain of the underwriters and their affiliates
have engaged in, and may in the future engage in, investment
banking and other commercial dealings in the ordinary course of
business with us. They have received customary fees and
commissions for these transactions. In particular, Merrill
Lynch, Pierce,
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Fenner & Smith Incorporated and Credit
Suisse First Boston LLC served as the initial purchasers of our
10 3/4% Notes in connection with the May 2003
recapitalization. In addition, an affiliate of Merrill Lynch,
Pierce, Fenner & Smith Incorporated serves as joint
lead arranger and syndication agent, and an affiliate of Credit
Suisse First Boston LLC serves as joint lead arranger and
administrative agent, under our existing senior credit
facilities. Each such affiliate is currently a lender under such
facilities. Also, an affiliate of Banc of America Securities LLC
provides certain credit services to us, including in respect of
foreign currency transactions.
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NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the common stock in Canada is
being made only on a private placement basis exempt from the
requirement that we and the selling stockholders prepare and
file a prospectus with the securities regulatory authorities in
each province where trades of common stock are made. Any resale
of the common stock in Canada must be made under applicable
securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made under
available statutory exemptions or under a discretionary
exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the common stock.
Representations of Purchasers
By purchasing the common stock in Canada and
accepting a purchase confirmation, a purchaser is representing
to us, the selling stockholders and the dealer from whom the
purchase confirmation is received that
•
the purchaser is entitled under applicable
    provincial securities laws to purchase the common stock without
    the benefit of a prospectus qualified under those securities
    laws,
•
where required by law, that the purchaser is
    purchasing as principal and not as agent, and
•
the purchaser has reviewed the text above under
    Resale Restrictions.
Rights of Action — Ontario
Purchasers Only
Under Ontario securities legislation, a purchaser
who purchases a security offered by this prospectus during the
period of distribution will have a statutory right of action for
damages, or while still the owner of the shares, for rescission
against us and the selling stockholders in the event that this
prospectus contains a misrepresentation. A purchaser will be
deemed to have relied on the misrepresentation. The right of
action for damages is exercisable not later than the earlier of
180 days from the date the purchaser first had knowledge of
the facts giving rise to the cause of action and three years
from the date on which payment is made for the shares. The right
of action for rescission is exercisable not later than
180 days from the date on which payment is made for the
shares. If a purchaser elects to exercise the right of action
for rescission, the purchaser will have no right of action for
damages against us or the selling stockholders. In no case will
the amount recoverable in any action exceed the price at which
the shares were offered to the purchaser and if the purchaser is
shown to have purchased the securities with knowledge of the
misrepresentation, we and the selling stockholders will have no
liability. In the case of an action for damages, we and the
selling stockholders will not be liable for all or any portion
of the damages that are proven to not represent the depreciation
in value of the shares as a result of the misrepresentation
relied upon. These rights are in addition to, and without
derogation from, any other rights or remedies available at law
to an Ontario purchaser. The foregoing is a summary of the
rights available to an Ontario purchaser. Ontario purchasers
should refer to the complete text of the relevant statutory
provisions.
Enforcement of Legal Rights
All of our directors and officers as well as the
experts named herein and the selling stockholders may be located
outside of Canada and, as a result, it may not be possible for
Canadian purchasers to effect service of process within Canada
upon us or those persons. All or a substantial portion of our
assets and the assets of those persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a
judgment against us or those persons in Canada or to enforce a
judgment obtained in Canadian courts against us or those persons
outside of Canada.
Taxation and Eligibility for
Investment
Canadian purchasers of common stock should
consult their own legal and tax advisors with respect to the tax
consequences of an investment in the common stock in their
particular circumstances and about the eligibility of the common
stock for investment by the purchaser under relevant Canadian
legislation.
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LEGAL MATTERS
The validity of the issuance of the shares
offered by this prospectus will be passed upon for us by
Debevoise & Plimpton LLP, New York, New York and certain
other matters will be passed upon for us by Bonn Schmitt
Steichen, Luxembourg. Franci J. Blassberg, Esq., a member
of Debevoise & Plimpton LLP, is married to Joseph L.
Rice, III, who is a principal of CD&R. The underwriters
have been represented by Cravath, Swaine & Moore LLP.
EXPERTS
The consolidated financial statements of CDRJ
North Atlantic (Lux) S.àr.l. and subsidiaries as of
December 31, 2002 and for the year then ended appearing in
this prospectus and the related financial statement schedule
appearing elsewhere in this registration statement have been
audited by Ernst & Young LLP, independent auditors, as set
forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of CDRJ North Atlantic
(Lux) S.àr.l. and subsidiaries as of December 31, 2001
and for each of the two years in the period ended
December 31, 2001 included in this prospectus and the
related financial statement schedule included elsewhere in this
registration statement have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports
of such firm given upon their authority as experts in accounting
and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration
statement on Form S-1 under the Securities Act for the
registration of the common stock represented by the shares
offered by this prospectus. This prospectus, which is a part of
the registration statement, does not contain all of the
information included in the registration statement. Any
statement made in this prospectus concerning the contents of any
contract, agreement or other document is not necessarily
complete. For further information regarding our company and the
common stock offered by this prospectus, please refer to the
registration statement, including its exhibits. If we have filed
any contract, agreement or other document as an exhibit to the
registration statement, you should read the exhibit for a more
complete understanding of the documents or other matters
involved.
Upon consummation of this offering, we will be
required to file annual and quarterly reports with the SEC. Our
former parent, CDRJ Investments (Lux) S.A., filed annual and
quarterly reports and other information with the SEC from
January 1999 through the fiscal quarter ended March 31,
2003, and our subsidiary, Jafra Worldwide Holdings (Lux)
S.àr.l., files annual and quarterly reports and other
information with the SEC. The public may read and copy any
reports or other information that we or Jafra Worldwide file
with the SEC or that CDRJ Investments (Lux) S.A. filed with the
SEC at the SEC's public reference room, Room 1024 at
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C.
20549, or at the SEC's regional offices located at
233 Broadway, New York, New York 10279, and
Suite 1400, 500 West Madison Street, Chicago, Illinois
60661. The public may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330.
These documents are also available to the public at the web site
maintained by the SEC at http://www.sec.gov. You may also obtain
a copy of the registration statement at no cost by writing or
telephoning us at the following address:
Jafra S.A.
c/o Jafra Cosmetics International, Inc.
2451 Townsgate Road
Westlake Village, CA 91361
(805) 449-3000
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INDEX TO FINANCIAL STATEMENTS
Page
Audited Financial Statements
Consolidated Financial Statements —
    CDRJ North Atlantic (Lux) S.àr.l. and
    Subsidiaries
Independent Auditors' Reports
F-2
Consolidated Balance Sheets — As of
    December 31, 2001 and 2002
F-4
Consolidated Statements of Income — For
    the years ended December 31, 2000, 2001 and 2002
F-5
Consolidated Statements of Stockholder's
    Equity — For the years ended December 31, 2000,
    2001 and 2002
F-6
Consolidated Statements of Cash Flows —
    For the years ended December 31, 2000, 2001 and 2002
F-7
Notes to Consolidated Financial Statements
F-8
Unaudited Financial Statements
Consolidated Financial Statements —
    CDRJ North Atlantic (Lux) S.àr.l. and
    Subsidiaries
Consolidated Balance Sheets — As of
    December 31, 2002 and September 30, 2003
F-33
Consolidated Statements of Operations —
    For nine months ended September 30, 2002 and 2003
F-34
Consolidated Statements of Cash Flows —
    For nine months ended September 30, 2002 and 2003
F-35
Notes to Consolidated Financial Statements
F-36
F-1
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
CDRJ North Atlantic (Lux) S.àr.l.
Luxembourg
We have audited the accompanying consolidated
balance sheet of CDRJ North Atlantic (Lux) S.àr.l. and
subsidiaries (the "Company") as of December 31,
2002, and the related consolidated statements of income,
stockholder's equity, and cash flows for the year then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with
auditing standards generally accepted in the United States.
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 audit
provides a reasonable basis for our opinion.
In our opinion, such consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of CDRJ North Atlantic (Lux)
S.àr.l. and subsidiaries as of December 31, 2002, and
the results of their operations and their cash flows for the
year then ended, in conformity with accounting principles
generally accepted in the United States.
As discussed in Note 2 to the consolidated
financial statements, effective January 1, 2002, the
Company adopted Statement of Financial Accounting Standards
No. 142.
/s/ ERNST & YOUNG, LLP
Los Angeles, California
February 11, 2004
F-2
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
CDRJ North Atlantic (Lux) S.àr.1.
Luxembourg
We have audited the accompanying consolidated
balance sheet of CDRJ North Atlantic (Lux) S.àr.1. and
subsidiaries (the "Company") as of December 31,
2001, and the related consolidated statements of income,
stockholder's equity, and cash flows for each of the two
years in the period ended December 31, 2001. These
financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. 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 referred to above present fairly, in all material
respects, the financial position of CDRJ North Atlantic (Lux)
S.àr.1. and subsidiaries as of December 31, 2001 and
the results of their operations and their cash flows for each of
the two years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the
United States of America.
/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
February 12, 2004
F-3
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
December 31,
2001
2002
ASSETS
Current assets:
Cash and cash equivalents
$
5,646
$
26,757
Receivables, less allowances for doubtful
    accounts of $7,133 in 2001 and $8,213 in 2002
42,578
40,205
Inventories
38,597
33,573
Prepaid income taxes
—
258
Receivables from affiliate
824
822
Prepaid expenses and other current assets
7,581
4,846
Deferred income taxes
55
—
Current assets from discontinued operations
5,584
3,653
Total current assets
100,865
110,114
Property and equipment, net
58,981
60,395
Other assets:
Goodwill
70,653
66,108
Trademarks
50,560
44,570
Deferred financing fees and other, net
10,736
7,796
Total
$
291,795
$
288,983
LIABILITIES AND STOCKHOLDER'S
    EQUITY
Current liabilities:
Current portion of long-term debt
$
6,188
$
6,489
Accounts payable
25,981
18,215
Accrued liabilities
40,480
44,403
Income taxes payable
7,099
4,911
Deferred income taxes
4,094
2,073
Current liabilities from discounted operations
992
860
Total current liabilities
84,834
76,951
Long-term debt
86,901
77,894
Deferred income taxes
20,311
21,186
Non-current payable to affiliate
10
16
Other long-term liabilities
3,088
3,787
Total liabilities
195,144
179,834
Commitments and contingencies
—
—
Stockholder's equity:
Quotas par value $100; 150 shares authorized,
    issued and outstanding
15
15
Additional paid-in capital
83,618
83,618
Retained earnings
18,984
37,784
Accumulated other comprehensive loss
(5,966
)
(12,268
)
Total stockholder's equity
96,651
109,149
Total
$
291,795
$
288,983
See accompanying notes to consolidated financial
statements.
F-4
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
Years Ended December 31,
2000
2001
2002
Net sales
$
310,467
$
365,429
$
382,644
Cost of sales
76,645
84,259
90,259
Gross profit
233,822
281,170
292,385
Selling, general and administrative expenses
188,807
224,765
233,739
Restructuring and impairment charges
2,626
—
—
Income from operations
42,389
56,405
58,646
Other income (expense):
Exchange loss, net
(11,647
)
(9,554
)
(10,576
)
Interest expense, net
(15,705
)
(13,351
)
(11,452
)
Loss on early extinguishment of debt
(510
)
—
—
Other, net
1,595
(102
)
72
Income from continuing operations before income
    taxes and cumulative effect of accounting change
16,122
33,398
36,690
Income tax expense
9,713
17,343
16,204
Income from continuing operations before
    cumulative effect of accounting change
6,409
16,055
20,486
Loss on discontinued operations, net of income
    tax expense of $26 in 2000, $77 in 2001 and $65 in 2002
(57
)
(185
)
(1,442
)
Income before cumulative effect of accounting
    change
6,352
15,870
19,044
Cumulative effect of accounting change, net of
    income tax expense of $82 in 2001 and $0 in 2002
—
126
(244
)
Net income
$
6,352
$
15,996
$
18,800
See accompanying notes to consolidated financial
statements.
F-5
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S
EQUITY
(In thousands, except for shares)
Years Ended December 31,
2000
2001
2002
Shares
Amount
Shares
Amount
Shares
Amount
Quotas:
Balance, beginning of year
150
$
15
150
$
15
150
$
15
Balance, end of year
150
15
150
15
150
15
Additional Paid-in Capital:
Balance, beginning of year
82,717
83,618
83,618
Contribution of equity
901
—
—
Balance, end of year
83,618
83,618
83,618
Retained Earnings:
Balance, beginning of year
(3,364
)
2,988
18,984
Net income
6,352
15,996
18,800
Balance, end of year
2,988
18,984
37,784
Accumulated Other Comprehensive
    Loss:
Balance, beginning of year
(3,855
)
(5,572
)
(5,966
)
Net unrealized and deferred realized losses on
    derivatives
—
(3,746
)
(264
)
Tax benefit on unrealized and deferred realized
    losses on derivatives
—
1,311
92
Currency translation adjustments
(1,717
)
2,041
(6,130
)
Balance, end of year
(5,572
)
(5,966
)
(12,268
)
Total Stockholder's Equity
150
$
81,049
150
$
96,651
150
$
109,149
Comprehensive Income:
Net income
$
6,352
$
15,996
$
18,800
Unrealized and deferred realized losses on
    derivatives
—
(5,504
)
(4,192
)
Reclassified to exchange loss
—
797
1,167
Reclassified to cost of sales
—
961
2,761
Tax benefit on unrealized and deferred realized
    losses on derivatives
—
1,311
92
Currency translation adjustments
(1,717
)
2,041
(6,130
)
Total Comprehensive Income
$
4,635
$
15,602
$
12,498
See accompanying notes to consolidated financial
statements.
F-6
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
Years Ended December 31,
2000
2001
2002
Cash flows from operating
    activities:
Net income from continuing operations
$
6,409
$
16,181
$
20,242
Cumulative effect of accounting change, net of
    taxes
—
(126
)
244
Income from continuing operations before
    cumulative effect of accounting change
6,409
16,055
20,486
Loss (gain) on sale of property and equipment
150
69
(76
)
Depreciation and amortization
7,497
7,461
5,506
Provision for uncollectible accounts receivable
5,936
9,323
12,376
Amortization of deferred financing fees
1,940
1,434
1,405
Asset impairment charge
1,019
—
—
Unrealized foreign exchange and derivative losses
    (gains)
2,918
(683
)
8,362
Deferred realized foreign exchange gains (losses)
—
(827
)
181
Deferred income taxes
3,430
3,913
587
Changes in operating assets and liabilities:
Receivables
(10,509
)
(15,578
)
(14,404
)
Inventories
(7,727
)
(933
)
1,013
Prepaid expenses and other current assets
(1,569
)
2,777
5,586
Other assets
(844
)
276
1,810
Accounts payable and accrued liabilities
11,981
(967
)
1,683
Income taxes payable/prepaid
12,206
7,377
(1,138
)
Other long-term liabilities
57
722
699
Receivable from affiliate
216
(776
)
—
Net operating activities of discontinued
    operations
(554
)
193
(618
)
Net cash provided by operating activities
32,556
29,836
43,458
Cash flows from investing
    activities:
Proceeds from sale of property and equipment
675
93
225
Purchases of property and equipment
(6,712
)
(11,171
)
(10,980
)
Other
(760
)
(408
)
(531
)
Net investing activities of discontinued
    operations
(393
)
(201
)
—
Net cash used in investing activities
(7,190
)
(11,687
)
(11,286
)
Cash flows from financing
    activities:
Repurchase of subordinated notes
(10,597
)
—
—
Repayments under term loan facility
(3,500
)
(4,500
)
(6,125
)
Net repayments under revolving credit facility
(10,500
)
(12,700
)
(1,800
)
Net (repayments) borrowings of bank debt
346
1,263
(781
)
Contribution of capital
901
—
—
Net cash used in financing activities
(23,350
)
(15,937
)
(8,706
)
Effect of exchange rate changes on cash
(848
)
(1,185
)
(2,355
)
Net increase in cash and cash equivalents
1,168
1,027
21,111
Cash and cash equivalents at beginning of year
3,451
4,619
5,646
Cash and cash equivalents at end of year
$
4,619
$
5,646
$
26,757
Supplemental disclosures of cash flow
    information
Cash paid (received) during the year for:
Interest
15,027
11,538
10,163
Income taxes
(5,615
)
5,319
8,264
At December 31, 2001, the Company had
deferred losses of $2.9 million on foreign currency forward
contracts recorded in accrued liabilities and other
comprehensive income. Additionally, the related deferred income
tax benefit of $1.3 million related to the deferred losses
was recorded as a component of the net deferred income tax
liability and other comprehensive income. At December 31,
2002, the Company had deferred net gains of $0.4 million on
foreign currency option contracts recorded as other
comprehensive loss and other receivables.
See accompanying notes to consolidated financial
statements.
F-7
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(1)
Basis of Presentation and Description of
    Business
Basis of Presentation
CDRJ North Atlantic (Lux) S.àr.l., a
Luxembourg
société à responsabilité
limitée
(the "Parent"), a wholly-owned
subsidiary of CDRJ Investments (Lux) S.A., a Luxembourg
société anonyme
("CDRJ"), Jafra
Cosmetics International, Inc., a Delaware corporation
("JCI"), Jafra Cosmetics International, S.A. de C.V.,
a
sociedad anonima de capital variable
organized under
the laws of the United Mexican States ("Jafra S.A.")
and certain other subsidiaries of the Parent were organized by
Clayton, Dubilier & Rice Fund V Limited
Partnership, a Cayman Islands exempted limited partnership
managed by Clayton, Dubilier & Rice, Inc.
("CD&R") to acquire (the "Acquisition")
the worldwide Jafra Cosmetics business (the "Jafra
Business") of The Gillette Company ("Gillette").
JCI and Jafra S.A. are indirect, wholly owned subsidiaries of
the Parent. The Parent is a holding company that conducts all
its operations through its subsidiaries. The Parent and its
subsidiaries are collectively referred to as the
"Company." The Acquisition was completed on
April 30, 1998. CDRJ North Atlantic (Lux) S.àr.l. is
to be renamed Jafra S.A.
The accompanying consolidated financial
statements for the years ended December 31, 2000, 2001 and
2002 reflect the operations of the Parent and its subsidiaries.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
Description of Business
The Company is an international manufacturer and
marketer of premium skin and body care products, color
cosmetics, fragrances, and other personal care products. The
Company markets its products primarily in 11 countries,
10 outside the United States, and a number of additional
countries through distributors, through a direct selling,
multilevel distribution system comprised of self-employed
salespersons (known as "consultants").
(2)
Summary of Significant Accounting
    Policies
Use of Estimates.
The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents.
Cash and cash equivalents include
cash, time deposits and all highly liquid debt instruments
purchased with a maturity of three months or less.
Inventories.
Inventories are stated at the lower of
cost, as determined by the first-in, first-out basis, or market.
Property and Equipment.
Property and equipment are stated at
cost. Depreciation of property and equipment is provided for
over the estimated useful lives of the respective assets using
the straight-line method. Estimated useful lives are 20 or
40 years for buildings, the lesser of 20 or 40 years
or the term of the lease for improvements, 5 to 15 years
for machinery and equipment and 3 to 8 years for hardware
and software. Maintenance and repairs, including cost of minor
replacements, are charged to operations as incurred. Costs of
additions and betterments are added to property and equipment
accounts provided that such expenditures increase the useful
life or the value of the asset.
Intangible Assets.
Intangible assets principally consist
of goodwill and trademarks. On January 1, 2002, the Company
adopted Statement of Financial Accounting Standards
("SFAS") No. 142, "Goodwill and other
Intangible Assets" which requires the Company to not
amortize goodwill and certain other
F-8
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
indefinite life intangible assets, but to test
those intangible assets for impairment at least annually. Prior
to adoption of SFAS No. 142, goodwill and other intangible
assets were amortized using the straight-line method over a
period of 40 years. Goodwill of $77.9 million and
trademarks of $53.8 million, resulted from the
Company's acquisition of the Jafra Business from Gillette.
The book value of goodwill and trademarks was $66,108,000 and
$44,570,000 at December 31, 2002, respectively. (See
"New Accounting Standards").
Deferred Financing
Costs.
In connection with the
acquisition of the Jafra Business, the Company incurred
approximately $12.0 million of costs related to the 11.75%
Senior Subordinated Notes due 2008 (the "Notes"), the
revolving credit facility and the term loan facility (see
Note 6). Such costs are being amortized on a basis that
approximates the interest method over the expected term of the
related debt. Accumulated amortization at December 31, 2001
and 2002 was $5,566,000 and $6,554,000, respectively.
Impairment of Long-Lived Assets and Goodwill.
Long-lived assets are reviewed for
impairment, based on undiscounted cash flows, whenever events or
changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. If this review indicates
that the carrying amount of the long-lived assets is not
recoverable, the Company will recognize an impairment loss,
measured by the future discounted cash flow method. Goodwill is
tested for impairment annually, or whenever events or changes in
circumstances indicate that the carrying amount of goodwill may
not be recoverable based on the provisions of SFAS No. 142.
(see "New Accounting Standards").
Foreign Currency Forward and Option Contracts.
During 2001 and 2002, the Company
entered into foreign currency forward contracts. In 2002, the
Company entered into forward currency option contracts. The
Company enters into these contracts to reduce the effect of
potentially adverse exchange rate fluctuations in the exchange
rate of the Mexican peso to the U.S. dollar. Effective
January 1, 2001, the Company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133, as amended and interpreted,
establishes accounting and reporting standards for derivative
instruments and hedging activities and requires that all
derivative instruments be recorded based on fair value. In
connection with the adoption of SFAS No. 133, at
January 1, 2001, the Company recorded a net gain of
$126,000 (net of a tax effect of $82,000) as a cumulative
transition adjustment to earnings. This adjustment relates to
derivatives not designated as hedges prior to adoption of SFAS
No. 133, and represents the difference between the carrying
value and the fair value of such instruments.
As a matter of policy, the Company does not hold
or issue foreign currency forward contracts or foreign currency
option contracts for trading or speculative purposes. The
forward contracts utilized by the Company did not qualify for
hedge accounting under the applicable accounting standards prior
to adoption of SFAS No. 133 on January 1, 2001, and
accordingly such instruments were marked-to-market each month
based upon the change in the spot rate from the date of contract
inception to the balance sheet date. The premium on such
contracts was amortized to expense over the life of the
contracts. However, under SFAS No. 133, the Company's
use of forward contracts and option contracts to hedge certain
forecasted transactions qualifies for hedge accounting. Gains
and losses from qualifying hedged derivative instruments are
deferred as a separate component of other comprehensive loss,
and are recognized in income at the same time that the
underlying hedged exposure is recognized in income. This
accounting treatment results in the matching of gains and losses
from such forward contracts and option contracts with the
corresponding gains and losses generated by the underlying
hedged transactions. Under SFAS No. 133, certain of the
Company's foreign currency forward contracts and option
contracts do not qualify for hedge accounting and therefore, are
remeasured based on fair value, with gains and losses included
as a component of net income. At December 31, 2001, the
carrying value of the forward contracts was $5,540,000 and was
included in accrued liabilities in the accompanying consolidated
balance sheets. At December 31, 2002, the carrying value of
the option contracts was $402,000 and was included in other
receivables in the accompanying consolidated balance sheets.
F-9
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Fair Value of Financial Instruments.
The carrying amounts of cash and cash
equivalents, accounts receivable, and accounts payable
approximate fair value because of the short-term maturities of
these instruments. The fair value of the Notes and other fixed
rate long-term debt at December 31, 2001 and 2002 was
$82,052,000 and $77,888,000, respectively, based upon
discussions with one of the Company's largest bondholders
and an analysis of current market interest rates and the
Company's credit rating. As the Company's revolving
credit facility and the term loan are variable rate debt, and
the interest rate spread paid by the Company is adjusted for
changes in certain financial ratios of the Company, the fair
value of the revolving credit facility and the term loan
approximated their carrying amounts at December 31, 2001
and 2002.
Revenue Recognition.
The Company recognizes revenue when
title passes at shipment in accordance with its shipping terms.
Amounts billed to consultants for shipping and handling costs
are included in net sales. Sales are reduced by commissions paid
to consultants on their personal sales.
Shipping and Handling Costs.
Shipping and handling costs of
$23,951,000, $27,946,000 and $31,618,000 for the years ended
December 31, 2000, 2001 and 2002, respectively, are
included in selling, general and administrative expenses.
Research and Development.
Research and development costs are
expensed as incurred. Total research and development expense
aggregated $1,901,000, $1,842,000 and $1,469,000 for the years
ended December 31, 2000, 2001 and 2002, respectively.
Income Taxes.
The
Company accounts for income taxes under the balance sheet
approach that requires the recognition of deferred income tax
assets and liabilities for the expected future consequences of
events that have been recognized in the Company's financial
statements or income tax returns. Management provides a
valuation allowance for deferred income tax assets when it is
more likely than not that a portion of such deferred income tax
assets will not be realized.
Foreign Currency Translation.
The functional currency for foreign
subsidiaries is generally the local currency. Assets and
liabilities of such foreign subsidiaries are translated into
U.S. dollars at current exchange rates, and related revenues and
expenses are translated at average exchange rates in effect
during the period. Resulting translation adjustments are
recorded as a component of other comprehensive loss.
Approximately 76%, 78% and 76% of the
Company's net sales for the years ended December 31,
2000, 2001 and 2002, respectively, were generated by operations
located outside of the United States. Mexico is the
Company's largest foreign operation, accounting for 64%,
68% and 66% of the Company's net sales for the years ended
December 31, 2000, 2001 and 2002, respectively. As such,
the Company's results of operations are subject to
fluctuations in the exchange rate of the Mexican peso to the
U.S. dollar.
Additionally, Jafra S.A. had outstanding
U.S. dollar-denominated debt of $35,572,000 and $32,447,000
at December 31, 2001 and 2002, respectively. This debt is
remeasured at each reporting date, subjecting the Company to
additional foreign exchange risk.
New Accounting Standards.
Effective January 1, 2001, the
Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS
No. 133, as amended and interpreted, established accounting
and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and
for hedging activities. All derivatives, whether designated in
hedging relationships or not, are required to be recorded on the
balance sheet at fair value. If the derivative is designated in
a fair-value hedge, the changes in the fair value of the
derivative and the underlying hedged item are recognized
concurrently in earnings. If the derivative is designated in a
cash-flow hedge, changes in the fair value of the derivative are
recorded in other comprehensive income (loss) ("OCI")
and are recognized in the statement of operations when the
hedged item affects earnings. SFAS
F-10
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
No. 133 defined new requirements for
designation and documentation of hedging relationships as well
as ongoing effectiveness assessments in order to use hedge
accounting. For a derivative that does not qualify as a hedge,
changes in fair value are recognized concurrently in earnings.
As of January 1, 2001, the Company recorded a net gain of
$126,000 (net of a tax effect of $82,000) as a cumulative
transition adjustment to earnings. This adjustment relates to
derivatives not designated as hedges prior to adoption of SFAS
No. 133, and represents the difference between the carrying
value as measured by the difference in the spot rate to the
forward rate and the fair value as determined by forward rates
of such instruments at January 1, 2001.
In June 2001, the Financial Accounting Standards
Board ("FASB") approved two new statements: SFAS
No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets."
SFAS No. 141 requires business combinations entered into
after June 30, 2001 to be accounted for using the purchase
method of accounting. SFAS No. 142 requires that goodwill
not be amortized, but be tested for impairment at least
annually. SFAS No. 142 was effective for fiscal years
beginning after December 15, 2001 to all goodwill and other
intangible assets recognized in an entity's statement of
financial position at that date, regardless of when those assets
were initially recognized. The Company adopted SFAS No. 142
on January 1, 2002. In accordance with such adoption, the
Company identified all reporting units in conjunction with the
provisions of SFAS No. 142 and allocated all goodwill
accordingly. Prior to June 30, 2002, the Company completed
the transitional goodwill impairment test required by SFAS
No. 142. Due to general market uncertainty in Colombia, the
Company revised its projections and recorded an impairment loss
of $244,000 associated with its Colombia reporting unit. The
impairment loss has been recorded as a cumulative effect of
accounting change in the accompanying consolidated statements of
income. No other impairment was identified in connection with
the annual impairment test. The changes in the carrying amount
of goodwill for the year ended December 31, 2002 are as
follows (in thousands):
United
All
Consolidated
Goodwill
States
Mexico
Europe
Others
Total
Balance as of December 31, 2001
$
32,188
$
32,401
$
5,937
$
127
$
70,653
Translation effect
—
(3,853
)
(637
)
189
(4,301
)
Impairment losses
—
—
—
(244
)
(244
)
Balance as of December 31, 2002
$
32,188
$
28,548
$
5,300
$
72
$
66,108
The Company's other intangible assets
consist of trademarks. During the year ended December 31,
2002, the Company determined trademarks to have an indefinite
life and performed the transitional and annual impairment test
as required under SFAS No. 142. Based upon the transitional
and annual test, the Company determined that there was no
impairment of trademarks. The carrying value of trademarks was
$44,570,000 as of December 31, 2002.
In accordance with SFAS No. 142, the Company
discontinued amortization of goodwill and other intangible
assets with an indefinite life. A reconciliation of previously
reported net income to amounts adjusted for the exclusion of
goodwill and trademark amortization, net of the related income
tax effects, where applicable, is as follows (in thousands):
Years Ended December 31,
2000
2001
2002
Net income
$
6,352
$
15,996
$
18,800
Goodwill amortization, net of tax
1,847
1,706
—
Trademark amortization, net of tax
882
822
—
Adjusted net income
$
9,081
$
18,524
$
18,800
F-11
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
In November 2001, the Emerging Issues Task Force
("EITF") issued EITF Issue No. 01-9,
"Accounting for Consideration Given by a Vendor to a
Customer or a Reseller of the Vendor's Products." This
new guidance provides that consideration from a vendor to a
reseller is generally presumed to be a reduction of the selling
prices of the vendor's products, and, therefore, should be
characterized as a reduction of revenue when recognized in the
vendor's income statement. On January 1, 2002, the
Company adopted EITF Issue No. 01-9 and reclassified
commissions paid to consultants of $3,320,000 and $3,778,000 on
their personal sales, previously reported as a component of
selling, general and administrative expenses, as a reduction in
net sales and selling, general and administrative expenses for
the years ended December 31, 2000 and 2001, respectively.
On January 1, 2002, the Company adopted SFAS
No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." SFAS No. 144 supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." SFAS
No. 144 retains substantially all of the requirements of
SFAS No. 121, while resolving certain implementation issues
and addressing the accounting for a component of a business
accounted for as a discontinued operation. SFAS No. 144 was
adopted with no significant impact on the financial position or
results of operations of the Company.
In April 2002, the FASB issued SFAS No. 145,
"Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections." This Statement rescinds or modifies existing
authoritative pronouncements including SFAS No. 4
"Reporting Gains and Losses from Extinguishment of
Debt." As a result of the issuance of SFAS No. 145,
gains and losses from extinguishment of debt should be
classified as extraordinary items only if they meet the criteria
in Accounting Principles Board ("APB")
Opinion 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." Applying the provisions of APB
Opinion 30 will distinguish transactions that are part of
an entity's recurring operations from those that are
unusual or infrequent or that meet the criteria for
classification as an extraordinary item. The provisions of this
Statement related to the rescission of SFAS No. 4 shall be
applied in fiscal years beginning after May 15, 2002. Any
gain or loss on extinguishment of debt that was classified as an
extraordinary item in prior periods presented that does not meet
the criteria in APB Opinion 30 for classification as an
extraordinary item shall be reclassified. The Company adopted
SFAS No. 145 on January 1, 2003 and reclassified items
previously reported as extraordinary items as a component of
operating income in the accompanying statements of income.
In June 2002, the FASB approved SFAS
No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities." This statement addresses financial
accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No. 94-3,
"Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity." The
provisions of this statement are effective for exit or disposal
activities that are initiated after December 31, 2002, with
early application encouraged. The Company is currently
evaluating the impact that this statement may have on any
potential future exit or disposal activities.
During 2002, the FASB issued SFAS No. 148,
"Accounting for Stock Based Compensation —
Transaction and Disclosure, an amendment to FASB Statement
No. 123." This Statement requires more extensive
disclosure, including interim disclosure, related to stock based
compensation for all companies and permits additional transition
methods for companies that elect to use the fair value method
for employee stock compensation. This statement is effective for
fiscal years ending after December 15, 2002, with early
adoption regarding annual disclosures encouraged. The Company
adopted the disclosure requirements of SFAS No. 148. (See
Note 13).
In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity.
SFAS
No. 150 establishes standards for how an issuer
F-12
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
classifies and measures certain financial
instruments with characteristics of both liabilities and equity.
It requires that an issuer classify a financial instrument that
is within its scope as a liability (or an asset in some
circumstances). SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. The adoption of SFAS
No. 150 on July 1, 2003 did not have a material impact
on the Company's financial position or results of
operations.
In January 2003, the FASB issued Interpretation
No. 46,
Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51, Consolidated Financial
Statements.
FIN 46 requires the consolidation of
variable interest entities by the party considered to be the
primary beneficiary of that entity. The FASB amended FIN 46
in December of 2003. The revised provisions of FIN 46 will
be effective for the company in the first quarter of 2004. This
interpretation may be applied prospectively with a
cumulative-effect adjustment as of the date on which it is first
applied or by restating previously issued financial statements
for one or more years with a cumulative-effect adjustment as of
the beginning of the first year restated. The adoption of
FIN 46 is not expected to have a material impact on the
Company's financial position or results of operations.
(3)
Inventories
Inventories consist of the following at
December 31, 2001 and 2002 (in thousands):
2001
2002
Raw materials and supplies
$
5,672
$
5,239
Finished goods
32,925
28,334
Total inventories
$
38,597
$
33,573
(4) Property and Equipment
Property and equipment consist of the following
at December 31, 2001 and 2002 (in thousands):
2001
2002
Land
$
17,833
$
16,448
Buildings and improvements
18,523
17,452
Machinery equipment and other
33,697
41,539
70,053
75,439
Less accumulated depreciation
11,072
15,044
Property and equipment, net
$
58,981
$
60,395
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Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(5)
Accrued Liabilities
Accrued liabilities consist of the following at
December 31, 2001 and 2002 (in thousands):
2001
2002
Sales promotions, commissions and overrides
$
14,212
$
15,094
Accrued restructuring charges (Note 10)
201
—
Accrued interest
1,549
1,498
Compensation and other benefit accruals
8,213
8,507
State and local sales taxes and other taxes
4,812
12,554
Unrealized losses on forward contracts
5,540
—
Other
5,953
6,750
Total accrued liabilities
$
40,480
$
44,403
(6)
Debt
Debt consists of the following at
December 31, 2001 and 2002 (in thousands):
2001
2002
Subordinated Notes, unsecured, interest payable
    semi-annually at 11.75% due in 2008
$
75,180
$
75,180
Term loan, secured, principal and interest due in
    quarterly installments through April 30, 2004, interest
    rates at 4.3% and 3.1% at December 31, 2001 and 2002,
    respectively
14,500
8,375
Revolving loan, secured, due April 30, 2004,
    weighted average interest rates of 5.4% at December 31, 2001
1,800
—
Unsecured foreign bank loan agreement, principal
    and interest due in monthly installments through January 25,
    2005, weighted average interest rates of 18.7% and 18.5% at
    December 31, 2001 and 2002, respectively
1,609
828
Total debt
93,089
84,383
Less current maturities
6,188
6,489
Long-term debt
$
86,901
$
77,894
The Company's long-term debt matures as
follows (in thousands): $6,489 in 2003, $2,714 in 2004, $0 in
2005, 2006 and 2007, and $75,180 thereafter.
On April 30, 1998, JCI and Jafra S.A.
borrowed $125 million by issuing $100 million
aggregate principal amount of 11.75% Subordinated Notes due 2008
(the "Notes") pursuant to an Indenture dated
April 30, 1998 (the "Indenture") and
$25 million under a senior credit agreement.
At the date of issuance, the Notes represented
the several obligations of JCI and Jafra S.A. in the amount of
$60 million and $40 million, respectively, with each
participating on a pro rata basis upon redemption. The Notes
mature in 2008 and bear a fixed interest rate of 11.75% payable
semi-annually.
Each of JCI and Jafra S.A. is an indirect, wholly
owned subsidiary of the Parent and has fully and unconditionally
guaranteed the obligations under the Notes of the other on a
senior subordinated basis, subject to a 30-day standstill period
prior to enforcement of such guarantees. In addition, CDRJ has
fully and unconditionally guaranteed the Notes on a senior
subordinated basis. JCI currently has no U.S. subsidiaries.
Each acquired or organized U.S. subsidiary of JCI will also
be required to fully and
F-14
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
unconditionally guarantee the Notes jointly and
severally, on a senior subordinated basis. Each existing
subsidiary of Jafra S.A. fully and unconditionally guarantees
the Notes jointly and severally, on a senior subordinated basis,
and each subsequently acquired or organized subsidiary of Jafra
S.A. will fully and unconditionally guarantee the Notes jointly
and severally, on a senior subordinated basis. The nonguarantor
entities are the Parent's indirect European subsidiaries in
Austria, Germany, Italy, the Netherlands, Poland, and
Switzerland; its indirect South American subsidiaries in
Argentina, Brazil, Chile, Colombia, Peru, and Venezuela; and its
indirect subsidiaries in the Dominican Republic and Thailand.
All guarantor and nonguarantor entities are either direct or
indirect wholly owned subsidiaries of the Parent. The Notes were
registered in a registered exchange offer, effective as of
January 25, 1999, under the Securities Act of 1933, as
amended.
The Notes are unsecured and are generally
non-callable for five years. Thereafter, the Notes will be
callable at premiums declining to par in the eighth year.
Consents and waivers, dated June 30, 2001
and November 19, 1999, to the senior credit agreement, as
described below, allow the Company to repurchase the Notes in
the open market from time to time, with the aggregate purchase
price for all such Notes repurchased not to exceed
$50 million. Aggregate repurchases as of December 31,
2002 were $24.8 million. During 2000, the Company retired
Notes of JCI and Jafra S.A., prior to maturity, with a face
value of $6.5 million and $4.3 million, respectively.
The debt repurchases in 2000 resulted in a loss on early
extinguishment of debt of $510,000. In connection with the early
extinguishment of the Notes, $733,000 of the unamortized
deferred financing costs was written off and included in the
determination of the loss on early extinguishment of debt.
In addition, JCI and Jafra S.A. entered into a
senior credit agreement that provides for senior secured credit
facilities in an aggregate principal amount of $90 million,
consisting of a multicurrency revolving credit facility of
$65 million and a term loan facility of $25 million.
Borrowings under the term loan facility are payable in quarterly
installments of principal and interest over six years through
April 30, 2004. Borrowings under the revolving credit
facility mature on April 30, 2004. Borrowings under the
senior credit agreement currently bear interest at an annual
rate of LIBOR plus a margin of 1.625% or an alternate base rate
(the higher of the prime rate or federal funds rate plus 0.5%,
plus an applicable margin of 0.625%). The interest rate in
effect at December 31, 2002 was approximately 3.1% for the
LIBOR-based borrowings. Borrowings under the senior credit
agreement are secured by substantially all of the assets of JCI
and Jafra S.A. No amounts were outstanding under the revolving
credit facility at December 31, 2002.
Both the Indenture and the senior credit
agreement contain certain covenants that limit the
Company's ability to incur additional indebtedness, pay
cash dividends and make certain other payments. These debt
agreements also require the Company to maintain certain
financial ratios including a minimum EBITDA to cash interest
expense coverage ratio and a maximum debt to EBITDA ratio.
During the year ended December 31, 2001,
Jafra S.A. repaid the balance remaining under a one-year term
loan originally due on August 16, 2001, and entered into an
unsecured foreign bank loan agreement. Under this agreement,
Jafra S.A. had the peso equivalent of $828,000 outstanding at
December 31, 2002 at a weighted average fixed interest rate
of 18.5%. Principal and interest payments are due monthly
through January 25, 2005.
As of December 31, 2002, the Company had
irrevocable standby letters of credit outstanding totaling
$2.8 million. These letters of credit, expiring on various
dates through February 17, 2003, collateralize the
Company's obligation to a third-party in connection with
certain lease agreements.
F-15
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(7) Income Taxes
The Company's income before income taxes
consists of the following (amounts in thousands):
Years Ended December 31,
2000
2001
2002
Income from continuing operations before income
    taxes and cumulative effect of accounting change:
United States
$
9,741
$
13,530
$
12,859
Foreign
6,381
19,868
23,831
$
16,122
$
33,398
$
36,690
Actual income tax expense differs from the
"expected" tax expense (computed by applying the
U.S. Federal corporate rate of 35% to income before income
taxes) as a result of the following:
Years Ended December 31,
2000
2001
2002
Provision for income taxes at federal statutory
    rate
$
5,643
$
11,689
$
12,842
Foreign income subject to tax other than at
    federal statutory rate
2,339
4,270
3,461
Foreign tax and other credits
(1,724
)
(3,230
)
(2,312
)
State income taxes
243
544
548
Valuation allowance — domestic
(616
)
944
19
Valuation allowance — foreign
3,774
2,874
1,710
Other
54
252
(64
)
Income tax expense
$
9,713
$
17,343
$
16,204
F-16
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The components of the provision for income taxes
are as follows (in thousands):
Years Ended December 31,
2000
2001
2002
Current:
Federal
$
(48
)
$
140
$
178
Foreign:
Mexico
6,011
13,303
15,177
Europe
49
641
(297
)
Other
28
113
11
6,088
14,057
14,891
State
243
544
548
Total current
6,283
14,741
15,617
Deferred — foreign
2,539
1,506
(646
)
Deferred — domestic
891
2,407
2,016
Foreign deferred allocated to other comprehensive
    income
—
(1,311
)
(783
)
Total deferred
3,430
2,602
587
Total income taxes on income before income taxes
    and cumulative effect of accounting change
9,713
17,343
16,204
Income tax expense on cumulative effect of
    accounting change
—
82
—
Income tax from discontinued operations
26
77
65
Total income tax expense
$
9,739
$
17,502
$
16,269
F-17
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The components of deferred income tax assets and
deferred income tax liabilities at December 31, 2001 and
2002 are as follows (in thousands):
2001
2002
Deferred income tax assets:
Accounts receivable
$
1,733
$
2,454
Net operating loss carryforward
12,282
12,338
Disallowed interest expense
26
—
Accrued bonuses
301
33
Foreign tax and other credit carryforwards
5,333
2,193
Accrued sales promotions
2,273
1,977
Other accrued liabilities
1,963
5,233
Other
4,776
1,738
Total deferred income tax assets
28,687
25,966
Less valuation allowance
(14,114
)
(14,804
)
Net deferred income tax assets
14,573
11,162
Deferred income tax liabilities:
Transaction and deferred financing costs
(494
)
(235
)
Property and equipment
(4,194
)
(4,406
)
Trademark and goodwill
(20,272
)
(18,129
)
Inventories
(13,399
)
(7,914
)
Other
(564
)
(3,737
)
Total deferred income tax liabilities
(38,923
)
(34,421
)
Net deferred income tax liabilities
$
(24,350
)
$
(23,259
)
The Company records a valuation allowance on the
deferred income tax assets to reduce the total to an amount that
management believes is more likely than not to be realized. The
valuation allowances at December 31, 2001 and 2002 were
based upon the Company's estimates of the future
realization of deferred income tax assets. Valuation allowances
at December 31, 2001 and 2002 were provided principally to
offset operating loss carryforwards and, foreign tax credit
carryforwards of the Company's U.S., European and South
American subsidiaries. Valuation allowances at December 31,
2002 were also provided to offset certain pretax expenses at the
company's U.S. subsidiary.
At December 31, 2001, the Company's
deferred income tax assets for carryforwards totaled
$17,615,000, comprised of U.S. foreign and foreign asset tax
credits of $4,775,000, alternative minimum tax and research and
development credits of $558,000 and tax loss carryforwards of
certain foreign subsidiaries of $12,282,000. At
December 31, 2002, the Company's deferred income tax
assets for carryforwards totaled $14,531,000 comprised of
foreign asset and other credit carryforwards of $2,193,000 and
net operating loss carryforwards of $12,338,000. These deferred
income tax assets were reduced by a valuation allowance of
$14,114,000 and $14,804,000 as December 31, 2001 and 2002,
respectively. The tax loss and certain credit carryforwards
expire in varying amounts between 2003 and 2012. Realization of
the income tax carryforwards is dependent on generating
sufficient taxable income prior to expiration of the
carryforwards. Although realization is not assured, management
believes it is more likely than not that the net carrying value
of the income tax carryforwards will be realized.
F-18
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Income tax expense for the year ended
December 31, 2002 was reduced by $1,169,000 as the result
of the enactment of changes in the Mexico corporate statutory
tax rate and the related impact on Jafra S.A.'s net
deferred income tax liabilities. The enactment in Mexico will
reduce the Mexico corporate income tax rate annually in
one-percent increments from 35% to 32% beginning January 1,
2003 through 2005.
(8) Benefit Plans
Certain employees of the Company's German
subsidiary participate in a defined benefit pension plan
covering key employees (the "Germany Plan"). Benefits
are based on age, years of service and the level of compensation
during the final years of employment. The Company's funding
policy is to contribute annually to the Germany Plan the amount
necessary to meet the minimum funding standards. The Company
recognized pension income of $18,000 for the year ended
December 31, 2000 due to the departure of certain employees
and recognized pension expense of $278,000 and $48,000 for the
years ended December 31, 2001 and 2002, respectively.
Under Mexican labor laws, employees of Jafra S.A.
and its subsidiaries are entitled to a payment when they leave
the Company if they have fifteen or more years of service. In
addition, the Company makes government mandated employee profit
sharing distributions equal to ten percent of the taxable income
of the subsidiary in which they are employed. Total expense
under these programs was $345,000, $995,000 and $1,222,000 for
the years ended December 31, 2000, 2001 and 2002,
respectively. The total liability was approximately $1,010,000
and $1,724,000 at December 31, 2001 and 2002, respectively,
and is classified as a noncurrent liability in the accompanying
consolidated balance sheets.
The Company's U.S. subsidiary has an
employee savings plan which permits participants to make
voluntary contributions by salary deferrals pursuant to section
401(k) of the Internal Revenue Code, which allows employees to
defer up to 20% of their total compensation, subject to
statutory limitations. Employee contributions of up to 10% of
compensation are matched by the Company at the rate of 50 cents
per dollar. Employees do not vest in the Company contribution
until they have reached two years of service, at which time they
become fully vested. The Company's expense under this
program was $620,000, $600,000 and $618,000 for the years ended
December 31, 2000, 2001 and 2002, respectively.
The Company's U.S. subsidiary also has a
supplemental excess benefit savings plan, which permits
participants to make unlimited voluntary contributions. Employee
contributions are matched on the same basis as under the
employee savings plan, and the vesting provisions are the same.
The Company's expense under this program was $213,000,
$177,000 and $207,000 for the years ended December 31,
2000, 2001 and 2002, respectively. Employee and employer
contributions under such plan are placed into a
"rabbi" trust exclusively for the uses and purposes of
plan participants and general creditors of the Company. The
Company has recorded an asset and the related liability in the
accompanying consolidated balance sheets of $1,880,000 and
$2,411,000 at December 31, 2001 and 2002, respectively.
(9) Related Party Transactions
Pursuant to a consulting agreement entered into
following the Acquisition, until the 10th anniversary of the
Acquisition or the date on which CD&R Fund V no longer
has a direct or indirect investment in the Company or until the
termination by either party with 30 days notice, CD&R
will receive an annual fee (and reimbursement of out-of-pocket
expenses) for providing advisory, management consulting and
monitoring services to the Company. On January 1, 2000, the
annual fee was $400,000. As of January 1, 2001, the annual
fee was increased to $1,000,000. As required by the terms of the
Company's lending arrangements, such fees are determined by
arm's-length negotiation and are believed by the Company to
be reasonable. The amendment, effective January 1, 2001,
adds to CD&R's services under the agreement financial
advisory, investment banking and similar services with respect
to future
F-19
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
proposals for an acquisition, merger,
recapitalization, or other similar transaction directly or
indirectly involving the Company or any of its subsidiaries. The
fee for such additional services in connection with future
transactions would be an amount equal to 1% of the transaction
value for the transaction to which such fee relates. Such
transaction fees may be increased upon approval of a majority of
the members of the Company's Board of Directors who are not
employees of the Company, CD&R or any affiliate of CD&R.
The amendment also provides that if any employee of CD&R is
appointed to an executive management position (or a position of
comparable responsibility) in the Company or any of its
subsidiaries, the annual fee will be increased by an amount to
be determined by CD&R, the amount of such increase not to
exceed 100% of the existing annual fee in effect at that time.
The CD&R fees incurred during the years ended
December 31, 2000, 2001 and 2002 were $400,000, $1,000,000
and $1,000,000, respectively. In addition, certain officers and
directors of CD&R or its affiliates serve as directors of
the Company.
Prior to 2000, the Company engaged Guidance
Solutions ("Guidance"), a corporation in which an
investment fund managed by CD&R has an investment, to
develop its e-commerce systems. Under the agreement entered into
by the Company and Guidance, the Company agreed to pay fees of
approximately $2.0 million to Guidance in connection with
planning, defining, designing and consulting services performed
related to the Company's e-commerce initiative. During the
year ended December 31, 2000, the Company paid fees to
Guidance of $1,798,000. The Company terminated its agreement
with Guidance and executed a settlement and mutual release
agreement effective September 30, 2000. Upon execution of
this agreement in October of 2000, Guidance paid the Company
$25,000 and agreed to pay the Company an aggregate additional
sum of $475,000, payable in quarterly installments plus interest
at 9.5% per annum, beginning in January 2001 through October
2005. At December 31, 2002, the balance was paid in full.
Members of management financed a portion of the
cash purchase price of the shares of CDRJ common stock they
acquired through loans from the Chase Manhattan Bank on market
terms. To help members of management obtain such terms for such
financing, CDRJ fully and unconditionally guaranteed up to 75%
of the purchase price for the shares of Company common stock
purchased by each such member of management in 1998 and 2000. As
of December 31, 2002, the outstanding guarantee was
$2,145,000.
(10) Restructuring and Impairment Charges
and Related Accruals
Prior Years Restructuring and Impairment
Charges.
During 2001, the Company
wrote-off $0.2 million of intangible assets as the Company
determined that the undiscounted cash flows were less than the
carrying amount of the assets due to a downturn in the political
and economic environment in Argentina. The amount was classified
in selling, general and administration in the accompanying
consolidated statements of income. In 2000, the Company recorded
approximately $1.6 million of restructuring charges and
approximately $1.0 million of asset impairment charges. The
restructuring charges of approximately $1.6 million related
to the Company's repositioning activities in Europe,
primarily severance costs, of which $1.4 million was paid
in 2000 and 2001 and the remaining $0.2 million was paid in
2002. The asset impairment charges of $1.0 million
consisted of approximately $0.3 million related to the
Company's repositioning activities in Europe and
approximately $0.7 million relating to the write-down of
certain capitalized computer software costs in the United States.
F-20
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The components of the additions and/or
adjustments to the aforementioned accruals include severance,
lease costs, fixed asset disposals, and other exit costs, and
are summarized as follows (in thousands):
Years Ended December 31,
2000
2001
Additions — charges to income:
Severance
$
1,210
$
(84
)
Lease costs
295
80
Other
102
4
Total additions
$
1,607
$
—
A rollforward of the activity of the
restructuring accruals is summarized as follows (in thousands):
Years Ended December 31,
2000
2001
2002
Opening balance
$
1,105
$
699
$
201
Additions
1,607
—
—
Charges against reserves
(2,013
)
(498
)
(201
)
Ending balance
$
699
$
201
$
—
The remaining costs at each year-end included in
the restructuring accrual are summarized as follows (in
thousands):
December 31,
2000
2001
Severance
$
385
$
—
Lease costs and other
314
201
$
699
$
201
The principal component of the restructuring
accruals was severance. A summary of the severance activity is
as follows (dollar amounts in thousands):
Years Ended December 31,
2000
2001
# of
# of
Employees
Amount
Employees
Amount
Opening balance
43
$
1,105
16
$
385
Planned terminations
35
1,210
—
—
Adjustment to planned terminations
—
—
—
(84
)
Actual terminations
(62
)
(1,930
)
(16
)
(301
)
Ending balance
16
$
385
—
$
—
(11)
Financial Reporting for Business
    Segments
Segment information has been prepared in
accordance with SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS No. 131 requires
disclosure of certain information regarding operating segments,
products and services, geographic areas of operations and major
customers.
F-21
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company's business is comprised of one
industry segment, direct selling, with worldwide operations. The
Company is organized into geographical business units that each
sell the full line of Jafra cosmetics, skin care, body care,
fragrances, and other products. The Company has three reportable
business segments: Mexico, the United States, and Europe.
Business results for subsidiaries in South America, excluding
certain discontinued operations (see Note 17), the
Dominican Republic, and Thailand are combined and included in
the following table under the caption "All Others."
The accounting policies used to prepare the
information reviewed by the Company's chief operating
decision makers are the same as those described in the summary
of significant accounting policies. The Company evaluates
performance based on segment operating income, excluding
reorganization and restructuring charges, unusual gains and
losses, and amortization of goodwill and intangibles. Consistent
with the information reviewed by the Company's chief
operating decision makers, corporate costs, foreign exchange
gains and losses, interest expense, other nonoperating income or
expense, and income taxes are not allocated to operating
segments. The effects of intersegment sales (net sales and
related gross profit) are excluded from the computation of
segment operating income.
Corporate,
United
Total
Unallocated
Consolidated
Mexico
States
Europe
All Others
Segments
and Other
Total
(Dollars in thousands)
Year ended December 31, 2000
Net sales
$
199,777
$
74,137
$
26,882
$
9,671
$
310,467
$
—
$
310,467
Income (loss) from operations
64,364
10,709
247
(5,987
)
69,333
(26,944
)
42,389
Depreciation and amortization
4,231
2,111
905
250
7,497
—
7,497
Capital expenditures
2,262
3,662
109
679
6,712
—
6,712
Assets from discontinued operations
—
—
—
5,828
5,828
—
5,828
Year ended December 31, 2001
Net sales
$
247,514
$
79,611
$
26,329
$
11,975
$
365,429
$
—
$
365,429
Income (loss) from operations
71,289
11,580
1,795
(5,861
)
78,803
(22,398
)
56,405
Depreciation and amortization
3,908
2,709
610
234
7,461
—
7,461
Capital expenditures
6,024
4,529
230
388
11,171
—
11,171
Segment assets
193,379
67,792
17,788
7,612
286,571
(360
)
286,211
Assets from discontinued operations
—
—
—
5,584
5,584
—
5,584
Year ended December 31, 2002
Net sales
$
251,546
$
92,143
$
26,932
$
12,023
$
382,644
$
—
$
382,644
Income (loss) from operations
66,245
15,620
1,224
(5,579
)
77,510
(18,864
)
58,646
Depreciation and amortization
2,121
2,631
411
343
5,506
—
5,506
Capital expenditures
4,124
6,298
174
384
10,980
—
10,980
Segment assets
178,629
82,532
18,673
6,153
285,987
(657
)
285,330
Assets from discontinued operations
—
—
—
3,653
3,653
—
3,653
Goodwill
28,548
32,188
5,300
72
66,108
—
66,108
F-22
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Additional business segment information regarding
product lines is as follows:
2000
2001
2002
Sales by
Sales by
Sales by
Product Line
Percentage of
Product Line
Percentage of
Product Line
Percentage of
($ in millions)
Total Sales
($ in millions)
Total Sales
($ in millions)
Total Sales
Skin care
$
62.5
20.6
%
$
66.4
18.7
%
$
66.3
17.9
%
Color cosmetics
80.1
26.4
91.9
25.9
97.6
26.3
Fragrances
101.6
33.5
123.1
34.7
124.9
33.7
Body care and personal care
28.1
9.2
35.0
9.9
40.5
10.9
Other(1)
31.2
10.3
38.3
10.8
41.3
11.2
Subtotal before shipping and other fees less
    commissions
303.5
100.0
%
354.7
100.0
%
370.6
100.0
%
Shipping and other fees less commissions
7.0
10.7
12.0
Total
$
310.5
$
365.4
$
382.6
(1)
Includes sales aids (e.g., party hostess gifts,
    demonstration products, etc.) and training materials, which
    typically do not qualify for commissions or overrides.
(12)
Commitments and Contingencies
The Company leases office and warehouse
facilities as well as manufacturing, transportation and data
processing equipment under operating leases which expire at
various dates through 2008. The leases contain certain renewal
options and require payment of property taxes, utilities, common
area maintenance and insurance and contain rent escalation
clauses based on consumer price indices. Future minimum lease
payments under noncancelable operating leases as of
December 31, 2002 are (in thousands):
2003
$
3,555
2004
3,553
2005
3,430
2006
3,220
2007
3,190
2008
167
$
17,115
Rental expense was $5,629,000, $3,149,000 and
$3,398,000 for the years ended December 31, 2000, 2001 and
2002, respectively.
Other income for 2000 included approximately
$1.4 million of income related to a recovery of the effect
of inflation from a receivable due from the Mexican government
related to taxes.
During 2002, the Company initiated product
replacement for a certain product sold in 2001 and 2002. The
total cost of the product replacement is approximately $400,000.
However, management believes
F-23
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
that the majority of the cost will be recovered
pursuant to contractual obligations with the third-party
manufacturer. (See Note 14).
The Company has implemented a structure in a
certain foreign jurisdiction to minimize import taxes. While
management believes this structure adequately protects and
minimizes the Company's exposure to import taxes, the
Company may be adversely impacted if this structure does not
withstand challenges by local tax authorities. Management
believes that the resolution of a tax authority challenge, if
any, will not have a material adverse effect on the
Company's business, financial condition or results of
operations.
The Company is involved from time to time in
routine legal matters incidental to its business. The Company
believes that the resolution of such matters will not have a
material adverse effect on the Company's business,
financial condition or results of operations.
(13)
Management Incentive Arrangements
Company Plan
Effective 1998, CDRJ adopted a stock incentive
plan (the "Stock Incentive Plan"), which provides for
the sale to members of senior management of up to
52,141 shares of common stock of CDRJ and the issuance of
options to purchase up to 104,282 additional shares of common
stock. CDRJ reserved 156,423 shares for issuance under the
Stock Incentive Plan, and as of December 31, 2002,
42,121 shares and 84,242 options were outstanding. A
summary of the status and activity of shares purchased under the
Stock Incentive Plan is as follows:
Number
Price Per
of Shares
Share
Shares outstanding at December 31, 1999
38,392
Shares issued in 2000
4,424
$
206
Options exercised in 2000
158
100
Shares repurchased in 2000
(948
)
210
Shares outstanding at December 31, 2000
42,026
Shares issued in 2001
474
210
Options exercised in 2001
210
150
Shares repurchased in 2001
(589
)
$
250
Shares outstanding at December 31, 2001
42,121
Shares issued in 2002
—
—
Options exercised in 2002
—
—
Shares repurchased in 2002
—
—
Shares outstanding at December 31, 2002
42,121
The purchase price of shares issued in 2000 and
2001 and options exercised in 2000 and 2001 represented the
estimated fair value at the respective dates of issuance and
exercise, except as discussed below. In 2000, 316 shares
were issued at a price below fair value, and the Company
recognized compensation expense of approximately $19,000. In
2001, 210 shares were issued at a price below fair value, and
the Company recognized compensation expense of approximately
$21,000. Under certain circumstances, the management
stockholders can require CDRJ to repurchase their shares,
subject to a holding period of at least seven months from the
date such shares were acquired, for an amount not to exceed fair
value.
F-24
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
In connection with the purchase of common stock
of CDRJ, certain members of senior management were granted
options to purchase two additional shares of common stock for
each share purchased at an exercise price equal to the fair
value at the date of grant under the Stock Incentive Plan. The
options have a life of ten years from the date of grant. Fifty
percent of the options granted are expected to vest in three
equal installments on each of the first three anniversaries of
the date of grant, subject to the continuous employment of the
grantee ("Option Type 1"). The remaining fifty
percent of the options become vested as follows, subject to the
continuous employment of the grantee: (a) up to one-third
of the options become vested as of each of the first three
anniversaries of the date of grant if the Company achieves at
least 85% of its EBITDA target for the immediately preceding
fiscal year, (b) if less than one-third of the total number
of options shall have become vested as provided in
clause (a) above, the portion that has not become so vested
shall become vested as of the first day of the fiscal year
following the fiscal year, if any, that the Company achieves its
cumulative EBITDA target, and (c) any options that do not
become vested as provided above will become vested on the ninth
anniversary of the date of grant ("Option
Type 2"). A summary of the status and activity of the
options under the Stock Incentive Plan is as follows:
2000
2001
2002
Weighted Average
Weighted Average
Weighted Average
Shares
Exercise Price
Shares
Exercise Price
Shares
Exercise Price
Outstanding at beginning of year
76,784
$
101.03
84,052
$
111.69
84,242
$
112.36
Granted
8,848
205.71
948
210.00
—
—
Exercised
(158
)
100.00
(210
)
150.00
—
—
Canceled
(1,422
)
122.22
(548
)
163.80
—
—
Outstanding at year-end
84,052
$
111.69
84,242
$
112.36
84,242
$
112.36
Options exercisable at year-end
37,655
$
100.70
63,528
$
105.32
66,615
$
109.92
Options available for grant
19,493
—
19,093
—
19,093
—
The following table summarizes information about
options outstanding as of December 31, 2002:
Outstanding
Exercisable
Weighted Average
Number
Remaining Contractual
Weighted Average
Number
Weighted Average
Exercise Price
of Options
Life (Yrs.)
Exercise Price
of Options
Exercise Price
$100.00
74,256
5.75
$
100.00
60,117
$
100.00
$150.00
948
6.92
150.00
902
150.00
$210.00
9,038
7.63
210.00
5,596
210.00
84,242
5.96
$
112.36
66,615
$
109.92
The Company applies Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to
Employees", and related Interpretations in accounting for
these options. As the options were granted with exercise prices
equal to the fair value at the date of grant, no compensation
cost was recognized by the Company upon issuance of such
options. The fair value of each option granted by the Company was
F-25
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
estimated using the minimum value option pricing
model. The assumptions used in this pricing model and the
weighted average fair value of options granted during 2001 and
2000 are summarized as follows:
2000
2001
Option
Option
Option
Option
Type 1
Type 2
Type 1
Type 2
Risk-free interest rate
6.30
%
6.30
%
5.80
%
5.80
%
Expected option life (in years)
5.0
7.0
5.0
7.0
Expected volatility
0.0
%
0.0
%
0.0
%
0.0
%
Expected dividend yield
0.0
%
0.0
%
0.0
%
0.0
%
Weighted average fair value per option
$
56.00
$
73.97
$
52.20
$
69.28
Pro Forma Compensation Cost
Had the Company recorded compensation cost based
on the fair value of options granted at the grant date, as
prescribed by FASB Statement No. 123 "Accounting for
Stock Based Compensation," pro forma net income would have
been as follows (in thousands):
Years Ended December 31,
2000
2001
2002
Net income, as reported
$
6,352
$
15,996
$
18,800
Pro forma compensation cost
680
348
92
Pro forma net income
$
5,672
$
15,648
$
18,708
Employment Agreements
Certain senior executive officers have employment
agreements which provide for annual bonuses if the Company
achieves the performance goals established under its annual
incentive plan for executives. The Company has a bonus plan for
U.S. based employees which provides that 50% of the bonus earned
by any Vice President or Director shall be deferred and shall
vest in three equal annual installments. As of December 31,
2001 and 2002, $372,000 and $415,000 of bonuses were deferred,
respectively. The Company recognizes compensation expense as the
vesting requirements are met.
(14) Manufacturing Agreement
The Company and a third-party contractor (the
"Contractor") entered into a manufacturing agreement,
dated as of June 10, 1999, (the "Manufacturing
Agreement"). Subject to the terms and conditions of the
Manufacturing Agreement, the Contractor has agreed to
manufacture all of the Company's requirements for certain
cosmetic and skin care products for an initial term of five
years. Following the expiration of the initial five-year term,
the Manufacturing Agreement will be automatically extended for
additional one-year terms unless terminated by six months'
prior written notice by either party. The Manufacturing
Agreement provides for price renegotiations by the Contractor if
the Company's quarterly or annual purchase volume falls
below specified minimums. The Manufacturing Agreement requires
the Contractor to maintain insurance to cover costs associated
with any product liability or product recall caused by the acts
or omissions of the Contractor. In addition, the Company is
obligated to purchase materials acquired by the contractor based
upon product forecasts provided by the Company if the Contractor
is unable to sell such materials to a third-party. There have
been no such repurchases to date. The Contractor is solely
responsible for obtaining the inventories, manufacturing the
inventories at its current location in Chino, California,
complying with applicable laws and regulations, and performing
quality assurance functions.
F-26
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
During the fourth quarter of 2000, the Contractor
obtained $1,000,000 of advances from the Company in exchange for
an unsecured promissory note. The note bears interest at an
annual rate of 9% and is payable in monthly installments
commencing on February 15, 2001. On April 15, 2002,
the unsecured promissory note was amended to advance an
additional $320,000 to the contractor. At December 31, 2001
and 2002, approximately $349,000 and $101,000, of the note was
outstanding and was included in receivables in the accompanying
consolidated balance sheets, respectively.
(15) Foreign Currency Forward and Option
Contracts
The Company is exposed to currency risk relating
to its forecasted U.S. dollar-denominated expenditures at
Jafra S.A. As part of its overall strategy to reduce the risk of
adverse potential exchange rate fluctuations in Mexico, the
Company enters into foreign currency exchange contracts. Prior
to March 2002, the Company purchased forward exchange contracts
("forward contracts" or "forwards") to hedge
its foreign currency exposures to the Mexican peso. In March
2002, in accordance with previously approved policies, the
Company modified its hedging program to include the use of
foreign currency option contracts ("option
contracts"). The Company places forward contracts or option
contracts based on its forecasted U.S. dollar cash outflows from
Jafra S.A. over a rolling 12 month period and does not
hedge transactions that are not included in the 12 month
forecast on the date the forward contract is initiated. As a
matter of policy, the Company does not hold or issue forward
contracts for trading or speculative purposes nor does it enter
into contracts or agreements containing "embedded"
derivative features. Prior to entering into forward contracts or
option contracts, the Company evaluates the counter
parties' credit ratings. Credit risk represents the
accounting loss that would be recognized at the reporting date
if counter parties failed to perform as contracted. The Company
does not currently anticipate non-performance by such counter
parties.
Effective January 1, 2001, the Company
adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as
amended and interpreted, establishes accounting and reporting
standards for derivative instruments and hedging activities and
requires that all derivative instruments be recorded based on
fair value. In connection with the adoption of SFAS
No. 133, at January 1, 2001, the Company recorded a
net gain of $126,000 (net of a tax effect of $82,000) as a
cumulative transition adjustment to earnings. This adjustment
relates to derivatives not designated as hedges prior to
adoption of SFAS No. 133, and represents the difference
between the carrying value and the fair value of such
instruments. Under SFAS No. 133, the Company's use of
forward contracts or option contracts to hedge certain
forecasted transactions does qualify for hedge accounting. Gains
and losses from such derivatives are deferred as a separate
component of other comprehensive loss, and are recognized in
income at the same time that the underlying hedged exposure is
recognized in income. This accounting treatment results in the
matching of gains and losses from such forward contracts or
option contracts with the corresponding gains and losses
generated by the underlying hedged transactions. Contracts that
do not qualify for hedge accounting under SFAS No. 133 are
remeasured based on fair value and the gains and losses are
included as a component of net income.
The forward contracts utilized by the Company did
not qualify for hedge accounting under the applicable accounting
standards prior to adoption of SFAS No. 133 on
January 1, 2001, and accordingly such instruments were
marked-to-market with gains and losses included as a component
of exchange loss in the statements of income for the year ended
December 31, 2000.
The Company currently designates certain of its
forward contracts and option contacts as cash flow hedges of
forecasted U.S. dollar-denominated inventory purchases,
forecasted U.S. dollar-denominated intercompany charges
from JCI to Jafra S.A., forecasted management fee charges from
JCI to Jafra S.A., and U.S. dollar-denominated interest
payments. On the date the Company enters into a derivative
contract, management designates the derivative as a hedge of the
identified exposure. The Company
F-27
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
formally documents all relationships between
hedging instruments and hedged items, as well as its
risk-management objective and strategy for undertaking various
hedge transactions. In this documentation, the Company
specifically identifies the forecasted transaction that has been
designated as a hedged item and states how the hedging
instrument is expected to hedge the risks related to the hedged
item. The Company formally measures effectiveness of its hedging
relationships both at the hedge inception and on an ongoing
basis in accordance with its risk management policy. For all
qualifying and highly effective cash flow hedges, the changes in
the fair value of the derivative are deferred as a component of
other comprehensive loss. Such amounts will be reclassified from
other comprehensive loss into net income when the underlying
hedged exposure is recognized in income. For U.S.
dollar-denominated inventory purchases, this will occur upon
sale to an outside party of the related inventory. For
intercompany charges and interest, this will occur at the date
such charges are recorded by Jafra S.A.
During the year ended December 31, 2002, the
Company recognized losses of approximately $2,605,000 on forward
contracts and gains of approximately $886,000 on option
contracts (including reclassification of other comprehensive
loss) as a component of exchange loss in the accompanying
consolidated statements of income. During the year ended
December 31, 2001, the Company recognized approximately
$12,188,000 of losses on forward contracts as a component of
exchange loss in the accompanying consolidated statements of
income. During the year ended December 31, 2000, the
Company recognized approximately $10,050,000 of losses as a
component of exchange loss on forward contracts that did not
qualify for hedge accounting under accounting standards prior to
the adoption of SFAS No. 133.
Additionally, during the year ended
December 31, 2001, the Company deferred as a component of
other comprehensive loss $5,504,000 of losses on forward
contracts qualifying for hedge accounting under SFAS
No. 133. Of this amount, approximately $797,000 was
reclassified as exchange loss and $961,000 was reclassified as
cost of sales upon recognition of the underlying hedged exposure
prior to December 31, 2001. As of December 31, 2001,
the Company had deferred as a component of other comprehensive
income (loss) $3,746,000 of losses on forward contracts.
During the year ended December 31, 2002, the
Company deferred approximately an additional $1,782,000 of
losses on forward contracts qualifying for hedge accounting
under SFAS No. 133. Of the total amount deferred, during
the year ended December 31, 2002, approximately $1,650,000
of other comprehensive loss was reclassified into exchange loss
and approximately $3,139,000 was reclassified into cost of sales
upon the recognition of the underlying hedged exposure. The
Company expects that substantially all of the remaining loss of
$739,000, deferred as a component of other comprehensive loss,
will be recognized into income within the next twelve months.
During the year ended December 31, 2002, the
Company deferred as a component of other comprehensive loss
$1,336,000 of gains on option contracts qualifying for hedge
accounting under SFAS No. 133. Of this amount,
approximately $483,000 of other comprehensive loss was
reclassified to exchange loss and approximately $378,000 was
reclassified as a cost of sales offset upon the recognition of
the underlying hedged exposure. The Company expects
substantially all of the remaining gain of approximately
$475,000, deferred as a component of other comprehensive loss,
to be recognized into income within the next twelve months.
The fair value of the forward contacts at
December 31, 2001 represented an unrealized loss of
$5,540,000 consisting of $2,920,000 of unrealized losses
recorded as a component of other comprehensive loss for
qualifying hedges and $2,620,000 of unrealized losses recorded
as a component of exchange loss for non-qualifying hedges under
SFAS No. 133. As of December 31, 2002, the Company had
no outstanding forward contracts. The fair value of the option
contracts at December 31, 2002 represented an unrealized
gain of approximately $402,000, consisting of $382,000 of
unrealized gains recorded as a component of
F-28
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
other comprehensive loss for qualifying hedges
and $20,000 of unrealized gains for non-qualifying hedges under
SFAS No. 133.
During the year ended December 31, 2002, the
ineffectiveness generated by the Company's forward
contracts and option contracts designated as hedges was
insignificant. Certain hedged forecasted transactions do not
appear probable of occurring due to timing differences between
the original and current forecasts, and accordingly $164,000 of
gains were reclassified into earnings.
The outstanding option contracts had a notional
value denominated in Mexican pesos of 523,000,000 in put and
call positions at December 31, 2002 and mature at various
dates through December 31, 2003. The outstanding forward
contracts had notional values denominated in Mexican pesos of
688,873,000 at December 31, 2001 and matured in 2002.
Notional amounts do not quantify market or credit exposure or
represent assets or liabilities of the Company, but are used in
the calculation of cash settlements under the contracts.
The following table provides information about
the details of the Company's option contracts as of
December 31, 2002 (in thousands):
At December 31, 2002:
Coverage in
Fair Value in
Foreign Currency
Mexican Pesos
Average Strike Price
U.S. Dollars(1)
Maturity Date
Purchased Puts (Company may sell Peso/buy USD)
Mexican Peso
149,000
10.31-10.48
$
(113
)
Jan.-Mar. 2003
Mexican Peso
100,000
11.05-12.19
77
Apr.-June 2003
Mexican Peso
150,000
11.76-12.79
131
July-Aug 2003
Mexican Peso
124,000
12.51-12.91
21
Oct.-Dec. 2003
523,000
$
116
Written Calls (Counterparty may buy Peso/sell USD)
Mexican Peso
149,000
9.01-9.02
$
(207
)
Jan.-Mar. 2003
Mexican Peso
100,000
9.50-9.84
(144
)
Apr.-June 2003
Mexican Peso
150,000
9.69-10.19
(112
)
July-Aug 2003
Mexican Peso
124,000
10.15-10.19
(55
)
Oct.-Dec. 2003
523,000
$
(518
)
(2)
The fair value of the option contracts presented
    above, an unrealized gain of $402,000 at December 31, 2002,
    represents the carrying value and has been recorded in other
    receivables in the accompanying consolidated balance sheets.
F-29
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The tables below describe the forward contracts
that were outstanding at December 31, 2001 (in thousands):
December 31, 2001:
Forward Position
In Mexican
Maturity
Weighted Average
Fair Value in
Foreign Currency
Pesos(1)
Date
Contract Rate
U.S. Dollars(1)
Buy US Dollar/sell Mexican Peso
108,715
1/31/02
10.19
$
1,128
Sell Mexican Peso/buy US Dollar
(20,000
)
1/31/02
9.35
(34
)
Buy US Dollar/sell Mexican Peso
71,787
2/28/02
10.26
756
Sell Mexican Peso/buy US Dollar
(20,000
)
2/28/02
9.47
(48
)
Buy US Dollar/sell Mexican Peso
94,371
3/27/02
10.46
1,102
Sell Mexican Peso/buy US Dollar
(40,000
)
3/27/02
9.48
(80
)
Buy US Dollar/sell Mexican Peso
85,000
4/30/02
10.23
748
Sell Mexican Peso/buy US Dollar
(30,000
)
4/30/02
9.62
(84
)
Buy US Dollar/sell Mexican Peso
81,000
5/31/02
10.11
559
Sell Mexican Peso/buy US Dollar
(25,000
)
5/31/02
9.71
(75
)
Buy US Dollar/sell Mexican Peso
80,000
6/28/02
9.95
375
Sell Mexican Peso/buy US Dollar
(30,000
)
6/28/02
9.78
(88
)
Buy US Dollar/sell Mexican Peso
48,000
7/31/02
10.07
242
Buy US Dollar/sell Mexican Peso
100,000
8/30/02
10.05
410
Buy US Dollar/sell Mexican Peso
45,000
9/30/02
10.09
169
Buy US Dollar/sell Mexican Peso
110,000
10/31/02
10.09
338
Buy US Dollar/sell Mexican Peso
30,000
11/29/02
10.27
122
688,873
$
5,540(1
)
(3)
The Fair Value of the forward positions presented
    above, an unrealized loss of $5,540,000 at December 31,
    2001, represents the carrying value of the forward contracts and
    has been recorded in accrued liabilities in the accompanying
    consolidated balance sheets.
(16) Fourth Quarter Adjustments
During the fourth quarter of 2001, the Company
recorded a total of approximately $4,288,000 to bad debt expense
due to declining consultant liquidity as a result of the general
slowdown of the economy in Mexico and Brazil. During the fourth
quarter of 2000, the Company recorded certain adjustments
related to changes in cost accounting estimates, which resulted
in an increase to cost of sales of approximately $3,000,000.
(17) Discontinued Operations
The Company discontinued its operations in
Venezuela, Colombia, Chile and Peru. The Company has terminated
sales in these markets and has liquidated a majority of the
assets. Final liquidation of the assets in Venezuela, Colombia,
Chile and Peru is expected to be complete during the fourth
quarter of 2003 or early 2004. As such, the results of the
operations of these markets have been classified as discontinued
operations in all periods disclosed on the accompanying
consolidated statements of income. The assets and liabilities
from the discontinued operations have been segregated on the
accompanying consolidated balance sheets.
F-30
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Net sales and loss from discontinued operations
is as follows:
Venezuela
Colombia
Chile
Peru
Total
(In thousands)
For the Year Ended December 31,
    2000
Net sales
$
6,316
$
3,958
$
421
$
66
$
10,761
Income (Loss) from discontinued operations, net
    of tax
187
116
(241
)
(119
)
(57
)
For the Year Ended December 31,
    2001
Net sales
$
6,400
$
3,664
$
284
$
376
$
10,724
Income (Loss) from discontinued operations, net
    of tax
335
(47
)
(321
)
(152
)
(185
)
For the Year Ended December 31,
    2002
Net sales
$
4,349
$
3,308
$
264
$
413
$
8,334
Loss from discontinued operations, net of tax
(651
)
(109
)
(397
)
(285
)
(1,442
)
The components of assets and liabilities of the
discontinued operations is as follows:
Venezuela
Colombia
Chile
Peru
Total
(In thousands)
As of December 31, 2001
Current assets:
Cash
$
132
$
657
$
90
$
123
$
1,002
Receivables, net
637
612
33
38
1,320
Inventory
1,097
661
90
70
1,918
Prepaid and other current assets
784
354
90
116
1,344
Total assets
$
2,650
$
2,284
$
303
$
347
$
5,584
Current liabilities:
Accounts payable
$
208
$
318
$
9
$
—
$
535
Accrued liabilities
180
242
4
—
426
Other current liabilities
—
31
—
—
31
Total liabilities
$
388
$
591
$
13
$
—
$
992
As of December 31, 2002
Current assets:
Cash
$
125
$
195
$
9
$
56
$
385
Receivables, net
439
408
34
40
921
Inventory
904
663
85
61
1,713
Prepaid and other current assets
372
153
52
57
634
Total assets
$
1,840
$
1,419
$
180
$
214
$
3,653
Current liabilities:
Accounts payable
$
143
$
222
$
32
$
26
$
423
Accrued liabilities
220
189
—
—
409
Other current liabilities
—
28
—
—
28
Total liabilities
$
363
$
439
$
32
$
26
$
860
F-31
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(18) Subsequent Events
On May 20, 2003, CDRJ and certain existing
and newly formed subsidiaries completed a recapitalization of
its operations by the issuance of $90 million of new senior
secured credit facilities, consisting of a $50 million
senior secured term loan facility and a $40 million senior
secured revolving credit facility and the issuance of
$200 million of 10.75% Senior Subordinated Notes due 2011
(collectively the "recapitalization"). The proceeds
from the recapitalization were used to repay the 11.75% Senior
Subordinated Notes due 2008 (the "Notes"), originally
issued April 30, 1998, to repay all amounts outstanding
under the existing credit facilities and to make a liquidating
distribution to the shareholders of CDRJ. Jafra Worldwide
Holdings (Lux) S.àr.1, a Luxembourg
société
à responsabilité limitée
, is the liquidator
of CDRJ. In connection with the liquidation of CDRJ, the Parent,
the direct wholly owned subsidiary of CDRJ, transferred all of
its assets and liabilities, including its direct and indirect
shares of JCI, Jafra Distribution and Jafra, S.A., to Jafra
Worldwide Holdings (Lux) S.àr.1 in exchange for all of
the common stock of Jafra Worldwide Holdings
(Lux) S.àr.1.
Distribuidora Comercial Jafra, S.A. de C.V.,
a
sociedad anónima de capital variable
, organized
under the laws of the United Mexican States ("Jafra
Distribution") on February 26, 2003, is owned by five
indirect wholly owned subsidiaries of Jafra Worldwide Holdings
(Lux), S.àr.1. Jafra Distribution was organized by
CDRJ to conduct the Company's distribution business in
Mexico. The distribution business was previously conducted by
Distribuidora Venus, S.A. de C.V., ("Venus") a
wholly owned subsidiary of Jafra, S.A.
In connection with the recapitalization on
May 20, 2003, Jafra Distribution and JCI issued
$200 million aggregate principal amount of 10.75%
Subordinated Notes due 2011 (the "New Notes"). The New
Notes represent several obligations of Jafra Distribution and
JCI with each participating on a pro rata basis upon redemption.
Jafra Distribution and JCI have fully and unconditionally
guaranteed the obligations under the Notes of the other on a
senior subordinated basis, subject to a 30-day standstill period
prior to enforcement of such guarantees. Jafra, S.A. has
fully and unconditionally guaranteed the obligations of Jafra
Distribution under the Notes, subject to a 30-day standstill
period prior to the enforcement of such guarantees.
Further, in connection with the recapitalization,
the Board of Directors approved an amendment to CDRJ's
stock incentive plan to reflect the equity instruments as rights
to shares in the Parent rather than shares in CDRJ. In addition,
the Board approved a reduction in the exercise price of all
existing options of $100, $150 and $210 to $39.91, $59.86 and
$83.80, respectively, due to the recapitalization. In order to
affect this re-pricing, the exercise price per share of all
existing options of CDRJ was reduced and the awards aggregate
intrinsic value immediately after the recapitalization was not
greater than the aggregate intrinsic value immediately before
recapitalization.
*****
F-32
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
September 30,
2002
2003
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
26,757
$
8,925
Receivables, net
40,205
31,753
Inventories
33,573
43,567
Prepaid income taxes
258
4,044
Intercompany receivables
822
—
Prepaid expenses and other current assets
4,846
8,782
Current assets from discontinued operations
3,653
366
Total current assets
110,114
97,437
Property and equipment, net
60,395
58,916
Other assets:
Goodwill
66,108
63,967
Trademarks
44,570
42,015
Deferred financing fees and other, net
7,796
18,695
Total
$
288,983
$
281,030
LIABILITIES AND STOCKHOLDER'S EQUITY
    (DEFICIT)
Current liabilities:
Current portion of long-term debt
$
6,489
$
6,875
Accounts payable
18,215
17,513
Accrued liabilities
44,403
45,677
Income taxes payable
4,911
—
Deferred income taxes
2,073
2,071
Current liabilities from discontinued operations
860
157
Total current liabilities
76,951
72,293
Long-term debt
77,894
241,875
Deferred income taxes
21,186
20,254
Noncurrent payable to affiliates
16
—
Other long-term liabilities
3,787
4,407
Total liabilities
179,834
338,829
Commitments and contingencies
—
—
Stockholder's equity (deficit):
Quotas par value $100: 150 shares authorized,
    issued and outstanding in 2002 and 2003.
15
15
Additional paid-in capital
83,618
—
Retained earnings (deficit)
37,784
(46,432
)
Accumulated other comprehensive loss
(12,268
)
(11,382
)
Total stockholders' equity (deficit)
109,149
(57,799
)
Total
$
288,983
$
281,030
See accompanying notes to consolidated financial
statements
F-33
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2002
2003
Net sales
$
285,340
$
276,742
Cost of sales
66,122
63,794
Gross profit
219,218
212,948
Selling, general and administrative expenses
174,959
188,493
Income from operations
44,259
24,455
Other income (expense):
Exchange loss, net
(9,814
)
(7,764
)
Interest expense, net
(8,745
)
(14,102
)
Loss on early extinguishment of debt
—
(6,620
)
Other, net
215
(296
)
Income (loss) from continuing operations
    before income taxes and cumulative effect of accounting change
25,915
(4,327
)
Income tax expense
9,713
1,159
Income (loss) from continuing operations
    before cumulative effect of accounting change
16,202
(5,486
)
Loss on discontinued operations, net of income
    tax expense of $55 and $28 in 2002 and 2003
(1,099
)
(2,567
)
Income (loss) before cumulative effect of
    accounting change
15,103
(8,053
)
Cumulative effect of accounting change
(244
)
—
Net income (loss)
$
14,859
$
(8,053
)
See accompanying notes to consolidated financial
statements
F-34
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2002
2003
Cash flows from operating
    activities:
Net income (loss) from continuing operations
$
16,202
$
(5,486
)
Cumulative effect of accounting change
244
—
Income (loss) from continuing operations
    before cumulative effect of accounting change
16,446
(5,486
)
Adjustments to reconcile income (loss) from
    continuing operations before cumulative effect of accounting
    change to net cash (used in) provided by operating activities:
Gain on sale of property and equipment
(88
)
—
Depreciation and amortization
3,766
4,359
Amortization and write off of deferred financing
    fees
1,063
3,234
Provision for uncollectible accounts receivable
9,831
7,038
Asset impairment charge
—
388
Unrealized foreign exchange and derivative loss
8,483
8,498
Deferred realized foreign exchange loss
515
646
Deferred income taxes
(3,504
)
—
Changes in operating assets and liabilities:
Receivables
(15,341
)
(718
)
Inventories
(1,725
)
(11,414
)
Prepaid expenses and other current assets
2,960
(3,434
)
Other assets
1,334
149
Accounts payable and accrued liabilities
(803
)
(1,108
)
Income taxes payable/prepaid
(448
)
(5,301
)
Other long-term liabilities
408
620
Receivable from affiliate
—
806
Net operating activities of discontinued
    operations
357
19
Net cash (used in) provided by operating
    activities
23,254
(1,704
)
Cash flows from investing
    activities:
Proceeds from sale of property and equipment
231
—
Purchases of property and equipment
(7,588
)
(4,963
)
Other
(303
)
(643
)
Net investing activities of discontinued
    operations
(17
)
—
Net cash used in investing activities
(7,677
)
(5,606
)
Cash flows from financing
    activities:
Proceeds from issuance of subordinated debt due
    2011.
—
200,000
Proceeds from issuance of term loan
—
50,000
Repurchase of subordinated debt due 2008.
—
(75,180
)
Repayments under term loan facility
(5,375
)
(9,625
)
Net borrowings under revolving credit facility
(1,800
)
—
Distribution of additional paid-in capital to
    shareholder
—
(83,618
)
Distribution payment to shareholder from retained
    earnings
—
(76,163
)
Deferred financing costs
—
(14,449
)
Net repayments under bank debt
(479
)
(828
)
Net cash used in financing activities
(7,654
)
(9,863
)
Effect of exchange rate changes on cash
(3,210
)
(659
)
Net (decrease) increase in cash and cash
    equivalents
4,713
(17,832
)
Cash and cash equivalents at beginning of period
5,646
26,757
Cash and cash equivalents at end of period
$
10,359
$
8,925
See accompanying notes to consolidated financial
statements
F-35
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(1)
Basis of Presentation
CDRJ North Atlantic (Lux) S.àr.L., a
Luxembourg
société à responsabilité
limitée
(the "Company"), is a wholly-owned
subsidiary of CDRJ Investments (Lux) S.A. a Luxembourg
société anonyme
("CDRJ"). Jafra
Worldwide Holdings (Lux) S.àr.l, a Luxembourg
société à responsabilité limitée
("Worldwide") is a wholly-owned subsidiary of the
Company. CDRJ North Atlantic (Lux) S.àr.L. is to be renamed
Jafra S.A.
On May 20, 2003, Worldwide, Jafra Cosmetics
International, Inc. ("JCI") and Distribuidora
Comercial Jafra S.A. de C.V. ("Jafra Distribution" and
together with JCI, the "Issuers") completed a
recapitalization of their operations by entering into
$90 million of new senior secured credit facilities,
consisting of a $50 million senior secured term loan
facility and a $40 million senior secured revolving credit
facility and issuing $200 million of 10 3/4% Senior
Subordinated Notes due 2011 (collectively, the
"Recapitalization"). The proceeds from the
Recapitalization were used to redeem the 11 3/4% Senior
Subordinated Notes due 2008 (the "Old Notes") of JCI
and Jafra Cometics International, S.A. de C.V. ("Jafra
S.A."), to repay all amounts outstanding under the existing
credit facilities of JCI and Jafra S.A. and to make certain
payments to CDRJ and employees of JCI and Jafra S.A. The
stockholders of CDRJ then resolved that CDRJ be liquidated and
appointed Worldwide to act as its liquidator. Thereafter, CDRJ
made an initial liquidating distribution of such proceeds to its
stockholders. In connection with the liquidation of CDRJ, the
Company transferred all of its assets and liabilities, including
its direct and indirect holdings of JCI, Jafra S.A. and Jafra
Distribution, to Worldwide in exchange for additional shares of
common stock of Worldwide. Jafra S.A. and Jafra Distribution are
collectively referred to as "Jafra Mexico."
Jafra Distribution was organized
February 26, 2003 to conduct the distribution functions of
the Company's Mexican operations. Worldwide was organized
on February 24, 2003 as a holding company to conduct the
worldwide Jafra cosmetics business through its subsidiaries.
The accompanying unaudited interim consolidated
financial statements as of September 30, 2003 and for the
nine months ended September 30, 2002 and 2003, reflect the
operations of the Company and its subsidiaries and have been
prepared in accordance with Article 10 of the Securities
and Exchange Commission's Regulation S-X. In the
opinion of management, the accompanying unaudited interim
financial statements contain all adjustments, including normal
recurring adjustments, necessary to present fairly the
Company's consolidated financial statements as of
September 30, 2003 and for the interim periods presented.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
The functional currency of certain of the
Company's foreign subsidiaries generally consists of
currencies other than the U.S. dollar. For presentation
purposes, assets and liabilities are translated into
U.S. dollars at current exchange rates, and related
revenues and expenses are translated at average exchange rates
in effect during the period. Resulting translation adjustments
are recorded as a component of other comprehensive loss.
Management Incentive
Arrangements.
The Company applies
Accounting principles Board Opinion ("APB")
No. 25, "Accounting for Stock issued to
Employees" and related Interpretations in accounting for
the issuance of stock options under the Company's Stock
Incentive Plan. No options were granted during the nine months
ended September 30, 2003. Had the Company recorded
compensation cost based on the fair value of options granted at
the grant date, as prescribed by Statement of Financial
Accounting Standards ("SFAS") No. 123,
"Accounting for Stock Based Compensation," the
compensation expense for the nine months ended
September 30, 2002 and 2003 would be immaterial to the
consolidated statements of operations.
F-36
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
New Accounting
Pronouncements.
The Company adopted
SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13,
and Technical Corrections" on January 1, 2003. This
statement rescinds or modifies existing authoritative
pronouncements including SFAS No. 4 "Reporting Gains
and Losses from Extinguishment of Debt." As a result of the
issuance of SFAS No. 145, gains and losses from
extinguishment of debt are classified as extraordinary items
only if they meet the criteria in APB Opinion 30,
"Reporting the Results of Operations — Reporting
the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." Applying the provisions of APB
Opinion 30 distinguishes transactions that are part of an
entity's recurring operations from those that are unusual
or infrequent or that meet the criteria for classification as an
extraordinary item. Based on the adoption of this principle, the
Company has reclassified any gain or loss on extinguishment of
debt that was classified as an extraordinary item in prior
periods and has classified its current loss on extinguishment of
debt within other income (expense).
The Company adopted SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal
Activities" on January 1, 2003 which did not result in
any material impact to the Company's consolidated
statements of operations. This statement addresses financial
accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No. 94-3,
"Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity."
(2)
Inventories
Inventories consist of the following (in
thousands):
December 31,
September 30,
2002
2003
Raw materials and supplies
$
5,101
$
5,293
Finished goods
28,472
38,274
Total inventories
$
33,573
$
43,567
(3)
Property and Equipment
Property and equipment consist of the following
(in thousands):
December 31,
September 30,
2002
2003
Land
$
16,448
$
15,869
Buildings
17,452
16,849
Machinery, equipment and other
41,539
44,881
75,439
77,599
Less accumulated depreciation
15,044
18,683
Property and equipment, net
$
60,395
$
58,916
(4)
Goodwill and Other Intangible
    Assets.
The Company's intangible assets consist of
trademarks and goodwill. The Company has determined trademarks
to have an indefinite life. The carrying value of trademarks was
$42,015,000 as of
F-37
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
September 30, 2003. The changes in the
carrying amount of goodwill for the nine months ended
September 30, 2003 are as follows (in thousands):
United
All
Consolidated
Goodwill
States
Mexico
Europe
Others
Total
Balance as of December 31, 2002
$
32,188
$
28,548
$
5,300
$
72
$
66,108
Impairment losses
—
—
—
(72
)
(72
)
Translation effect
—
(1,610
)
(459
)
—
(2,069
)
Balance as of September 30, 2003
$
32,188
$
26,938
$
4,841
$
—
$
63,967
In connection with the implementation of SFAS
No. 142, "Goodwill and Other Intangible Assets,"
the Company identified all reporting units and allocated all
goodwill accordingly. During the nine months ended
September 30, 2003, the Company identified impairment
indicators regarding the Venezuelan operations given the
Company's decision to exit this market. The Company
recorded an impairment loss of $72,000 for goodwill originally
allocated to the Venezuelan reporting unit.
(5)
Income Taxes
The actual income tax rate of the Company differs
from the "expected" tax rate, computed by applying the
U.S. federal corporate rate of 35% to income (loss) from
continuing operations before income taxes and cumulative effect
of accounting change for the nine months ended
September 30, 2003. During the nine months ended
September 30, 2003, Jafra Mexico reported pretax income and
income tax expense. The income tax expense was partially offset
by an income tax benefit in the United States based on pretax
net loss. Additionally, during the nine months ended
September 30, 2003, the Company recorded valuation
allowances against certain pretax losses in other subsidiaries.
The actual income tax rate of the Company differed from the
expected rate for the nine months ended September 30, 2002,
principally as a result of (i) a lower effective tax rate
at Jafra Mexico, as the result of the enactment of changes in
Mexico's future corporate statutory tax rates and the
related impact on Jafra Mexico's net deferred income tax
liabilities of $1,167,000 and (ii) the release of valuation
allowances of $2,337,000 against certain foreign tax credits in
the United States. These were offset by state income taxes in
the United States and valuation allowances provided against
certain operating losses in South America and Europe. The new
tax legislation in Mexico reduces Mexico's corporate income
tax rate annually in one-percent increments from 35% to 32%
beginning January 1, 2003 through 2005.
(6)
Debt and Distribution to
    Shareholders
On May 20, 2003, the Issuers issued
$200 million aggregate principal amount of 10 3/4%
Subordinated Notes due 2011 (the "New Notes") pursuant
to an Indenture dated May 20, 2003 (the
"Indenture") and entered into a $90 million
senior credit agreement ("the "Senior Credit
Agreement"). The New Notes represent the several
obligations of JCI and Jafra Distribution in the amount of
$80 million and $120 million, respectively. The New
Notes mature in 2011 and bear a fixed interest rate of
10 3/4% payable semi-annually.
JCI is a direct wholly-owned subsidiary of
Worldwide and Jafra Distribution is an indirect wholly-owned
subsidiary of Worldwide. Worldwide has fully and unconditionally
guaranteed the obligations under the New Notes on a senior
subordinated basis on the terms provided in the Indenture
governing the New Notes. Each Issuer has fully and
unconditionally guaranteed the obligations of the other under
the New Notes on a senior subordinated basis, subject to a
30-day standstill period prior to enforcement of such
guarantees. Each existing and subsequently acquired or organized
U.S. subsidiary of JCI is required to fully and
unconditionally guarantee the U.S. portion of New Notes
jointly and severally, on a senior subordinated basis. Each
acquired or organized Mexican subsidiary of Jafra Distribution
is also required to
F-38
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
fully and unconditionally guarantee the Mexican
portion of the New Notes jointly and severally, on a senior
subordinated basis. Jafra S.A. has also fully and
unconditionally guaranteed the obligations of Jafra Distribution
under the New Notes. Each existing and subsequently acquired or
organized subsidiary of Jafra S.A. is also required to fully and
unconditionally guarantee the Mexican portion of the New Notes
jointly and severally, on a senior subordinated basis.
The New Notes are unsecured and are generally not
redeemable for four years from their issue date. Thereafter, the
New Notes will be redeemable on a pro rata basis at premiums
declining to par in the sixth year. Prior to May 16, 2006,
the Issuers at their option may concurrently redeem the New
Notes in an aggregate principal amount equal to up to 35% of the
original aggregate principal amount of the New Notes, with funds
in an aggregate amount not exceeding the aggregate cash proceeds
of one or more equity offerings, at a redemption price of
110.75% plus accrued interest. On September 15, 2003, the
Issuers consummated a registered exchange of the New Notes under
the Securities Act of 1933.
In addition, the Issuers entered into the Senior
Credit Agreement, which provides for senior secured credit
facilities in an aggregate principal amount of $90 million,
consisting of a $50 million senior secured term loan
facility maturing in 2008 and a $40 million senior secured
revolving credit facility, also maturing in 2008, of which
$20 million is available as letters of credit. The Senior
Credit Agreement is allocated 40% to JCI and 60% to Jafra
Distribution. On May 20, 2003, JCI borrowed
$20 million and Jafra Distribution borrowed
$30 million of the loans under the term facility. At
September 30, 2003, $48,750,000 was outstanding under the
term loan and no amounts were outstanding under the revolving
credit facility. Borrowings under the term loan facility are
payable in quarterly installments of principal and interest over
five years through May 20, 2008. Borrowings under the
revolving credit facility mature on May 20, 2008.
Borrowings under the Senior Credit Agreement bear interest at an
annual rate of LIBOR plus a margin not to exceed 4.00% or an
alternate base rate plus an applicable margin not to exceed
3.00%. The interest rate in effect at September 30, 2003
was 5.2% for LIBOR borrowings and 7.0% for Prime based
borrowings. Borrowings under the Senior Credit Agreement are
secured by substantially all of the assets of JCI and Jafra
Distribution.
Both the Indenture and the Senior Credit
Agreement contain certain covenants that limit Worldwide's
ability to incur additional indebtedness, pay cash dividends and
make certain other payments. These debt agreements also require
Worldwide to maintain certain financial ratios including a
minimum EBITDA to cash interest expense coverage ratio and a
maximum debt to EBITDA ratio. As of September 30, 2003,
Worldwide was in compliance with all covenants.
On May 23, 2003, with proceeds from the
issuance of the New Notes and borrowings under the Senior Credit
Agreement, JCI and Jafra S.A. redeemed the Old Notes in the
aggregate outstanding principal amount of $75,180,000 at a
premium of approximately $4,417,000. Additionally, JCI and Jafra
S.A. repaid $7,375,000 under its existing credit agreement (the
"Old Credit Agreement") and terminated the Old Credit
Agreement. In connection with the redemption of the Old Notes
and the termination of the Old Credit Agreement, the Company
wrote off approximately $2,203,000 of capitalized deferred
financing fees. Total costs related to the redemption of the Old
Notes and the repayment of amounts outstanding under the Old
Credit Agreement were $6,620,000 and were recorded as a
component of net (loss) income on the accompanying
consolidated statements of operations.
After the redemption of the Old Notes and
repayment of all outstanding amounts under the Old Credit
Agreement, the Company made a distribution to CDRJ of
$159,780,846 and then the shareholders of CDRJ made a
distribution of $157,609,000 to its shareholders of record as of
May 20, 2003. JCI and Jafra S.A. also made a special
payment to the holders of Company options and certain members of
management and non-employee directors. (See footnote 9).
F-39
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company capitalized $14,449,000 of costs
related to the issuance of the New Notes and the Senior Credit
Agreement as deferred financing fees. These deferred financing
fees are reported as a noncurrent asset on the accompanying
consolidated balance sheets and are being amortized on a basis
that approximates the interest method over the term of the New
Notes and the Senior Credit Agreement. As of September 30,
2003, approximately $740,000 of the deferred financing fees were
amortized.
(7)
Management Incentive Plan
In connection with the Recapitalization, the
board of directors approved an amendment to CDRJ's stock
incentive plan (the "Stock Incentive Plan") to reflect
the equity instruments as rights to shares in North Atlantic
rather than shares in CDRJ. In addition the board approved a
reduction in the exercise price of all existing stock options
due to the Recapitalization. In order to affect this re-pricing
the exercise price per share of all existing options of CDRJ,
was reduced such that the awards ratio of exercise price per
share to the market value per share was not reduced and the
awards aggregate intrinsic value immediately after the
Recapitalization was not greater than the aggregate intrinsic
value immediately before Recapitalization. The amendments became
effective as of the initiation of the liquidation of CDRJ.
(8)
Comprehensive Income (Loss)
Comprehensive income (loss) is summarized as
follows (in thousands):
Nine Months Ended
September 30,
2002
2003
Net (loss) income
$
14,859
$
(8,053
)
Unrealized and deferred realized gain on
    derivatives
203
303
Reclassification of deferred realized
    (loss) gain to
exchange (loss) gain
882
(549
)
Reclassification of deferred realized loss to
    cost of sales
2,421
654
Tax benefit on unrealized and deferred realized
    (loss) gain on derivatives
(1,227
)
(49
)
Foreign currency translation adjustments
(7,600
)
527
Comprehensive income (loss)
$
9,538
$
(7,167
)
(9)
Related Party Transaction
In connection with the Recapitalization, the
board of directors authorized CDRJ to reprice all outstanding
Company stock options. (See footnote 7) In order to
compensate option holders for any diminished value of the
outstanding options, the board of directors further authorized
$10,391,000 in bonus payments to current option holders during
the nine months ended September 30, 2003. Additionally, the
Company authorized a special bonus of $2,715,000 (excluding
employer taxes) to certain members of management and
non-employee directors for contributions in completing the
Recapitalization of CDRJ. Bonus payments were recorded as
compensation expense as a component of income from operations
within the consolidated statements of operations.
(10) Financial Reporting for Business
Segments
The Company's business is comprised of one
industry segment, direct selling, with worldwide operations. The
Company is organized into geographical business units that each
sell the full line of Jafra cosmetics, skin care, body care,
fragrances, and other products. Jafra has three reportable
business
F-40
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
segments: Mexico, the United States, and Europe.
Business results for subsidiaries in South America, the
Dominican Republic, and Thailand are combined and included in
the following table under the caption "All Others".
The accounting policies used to prepare the
information reviewed by the Company's chief operating
decision makers are the same as those described in the summary
of significant accounting policies included in the
Company's audited consolidated financial statements as of
and for the year ended December 31, 2002 included in the
CDRJ's Annual Report on Form 10-K. The Company
evaluates performance based on segment operating income,
excluding restructuring and impairment charges, unusual gains
and losses, and amortization of goodwill and intangibles.
Consistent with the information reviewed by the Company's
chief operating decision makers, corporate costs, foreign
exchange gains and losses, interest expense, other nonoperating
income or expense, and income taxes are not allocated to
operating segments for purposes of this presentation. The
effects of intersegment sales (net sales and related gross
profit) are excluded from the related captions below and from
the computation of segment operating income.
Corporate,
United
All
Total
Unallocated
Consolidated
Mexico
States
Europe
Others
Segments
And Other
Total
(in thousands)
As of and for the Nine Months Ended
    September 30, 2002
Net sales
$
190,502
$
66,882
$
18,599
$
9,357
$
285,340
$
—
$
285,340
Operating income (loss)
49,953
10,865
185
(3,728
)
57,275
(13,016
)
44,259
Depreciation and amortization
1,511
1,719
289
247
3,766
—
3,766
Capital expenditures
2,026
5,197
78
287
7,588
—
7,588
Segment assets
176,641
79,712
18,332
2,126
276,811
3,243
280,054
Discontinued operations assets
—
—
—
4,113
4,113
—
4,113
Goodwill
28,983
32,188
5,548
72
66,791
—
66,791
As of and for the Nine Months Ended
    September 30, 2003
Net sales
$
172,057
$
74,483
$
22,670
$
7,532
$
276,742
$
—
$
276,742
Operating income (loss)
44,845
11,646
473
(3,868
)
53,096
(28,641
)
24,455
Depreciation and amortization
1,688
2,067
317
287
4,359
—
4,359
Capital expenditures
1,814
2,565
305
279
4,963
—
4,963
Segment assets
172,466
84,386
18,744
6,098
281,694
(1,030
)
280,664
Discontinued operations assets
—
—
—
366
366
—
366
Goodwill
26,938
32,188
4,841
—
63,967
—
63,967
(11) Foreign Currency Forward and Option
Contracts
The Company is exposed to currency risk relating
to its forecasted U.S. dollar-denominated expenditures at Jafra
Mexico. As part of its overall strategy to reduce the risk of
potential adverse exchange rate fluctuations in Mexico, the
Company entered into foreign currency exchange contracts
("forward contracts") during the first four months of
2002, and entered into foreign currency option contracts
("option contracts" or "options") during
2002 and 2003. The Company places forward contracts or option
contracts based on its rolling forecasted cash outflows from
Jafra Mexico and hedges transactions included in the forecast on
the date the forward contract or option contract is initiated.
As a matter of policy, the Company does not hold or issue
forward contracts or option contracts for trading or speculative
purposes nor does it enter into contracts or agreements
containing "embedded" derivative features.
F-41
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company currently designates certain of its
forward contracts and option contracts as cash flow hedges of
forecasted U.S. dollar-denominated inventory purchases,
forecasted U.S. dollar-denominated intercompany charges
from JCI to Jafra Mexico, forecasted management fee charges from
JCI to Jafra Mexico, and U.S. dollar-denominated interest
payments. For all qualifying and highly effective cash flow
hedges, the changes in the fair value of the derivative are
deferred as a component of other comprehensive loss. Such
amounts will be reclassified from other comprehensive loss into
net (loss) income when the underlying hedged exposure is
recognized in income. For U.S. dollar-denominated inventory
purchases, this will occur upon sale to an outside party of the
related inventory. For intercompany charges and interest, this
will occur at the date such charges are paid by Jafra Mexico.
During the nine months ended September 30,
2003, the Company recognized gains of approximately $627,000 on
option contracts. The Company recognized losses on forward
contracts of approximately $949,000 during the nine months ended
September 30, 2002. The Company recognized gains on option
contracts of approximately $755,000 during the nine months ended
September 30, 2002, in the accompanying consolidated
statements of operations.
As of December 31, 2001, the Company had
deferred as a component of other comprehensive loss $3,746,000
of losses on forward contracts. During the nine months ended
September 30, 2002, the Company deferred as a component of
other comprehensive loss an additional $1,779,000 of losses on
forward contracts and $1,982,000 of gains on option contracts
qualifying for hedge accounting under SFAS No. 133. During
the nine months ended September 30, 2002, approximately
$882,000 was reclassified as exchange loss and $2,421,000 was
reclassified as cost of sales upon recognition of the underlying
hedged exposure.
As of December 31, 2002, the Company had
deferred as a component of other comprehensive loss $739,000 of
losses on forward contracts and $475,000 of gains on option
contracts. During the nine months ended September 30, 2003,
the Company deferred as a component of other comprehensive loss
an additional $303,000 of gains on option contracts qualifying
for hedge accounting under SFAS No. 133. During the nine
months ended September 30, 2003, approximately $549,000 of
gains were reclassified as exchange loss and approximately
$654,000 of losses were reclassified as cost of sales upon the
recognition of the underlying hedged exposure. The Company
expects that substantially all of the remaining gain of $144,000
deferred as a component of other comprehensive loss at
September 30, 2003 will be recognized into net income
(loss) within the next twelve months.
The fair value of the option contracts was
$144,000 at September 30, 2003 and has been recorded in
other receivables in the consolidated balance sheets. The fair
value of the option contracts was $402,000 at December 31,
2002, and was recorded in other receivables in the consolidated
balance sheets.
During the nine months ended September 30,
2003 and 2002, the ineffectiveness generated by the
Company's forward and option contracts designated as hedges
was insignificant. Certain hedged forecasted transactions do not
appear probable of occurring due to timing differences between
the original and current forecasts, and accordingly during the
nine months ended September 30, 2003 and 2002, $230,000 and
$162,000, respectively, of gains, were reclassified into
earnings.
The outstanding foreign currency option contracts
had a notional value denominated in Mexican pesos of 743,000,000
in put and call positions at September 30, 2003 and mature
at various dates through December 31, 2004. The outstanding
foreign currency option contracts had a notional value
denominated in Mexican pesos of 523,000,000 in put and call
positions at December 31, 2002 and mature at various dates
through December 31, 2003. Notional amounts do not quantify
market or credit exposure or represent assets or liabilities of
the Company, but are used in the calculation of cash settlements
under the contracts.
F-42
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(12) Discontinued Operations/ Markets to
be Exited
As of September 30, 2003, the Company
discontinued its operations in Venezuela, Colombia, Chile and
Peru. The Company has terminated sales in these markets and has
liquidated a majority of the assets during the quarter ended
September 30, 2003. Final liquidation of the assets in
Venezuela, Colombia, Chile and Peru is expected to be complete
during the fourth quarter of 2003 or early 2004. As such, the
results of the operations of these markets has been classified
as discontinued operations in all periods disclosed on the
statements of operations. The assets and liabilities from the
discontinued operations has been segregated on the accompanying
balance sheets.
Net sales and loss from discontinued operations
is as follows:
Venezuela
Colombia
Chile
Peru
Total
(in thousands)
For the Nine Months Ended September 30,
    2002
Net sales
$
3,632
$
2,628
$
212
$
311
$
6,783
Income (Loss) from discontinued operations net of
    tax
(543
)
38
(369
)
(225
)
(1,099
)
For the Nine Months Ended September 30,
    2003
Net sales
$
1,255
$
1,004
$
97
$
127
$
2,483
Loss from discontinued operations net of tax
(995
)
(1,129
)
(191
)
(252
)
(2,567
)
The components of assets and liabilities of the
discontinued operations is as follows:
Venezuela
Colombia
Chile
Peru
Total
(in thousands)
As of December 31, 2002
Current assets:
Cash
$
125
$
195
$
9
$
56
$
385
Receivables, net
439
408
34
40
921
Inventory
904
663
85
61
1,713
Prepaid and other current assets
372
153
52
57
634
Total assets
$
1,840
$
1,419
$
180
$
214
$
3,653
Current liabilities:
Accounts payable
$
143
$
222
$
32
$
26
$
423
Accrued liabilities
220
189
—
—
409
Other current liabilities
—
28
—
—
28
Total liabilities
$
363
$
439
$
32
$
26
$
860
F-43
Table of Contents
CDRJ NORTH ATLANTIC (LUX) S.àR.L. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Venezuela
Colombia
Chile
Peru
Total
(in thousands)
As of September 30, 2003
Current assets:
Cash
$
12
$
43
$
36
$
18
$
109
Receivables, net
1
40
—
—
41
Inventory
174
—
17
—
191
Prepaid and other current assets
3
—
3
19
25
Total assets
$
190
$
83
$
56
$
37
$
366
Current liabilities:
Accounts payable
$
—
$
11
$
2
$
23
$
36
Accrued liabilities
19
84
—
—
103
Other current liabilities
—
18
—
—
18
Total liabilities
$
19
$
113
$
2
$
23
$
157
In addition to the markets discontinued, the
Company is currently evaluating its operations in Argentina and
Brazil for potential restructuring or discontinuation. The
Company has begun implementation of plans to liquidate its
operations in Thailand and expect to exit the market by the end
of the fourth quarter of 2003.
F-44
Table of Contents
[Inside Back Cover]
[Photographs of skin care and color cosmetic
products;
photographs depicting Jafra
consultants]
Table of Contents
[Jafra logo]
Until                     ,
2004 (25 days after the date of this offering), all dealers
that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation
to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
Table of Contents
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 13.
Other Expenses of Issuance and
    Distribution
The following table itemizes the expenses
incurred by the Registrant in connection with the issuance and
distribution of the securities being registered, other than
underwriting discounts. All the amounts shown are estimates
except the Securities and Exchange Commission registration fee
and the NASD filing fee.
Registration fee — Securities and
    Exchange Commission
$
12,670
Filing fee — National Association of
    Securities Dealers, Inc.
$
10,500
Listing fee
$
*
Accounting fees and expenses
$
*
Legal fees and expenses (other than blue sky)
$
*
Printing; stock certificates
$
*
Transfer agent and registrar fees
$
*
Miscellaneous
$
*
Total
$
*
*
To be completed by amendment.
Item 14.
Indemnification of Officers and
    Directors
Under the laws of Luxembourg, directors of a
société anonyme, such as Jafra S.A., do not in
principle incur any personal liability for the debts and
obligations of the company. Directors are however liable for
damages caused through their fault. Article 59 of the
August 15, 1915 Luxembourg law on commercial companies, for
instance, provides that Directors are responsible to the
company, in accordance with the general provisions of Luxembourg
law, for the execution of the mandate for which they have been
appointed and for the faults committed during their management.
They are jointly and severally liable either to the company or
to third parties for all damages resulting from infringements of
the law or of the company's articles. They shall be
discharged from this liability for infringements in which they
did not take part, only if no fault is imputable to them and if
they denounce the infringements to the next general meeting of
the shareholders after the date at which they became aware
thereof. The members of the board of directors may be discharged
from their liability by the company's shareholders, but
such dischargement remains strictly internal to the company.
Directors may not be discharged from their obligations towards
third parties. Furthermore, in the event of bankruptcy of the
company, according to article 495-1 of the Luxembourg Commercial
Code, the Luxembourg court may hold the company's directors
liable to reimburse any indebtedness of the bankrupt company,
whenever the company's assets are not sufficient and the
director's serious and wrongful offences have led to the
bankruptcy of the company. Under article 495 of the Luxembourg
Commercial Code, directors may be declared personally bankrupt
if (i) they abusively pursued, for their interest, a non
profitable business which resulted in the company becoming
insolvent or (ii) they disposed of corporate assets in the
same manner as if those had been their own personal assets or
(iii) they carried out business on behalf of the company
for their personal interest.
Article 9 of the Articles of Incorporation
of Jafra S.A. provides for the indemnification of directors
of Jafra S.A. as follows:
The company shall indemnify any director and his
or her heirs, executors and administrators, against expenses
(including attorneys' fees) judgments and fines in
connection with any action, suit or proceeding or appeal
therefrom, to which he may be made a party by reason of his
being or having been a director of the company, or, at the
request of the company, of any other company partnership, joint
venture, trust or other enterprise in which the company holds a
direct or indirect ownership interest or of which the company is
a direct or indirect creditor and by which he is not entitled to
be indemnified,
II-1
Table of Contents
provided that he did not act recklessly in a
manner he believed to be not in or opposed to the best interests
of the company, and, with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct was
unlawful; and in the event of a settlement, such indemnification
shall be provided for all expenses as and when they are incurred
and amounts paid in connection with such settlement unless the
company is advised by its legal counsel that the person to be
indemnified acted recklessly or intentionally not in or opposed
to the best interests of the company; except that in the case of
an action or suit brought by the company against such a
director, to procure a judgment in favor of the company
(1) such indemnification shall be limited to expenses
(including attorneys' fees) actually and reasonably
incurred by such person in the defense or settlement of such
action or suit, and (2) notwithstanding any other
provisions hereof, no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the company unless and only to the
extent that the Luxembourg Courts or the courts in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such costs and expenses as
the Luxembourg Court or such other court may deem legal and
proper.
The company may purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a
director, of the company, or is or was serving at the request of
the company in any equivalent position in any such other
company, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him
or on his behalf in any such capacity, or arising out of his
status as such, whether or not the company would have the power
to indemnify him against such liability under the provisions of
this Article, provided that such insurance is available on
acceptable terms, which determination shall be made by a vote of
a majority of the directors.
If this Article or any portion hereof shall be
invalidated on any ground by any court of competent
jurisdiction, then the company shall nevertheless indemnify each
such director, and may indemnify each employee or agent of the
company as to costs, charges and expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative,
including an action by or in the right of the company, to the
fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.
Subject to the applicable provisions of
Luxembourg law and in particular Section 59 of the
Luxembourg Law on Commercial Companies, no director, of the
company shall be liable to the company or its stockholders for
his actions or omissions when performing his duties as a
director, provided that nothing contained in these Articles of
Incorporation shall eliminate or limit the liability of a
director, (i) for any breach of his duty of loyalty to the
company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of the law, or (iii) for any transaction
from which the director derived an improper personal benefit.
Item 15.
Recent Sales of Unregistered
    Securities
In the past three years, there have been no
issuances of securities of Jafra S.A. Prior to the closing of
the sale of the shares of common stock offered hereby,
outstanding options granted to our employees to purchase shares
of CDRJ Investments (Lux) S.A. will automatically convert into
options to purchase shares of our common stock.
II-2
Table of Contents
Item 16.
Exhibits and Financial Statement
    Schedules.
(a)
Exhibit
Number
Description of Document
1.1
Form of Underwriting Agreement.*
2.1
Notarial Deed,
    dated           ,
    2004, of CDRJ North Atlantic (Lux) S.àr.l., providing for
    the conversion of CDRJ North Atlantic (Lux) S.àr.l. to a
    société anonyme and change of name to Jafra, together
    with an unofficial summary in English.*
3.1
Articles of Incorporation of Jafra S.A.,
    dated           ,
    2004, together with an unofficial English translation.*
4.1
Indenture, dated May 20, 2003, by and among
    Jafra Cosmetics International, Inc., Distribuidora Comercial
    Jafra, S.A. de C.V., Jafra Worldwide Holdings (Lux) S.àr.l.
    and U.S. Bank National Association; previously filed as
    Exhibit 4.14 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
4.2
First Supplemental Indenture, dated as of
    May 20, 2003, by and among Jafra Cosmetics International,
    S.A. de C.V., Distribuidora Comercial Jafra, S.A. de C.V.,
    Dirsamex, S.A. de C.V., Distribuidora Venus, S.A. de C.V.,
    Serviday, S.A. de C.V., Cosmeticos y Frangancias, S.A. de C.V.,
    Jafra Cosmetics S. A. de C.V., JafraFin S.A. de C.V., Jafra
    Cosmetics International, Inc. and U.S. Bank National
    Association; previously filed as Exhibit 4.15 in
    Registration Statement No. 333-106666 under the Securities
    Act of 1933, as amended, on June 30, 2003, and incorporated
    herein by reference.
4.3
Registration Rights Agreement, dated May 20,
    2003, by and among Jafra Cosmetics International, Inc.,
    Distribuidora Comercial Jafra, S.A. de C.V., Jafra Worldwide
    Holdings (Lux) S.àr.l, CDRJ Investments (Lux) S.A. and the
    Initial Purchasers; previously filed as Exhibit 4.16 in
    Registration Statement No. 333-106666 under the Securities
    Act of 1933, as amended, on June 30, 2003, and incorporated
    herein by reference.
4.4
Form of 144A Global Note; previously filed as
    Exhibit 4.17 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
4.5
Form of Regulation S Global Note; previously
    filed as Exhibit 4.18 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
5.1
Opinion of Debevoise & Plimpton LLP.*
5.2
Opinion of Bonn Schmitt Steichen.*
10.1
Amended and Restated Registration and
    Participation Agreement, dated as
    of       , 2004, by and among CDRJ
    North Atlantic (Lux) S.àr.l., Clayton, Dubilier &
    Rice Fund V Limited Partnership and the other parties thereto.*
10.2
Form of Employment Agreement for
    Messrs. Clark, Rubio, Mason, Guirao and DiGregorio;
    previously filed as Exhibit 10.3 to Registration Statement
    No. 333-62989 under the Securities Act of 1933, as amended,
    filed September 4, 1998, and incorporated herein by
    reference.
10.3
Amended and Restated Jafra Cosmetics
    International, Inc. Stock Incentive Plan, as adopted
    September 3, 1998; previously filed as Exhibit 10.4 to
    Amendment No. 1 to Registration Statement
    No. 333-62989 under the Securities Act of 1933, as amended,
    filed October 27, 1998, and incorporated herein by
    reference.
10.4
CDRJ Investments (Lux) S.A. Form of Management
    Stock Option Agreement; previously filed as Exhibit 10.5 to
    Amendment No. 1 to Registration Statement
    No. 333-62989 under the Securities Act of 1933, as amended,
    filed October 27, 1998, and incorporated herein by
    reference.
10.5
Amended and Restated Stock Purchase Warrant,
    dated September 30, 1998, by and between CDRJ Investments
    (Lux) S.A. and Jafra Cosmetics International, Inc.; previously
    filed as Exhibit 10.6 to Amendment No. 1 to
    Registration Statement No. 333-62989 under the Securities
    Act of 1933, as amended, filed October 27, 1998, and
    incorporated herein by reference.
II-3
Table of Contents
Exhibit
Number
Description of Document
10.6
Registration and Participation Agreement, dated
    April 30, 1998, among CDRJ Investments (Lux) S.A. and
    Clayton, Dubilier & Rice Fund V Limited
    Partnership and the other parties thereto; previously filed as
    Exhibit 10.7 to Registration Statement No. 333-62989
    under the Securities Act of 1933, as amended, filed
    September 4, 1998, and incorporated herein by reference.
10.7
CDRJ Investments (Lux) S.A. Form of Management
    Stock Subscription Agreement; previously filed as
    Exhibit 10.8 to Amendment No. 1 to Registration
    Statement No. 333-62989 under the Securities Act of 1933,
    as amended, filed October 27, 1998, and incorporated herein
    by reference.
10.8
CDRJ Investments (Lux) S.A. Form of Individual
    Investor Stock Subscription Agreement; previously filed as
    Exhibit 10.9 to Amendment No. 1 to Registration
    Statement No. 333-62989 under the Securities Act of 1933,
    as amended, filed October 27, 1998, and incorporated herein
    by reference.
10.9
Jafra Cosmetics International, Inc. Supplemental
    Savings Plan, dated October 27, 1998; previously filed as
    Exhibit 10.1 to CDRJ Investments (Lux) S.A.'s
    Quarterly Report on Form 10-Q for the first quarter ended
    March 31, 1999, filed May 17, 1999, and incorporated
    herein by reference.
10.10
Jafra Cosmetics International, Inc. Special
    Supplemental Savings Plan for Non-United States-Source Income,
    dated January 20, 1999; previously filed as
    Exhibit 10.2 to CDRJ Investments (Lux) S.A.'s
    Quarterly Report on Form 10-Q for the first quarter ended
    March 31, 1999, filed May 17, 1999, and incorporated
    herein by reference.
10.11
Asset Purchase Agreement, dated as of
    June 18, 1999, as amended by Amendment No. 1, dated as
    of June 18, 1999; by and between Jafra Cosmetics
    International, Inc. and the Contractor, previously filed as
    Exhibit 10.1 to Jafra Cosmetics International, Inc.'s
    Form 8-K, filed on June 18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
10.12
Amendment No. 1 to Asset Purchase Agreement,
    dated as of June 18, 1999; previously filed as
    Exhibit 10.2 to Jafra Cosmetics International, Inc.'s
    Form 8-K, filed on June 18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
10.13
Manufacturing Agreement, dated as of
    June 18, 1999, by and between Jafra Cosmetics
    International, Inc. and the Contractor, as amended by Amendment
    No. 1, dated as of June 22, 1999; previously filed as
    Exhibit 10.3 to Jafra Cosmetics International, Inc.'s
    Form 8-K, filed on June 18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
10.14
Form of Amendment No. 1 to Manufacturing
    Agreement, dated as of June 18, 1999; previously filed as
    Exhibit 10.4 to Jafra Cosmetics International, Inc.'s
    Form 8-K, filed on June 18, 1999 and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
10.15
Sale Agreement, dated as of September 29,
    1999, between Jafra Cosmetics International Inc. and Townsgate
    Road LLC; previously filed as Exhibit 10.1 to CDRJ
    Investment (Lux) S.A.'s Quarterly Report on Form 10-Q
    for the third quarter ended September 30, 1999, filed
    November 12, 1999, and incorporated herein by reference.
10.16
Sale Agreement, dated as of October 15,
    1999, between Jafra Cosmetics International Inc. and Selvin
    Properties; previously filed as Exhibit 10.2 to CDRJ
    Investment (Lux) S.A.'s Quarterly Report on Form 10-Q
    for the third quarter ended September 30, 1999, filed
    November 12, 1999, and incorporated herein by reference.
10.17
Trust Agreement dated May 26, 1999 by and
    between Jafra Cosmetics International, Inc. and Scudder Trust
    Company; previously filed as Exhibit 10.20 to CDRJ
    Investments (Lux) S.A.'s Annual Report on Form 10-K
    for the fiscal year ended 1999, filed on March 30, 2000,
    and incorporated herein by reference.
II-4
Table of Contents
Exhibit
Number
Description of Document
10.18
First Amendment to Amended and Restated Jafra
    Cosmetics International, Inc. Stock Incentive Plan; previously
    filed as exhibit 10.22 to CDRJ Investments (Lux) S.A.'s
    Annual Report on Form 10-K for the fiscal year ended 2000,
    filed on April 2, 2001, and incorporated herein by
    reference.
10.19
CDRJ Investments (Lux) S.A. Form of Management
    Stock Subscription Agreement, as amended; previously filed as
    exhibit 10.23 to CDRJ Investments (Lux) S.A.'s Annual
    Report on Form 10-K for the fiscal year ended 2000, filed
    on April 2, 2001, and incorporated herein by reference.
10.20
Administrative Services Agreement, dated
    May 20, 2003, between Distribuidora Venus, S.A. de C.V.;
    and Distribuidora Comercial Jafra, S.A. de C.V.; previously
    filed as Exhibit 10.21 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
10.21
Assignment Assumption and Liquidation Agreement,
    dated May 20, 2003, between CDRJ North Atlantic (Lux)
    S.àr.l and Jafra Worldwide Holdings (Lux) S.àr.l;
    previously filed as Exhibit 10.22 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
10.22
Amended and Restated Indemnification Agreement,
    dated May 20, 2003, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.àr.l, Jafra Worldwide Holdings (Lux)
    S.àr.l, Jafra Cosmetics International, Inc., Jafra
    Cosmetics International, S.A. de C.V., Distribuidora Comercial
    Jafra, S.A. de C.V., CD&R Fund V and Clayton,
    Dubilier & Rice, Inc. ("CD&R");
    previously filed as Exhibit 10.23 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
10.23
Second Amended and Restated Consulting Agreement,
    dated May 20, 2003, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.àr.l, Jafra Worldwide Holdings (Lux)
    S.àr.l, Jafra Cosmetics International, Inc., Jafra
    Cosmetics International, S.A. de C.V., Distribuidora Comercial
    Jafra, S.A. de C.V. and CD&R; previously filed as
    Exhibit 10.24 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.24
Stock Purchase Agreement, dated May 20,
    2003, among Jafra Cosmetics International, S.A. de C.V.,
    Distribuidora Comercial Jafra, S.A. de C.V., CDRJ Latin American
    Holding Company B.V, Latin Cosmetics Holdings, B.V., Regional
    Cosmetics Holding, B.V., Southern Cosmetics Holdings, B.V. and
    CDRJ Mexico Holding Company, B.V.; previously filed as
    Exhibit 10.25 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.25
Stock Subscription and Guarantee Agreement, dated
    May 20, 2003, between Jafra Cosmetics International, S.A.
    de C.V. and Distribuidora Comercial Jafra, S.A. de C.V.;
    previously filed as Exhibit 10.26 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
10.26
Purchase and Sale Agreement, dated May 20,
    2003, between Distribuidora Venus, S.A. de C.V. and
    Distribuidora Comercial Jafra, S.A. de C.V.; previously filed as
    Exhibit 10.27 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.27
Registration and Participation Agreement, dated
    May 20, 2003, among CDRJ North Atlantic (Lux) S.àr.l.
    and Clayton, Dubilier & Rice Fund & Limited
    Partnership and other parties thereto; previously filed as
    Exhibit 10.28 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.28
Form of Contribution Agreement and Power of
    Attorney, among CDRJ Investments (Lux) S.A., Jafra Worldwide
    Holdings (Lux) S.àr.l., and the stockholders of CDRJ
    Investments (Lux) S.A.; previously filed as Exhibit 10.29
    in Registration Statement No. 333-106666 under the
    Securities Act of 1933, as amended, on June 30, 2003, and
    incorporated herein by reference.
II-5
Table of Contents
Exhibit
Number
Description of Document
10.29
Form of Consent to Assignment of Stock
    Subscription Agreement, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.àr.l. and the stockholders of CDRJ
    Investments (Lux) S.A.; previously filed as Exhibit 10.30
    in Registration Statement No. 333-106666 under the
    Securities Act of 1933, as amended, on June 30, 2003, and
    incorporated herein by reference.
10.30
Form of Consent to Assignment, Assumption and
    Novation of Employment Agreement, between CDRJ Investments (Lux)
    S.A., Jafra Worldwide Holdings (Lux) S.àr.l., Jafra
    Cosmetics International, Inc. and certain executives party to
    employment agreements pursuant to which such executives are
    employed by Jafra Cosmetics International, Inc.; previously
    filed as Exhibit 10.31 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
10.31
Form of Amendment to Management Stock Option
    Agreement; previously filed as Exhibit 10.35 in
    Registration Statement No. 333-106666 under the Securities
    Act of 1933, as amended, on June 30, 2003, and incorporated
    herein by reference.
10.32
Form of Second Amended and Restated Stock
    Purchase Warrant, by and between Jafra S.A. and Jafra Cosmetics
    International, Inc.*
10.33
Purchase Agreement, dated as of May 2, 2003,
    by and among Jafra Cosmetics International, Inc., Distribuidora
    Comercial Jafra, S.A. de C.V., Jafra Worldwide Holdings (Lux)
    S.àr.l, CDRJ Investments (Lux) S.A.; previously filed as
    Exhibit 10.36 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.34
Form of Exchange Agreement among Jafra Cosmetics
    International, Inc., Distribuidora Comercial Jafra, S.A. de C.V.
    and U.S. Bank National Association; previously filed as Exhibit
    10.37 in Registration Statement No. 333-106666 under the
    Securities Act of 1933, as amended, on June 30, 2003, and
    incorporated herein by reference.
10.35
Jafra S.A. 2004 Omnibus Stock Incentive Plan.*
10.36
Form of Option Agreement under the Jafra S.A.
    2004 Omnibus Stock Incentive Plan.*
10.37
Form of Restricted Stock Agreement under the
    Jafra 2004 Omnibus Stock Incentive Plan.*
10.38
Second Amendment to the Amended and Restated
    Jafra Cosmetics International, Inc. Stock Incentive Plan.*
10.39
Jafra S.A. Annual Incentive Plan.*
10.40
Jafra S.A. Directors Stock Incentive Plan.*
10.41
Credit Agreement, dated as of May 20, 2003,
    among Jafra Cosmetics International, Inc., Distribuidora
    Comercial Jafra, S.A. de C.V., Jafra Worldwide Holdings (Lux),
    S.àr.l., CDRJ North Atlantic (Lux) S.àr.l. and the
    lenders party thereto; previously filed as Exhibit 4.1 in
    Registration Statement No. 333-106666 under the Securities
    Act of 1933, as amended, on June 30, 2003, and incorporated
    therein by reference.
10.42
Amendment No. 1, dated as of June 25,
    2003, to the Credit Agreement, dated as of May 20, 2003,
    previously filed as Exhibit 4.1 in Registration Statement
    No. 333-10666 under the Securities Act of 1933, as amended
    on June 30, 2003, and incorporated herein by reference.*
10.43
Stock Subscription Agreement, dated
    April 30, 1998, between CDRJ Investments (Lux) S.A. and
    Clayton, Dubilier & Rice Fund V Limited
    Partnership.*
11.1
Statement regarding computation of per share
    earnings.*
21.1
Subsidiaries of the registrant.*
23.1
Consent of Ernst & Young LLP.
23.2
Consent of Deloitte & Touche LLP.
23.3
Consent of Debevoise & Plimpton LLP
    (contained in Exhibit 5.1).*
II-6
Table of Contents
Exhibit
Number
Description of Document
23.4
Consent of Bonn Schmitt Steichen (contained in
    Exhibit 5.3).*
24.1
Powers of Attorney (contained on signature pages
    hereto).
*
To be filed by amendment.
(b)
II-7
Table of Contents
SCHEDULE II — VALUATION AND
QUALIFYING ACCOUNTS
(In thousands)
CDRJ North Atlantic (Lux) S.àr.l. and
Subsidiaries:
As of December 31:
Balance
at
Charged to
Balance
Beginning
Costs and
Deductions-
at End of
Descriptions
of Period
Expenses
Recoveries
Period
Accounts Receivable:
2002
$
7,133
$
12,376
$
11,296
$
8,213
2001
3,431
9,323
5,621
7,133
2000
2,968
5,936
5,473
3,431
Inventories:
2002
$
2,801
$
2,630
$
2,799
$
2,632
2001
2,439
1,867
1,505
2,801
2000
2,389
1,973
1,923
2,439
Item 17.
Undertakings
The undersigned registrant hereby undertakes as
follows:
1.     The undersigned
    will provide to the underwriters at the closing specified in the
    Underwriting Agreement certificates in such denominations and
    registered in such names as required by the underwriters to
    permit prompt delivery to each purchaser.
2.     For purposes of
    determining any liability under the Securities Act, the
    information omitted from the form of prospectus filed as part of
    this registration statement in reliance on Rule 430A and
    contained in a form of prospectus filed by the registrant
    pursuant to Rule 424(b)(1) or (4) or 497(h) under the
    Securities Act shall be deemed to be part of this registration
    statement as of the time it was declared effective.
3.     For the purpose
    of determining any liability under the Securities Act of 1933,
    each post-effective amendment that contains a form of prospectus
    shall be deemed to be a new registration statement relating to
    the securities offered therein, and the offering of such
    securities at that time shall be deemed to be the initial bona
    fide offering thereof.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions described in Item 14 or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
II-8
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, the Registrant has duly caused this
Registration Statement on Form S-1 to be signed on its
behalf by the undersigned, thereunto duly authorized in the City
of Westlake Village, State of California, on February 13,
2004.
CDRJ NORTH ATLANTIC (LUX) S.ÀR.L.
By:
/s/ RONALD B. CLARK
Name: Ronald B. Clark
Title:
Chairman (Principal Executive
    Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Ronald B.
Clark, Michael A. DiGregorio, Gary Eshleman and Ralph S. Mason,
III and each of them (with full power to act alone) his true and
lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this
registration statement, and any new registration statement with
respect to the offering contemplated hereby filed pursuant to
Rule 462(b) of the Securities Act, and to file the same,
with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto any such attorney-in-fact full power and authority to do
and perform each and every act and thing requisite or necessary
to be done in and about the premises, and each such person
hereby ratifies and confirms all that such attorneys-in-fact and
agents, or any of them, or any of their respective substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, as amended, this Registration Statement has been
signed by the following persons in the capacities and on the
dates indicated.
Signature
Title
Date
/s/ RONALD B. CLARK
Ronald B. Clark
Chairman and Manager (Principal Executive Officer)
February 13, 2004
/s/ MICHAEL A. DIGREGORIO
Michael A. DiGregorio
Chief Financial Officer (Principal Financial
    Officer, Principal Accounting Officer)
February 13, 2004
/s/ RALPH S. MASON, III
Ralph S. Mason, III
Executive Vice President (Representative in the
    U.S.)
February 13, 2004
/s/ DONALD J. GOGEL
Donald J. Gogel
Manager
February 13, 2004
/s/ STEVEN D. GOLDSTEIN
Steven D. Goldstein
Manager
February 13, 2004
Table of Contents
Signature
Title
Date
/s/ THOMAS E. IRELAND
Thomas E. Ireland
Manager
February 13, 2004
/s/ SIRI MARSHALL
Siri Marshall
Manager
February 13, 2004
/s/ DAVID A. NOVAK
David A. Novak
Manager
February 13, 2004
/s/ ANN REESE
Ann Reese
Manager
February 13, 2004
/s/ EDWARD H. RENSI
Edward H. Rensi
Manager
February 13, 2004
/s/ GONZALO RUBIO
Gonzalo Rubio
Chief Operating Officer and Manager
February 13, 2004
/s/ KENNETH D. TAYLOR
Kenneth D. Taylor
Manager
February 13, 2004
S-2
Table of Contents
EXHIBITS
Exhibit
Number
Description of Document
1.1
Form of Underwriting Agreement.*
2.1
Notarial Deed,
    dated       , 2004, of CDRJ North
    Atlantic (Lux) S.àr.l., providing for the conversion of
    CDRJ North Atlantic (Lux) S.à.r.l. to a société
    anonyme and change of name to Jafra S.A., together with an
    unofficial summary in English.*
3.1
Articles of Incorporation of Jafra S.A.,
    dated       , 2004, together with
    an unofficial English translation.*
4.1
Indenture, dated May 20, 2003, by and among
    Jafra Cosmetics International, Inc., Distribuidora Comercial
    Jafra, S.A. de C.V., Jafra Worldwide Holdings (Lux) S.àr.l,
    CDRJ Investments (Lux) S.A. and U.S. Bank National Association;
    previously filed as Exhibit 4.14 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
4.2
First Supplemental Indenture, dated as of
    May 20, 2003, by and among Jafra Cosmetics International,
    S.A. de C.V., Distribuidora Comercial Jafra, S.A. de C.V.,
    Dirsamex, S.A. de C.V., Distribuidora Venus, S.A. de C.V.,
    Serviday, S.A. de C.V., Cosmeticos y Frangancias, S.A. de C.V.,
    Jafra Cosmetics S. A. de C.V., JafraFin S.A. de C.V. Jafra
    Cosmetics International, Inc. and U.S. Bank National
    Association; previously filed as Exhibit 4.15 in
    Registration Statement No. 333-106666 under the Securities
    Act of 1933, as amended, on June 30, 2003, and incorporated
    herein by reference.
4.3
Registration Rights Agreement, dated May 20,
    2003, by and among Jafra Cosmetics International, Inc.,
    Distribuidora Comercial Jafra, S.A. de C.V., Jafra Worldwide
    Holdings (Lux) S.àr.l, CDRJ Investments (Lux) S.A. and the
    Initial Purchasers; previously filed as Exhibit 4.16 in
    Registration Statement No. 333-106666 under the Securities
    Act of 1933, as amended, on June 30, 2003, and incorporated
    herein by reference.
4.4
Form of 144A Global Note; previously filed as
    Exhibit 4.17 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
4.5
Form of Regulation S Global Note; previously
    filed as Exhibit 4.18 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
5.1
Opinion of Debevoise & Plimpton LLP.*
5.2
Opinion of Bonn Schmitt Steichen.*
10.1
Amended and Restated Registration and
    Participation Agreement, dated as
    of       , 2004, by and among CDRJ
    North Atlantic (Lux) S.àr.l., Clayton, Dubilier &
    Rice Fund V Limited Partnership and the other parties
    thereto.*
10.2
Form of Employment Agreement for
    Messrs. Clark, Rubio, Mason, Guirao and DiGregorio;
    previously filed as Exhibit 10.3 to Registration Statement
    No. 333-62989 under the Securities Act of 1933, as amended,
    filed September 4, 1998, and incorporated herein by
    reference.
10.3
Amended and Restated Jafra Cosmetics
    International, Inc. Stock Incentive Plan, as adopted
    September 3, 1998; previously filed as Exhibit 10.4 to
    Amendment No. 1 to Registration Statement
    No. 333-62989 under the Securities Act of 1933, as amended,
    filed October 27, 1998, and incorporated herein by
    reference.
10.4
CDRJ Investments (Lux) S.A. Form of Management
    Stock Option Agreement; previously filed as Exhibit 10.5 to
    Amendment No. 1 to Registration Statement
    No. 333-62989 under the Securities Act of 1933, as amended,
    filed October 27, 1998, and incorporated herein by
    reference.
10.5
Amended and Restated Stock Purchase Warrant,
    dated September 30, 1998, by and between CDRJ Investments
    (Lux) S.A. and Jafra Cosmetics International, Inc.; previously
    filed as Exhibit 10.6 to Amendment No. 1 to
    Registration Statement No. 333-62989 under the Securities
    Act of 1933, as amended, filed October 27, 1998, and
    incorporated herein by reference.
Table of Contents
Exhibit
Number
Description of Document
10.6
Registration and Participation Agreement, dated
    April 30, 1998, among CDRJ Investments (Lux) S.A. and
    Clayton, Dubilier & Rice Fund V Limited
    Partnership and the other parties thereto; previously filed as
    Exhibit 10.7 to Registration Statement No. 333-62989
    under the Securities Act of 1933, as amended, filed
    September 4, 1998, and incorporated herein by reference.
10.7
CDRJ Investments (Lux) S.A. Form of Management
    Stock Subscription Agreement; previously filed as
    Exhibit 10.8 to Amendment No. 1 to Registration
    Statement No. 333-62989 under the Securities Act of 1933,
    as amended, filed October 27, 1998, and incorporated herein
    by reference.
10.8
CDRJ Investments (Lux) S.A. Form of Individual
    Investor Stock Subscription Agreement; previously filed as
    Exhibit 10.9 to Amendment No. 1 to Registration
    Statement No. 333-62989 under the Securities Act of 1933,
    as amended, filed October 27, 1998, and incorporated herein
    by reference.
10.9
Jafra Cosmetics International, Inc. Supplemental
    Savings Plan, dated October 27, 1998; previously filed as
    Exhibit 10.1 to CDRJ Investments (Lux) S.A.'s
    Quarterly Report on Form 10-Q for the first quarter ended
    March 31, 1999, filed May 17, 1999, and incorporated
    herein by reference.
10.10
Jafra Cosmetics International, Inc. Special
    Supplemental Savings Plan for Non-United States-Source Income,
    dated January 20, 1999; previously filed as
    Exhibit 10.2 to CDRJ Investments (Lux) S.A.'s
    Quarterly Report on Form 10-Q for the first quarter ended
    March 31, 1999, filed May 17, 1999, and incorporated
    herein by reference.
10.11
Asset Purchase Agreement, dated as of
    June 18, 1999, as amended by Amendment No. 1, dated as
    of June 18, 1999; by and between Jafra Cosmetics
    International, Inc. and the Contractor, previously filed as
    Exhibit 10.1 to Jafra Cosmetics International, Inc.'s
    Form 8-K, filed on June 18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
10.12
Amendment No. 1 to Asset Purchase Agreement,
    dated as of June 18, 1999; previously filed as
    Exhibit 10.2 to Jafra Cosmetics International, Inc.'s
    Form 8-K, filed on June 18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
10.13
Manufacturing Agreement, dated as of
    June 18, 1999, by and between Jafra Cosmetics
    International, Inc. and the Contractor, as amended by Amendment
    No. 1, dated as of June 22, 1999; previously filed as
    Exhibit 10.3 to Jafra Cosmetics International, Inc.'s
    Form 8-K, filed on June 18, 1999, and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
10.14
Form of Amendment No. 1 to Manufacturing
    Agreement, dated as of June 18, 1999; previously filed as
    Exhibit 10.4 to Jafra Cosmetics International, Inc.'s
    Form 8-K, filed on June 18, 1999 and incorporated
    herein by reference (portions of which were filed under a
    confidentiality request).
10.15
Sale Agreement, dated as of September 29,
    1999, between Jafra Cosmetics International Inc. and Townsgate
    Road LLC; previously filed as Exhibit 10.1 to CDRJ
    Investment (Lux) S.A.'s Quarterly Report on Form 10-Q
    for the third quarter ended September 30, 1999, filed
    November 12, 1999, and incorporated herein by reference.
10.16
Sale Agreement, dated as of October 15,
    1999, between Jafra Cosmetics International Inc. and Selvin
    Properties; previously filed as Exhibit 10.2 to CDRJ
    Investment (Lux) S.A.'s Quarterly Report on Form 10-Q
    for the third quarter ended September 30, 1999, filed
    November 12, 1999, and incorporated herein by reference.
10.17
Trust Agreement dated May 26, 1999 by and
    between Jafra Cosmetics International, Inc. and Scudder Trust
    Company; previously filed as Exhibit 10.20 to CDRJ
    Investments (Lux) S.A.'s Annual Report on Form 10-K
    for the fiscal year ended 1999, filed on March 30, 2000,
    and incorporated herein by reference.
10.18
First Amendment to Amended and Restated Jafra
    Cosmetics International, Inc. Stock Incentive Plan; previously
    filed as exhibit 10.22 to CDRJ Investments (Lux)
    S.A.'s Annual Report on Form 10-K for the fiscal year
    ended 2000, filed on April 2, 2001, and incorporated herein
    by reference.
Table of Contents
Exhibit
Number
Description of Document
10.19
CDRJ Investments (Lux) S.A. Form of Management
    Stock Subscription Agreement, as amended; previously filed as
    exhibit 10.23 to CDRJ Investments (Lux) S.A.'s Annual
    Report on Form 10-K for the fiscal year ended 2000, filed
    on April 2, 2001, and incorporated herein by reference.
10.20
Administrative Services Agreement, dated
    May 20, 2003, between Distribuidora Venus, S.A. de C.V.;
    and Distribuidora Comercial Jafra, S.A. de C.V.; previously
    filed as Exhibit 10.21 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
10.21
Assignment Assumption and Liquidation Agreement,
    dated May 20, 2003, between CDRJ North Atlantic (Lux)
    S.àr.l and Jafra Worldwide Holdings (Lux) S.àr.l;
    previously filed as Exhibit 10.22 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
10.22
Amended and Restated Indemnification Agreement,
    dated May 20, 2003, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.àr.l, Jafra Worldwide Holdings (Lux)
    S.àr.l, Jafra Cosmetics International, Inc., Jafra
    Cosmetics International, S.A. de C.V., Distribuidora Comercial
    Jafra, S.A. de C.V., CD&R Fund V and Clayton, Dubilier &
    Rice, Inc. ("CD&R"); previously filed as
    Exhibit 10.23 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.23
Second Amended and Restated Consulting Agreement,
    dated May 20, 2003, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.àr.l, Jafra Worldwide Holdings (Lux)
    S.àr.l, Jafra Cosmetics International, Inc., Jafra
    Cosmetics International, S.A. de C.V., Distribuidora Comercial
    Jafra, S.A. de C.V. and CD&R; previously filed as
    Exhibit 10.24 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.24
Stock Purchase Agreement, dated May 20,
    2003, among Jafra Cosmetics International, S.A. de C.V.,
    Distribuidora Comercial Jafra, S.A. de C.V., CDRJ Latin American
    Holding Company B.V, Latin Cosmetics Holdings, B.V., Regional
    Cosmetics Holding, B.V., Southern Cosmetics Holdings, B.V. and
    CDRJ Mexico Holding Company, B.V.; previously filed as
    Exhibit 10.25 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.25
Stock Subscription and Guarantee Agreement, dated
    May 20, 2003, between Jafra Cosmetics International, S.A.
    de C.V. and Distribuidora Comercial Jafra, S.A. de C.V.;
    previously filed as Exhibit 10.26 in Registration Statement
    No. 333-106666 under the Securities Act of 1933, as
    amended, on June 30, 2003, and incorporated herein by
    reference.
10.26
Purchase and Sale Agreement, dated May 20,
    2003, between Distribuidora Venus, S.A. de C.V. and
    Distribuidora Comercial Jafra, S.A. de C.V.; previously filed as
    Exhibit 10.27 in Registration Statement No. 333-106666
    under the Securities Act of 1933, as amended, on June 30,
    2003, and incorporated herein by reference.
10.27
Registration and Participation Agreement, dated
    May 20, 2003, among CDRJ North Atlantic (Lux) S.àr.l.
    and Clayton, Dubilier & Rice Fund V Limited Partnership and
    other parties thereto; previously filed as Exhibit 10.28 in
    Registration Statement No. 333-106666 under the Securities
    Act of 1933, as amended, on June 30, 2003, and incorporated
    herein by reference.
10.28
Form of Contribution Agreement and Power of
    Attorney, among CDRJ Investments (Lux) S.A., Jafra Worldwide
    Holdings (Lux) S.àr.l., and the stockholders of CDRJ
    Investments (Lux) S.A.; previously filed as Exhibit 10.29
    in Registration Statement No. 333-106666 under the
    Securities Act of 1933, as amended, on June 30, 2003, and
    incorporated herein by reference.
10.29
Form of Consent to Assignment of Stock
    Subscription Agreement, among CDRJ Investments (Lux) S.A., CDRJ
    North Atlantic (Lux) S.àr.l. and the stockholders of CDRJ
    Investments (Lux) S.A.; previously filed as Exhibit 10.30
    in Registration Statement No. 333-106666 under the
    Securities Act of 1933, as amended, on June 30, 2003, and
    incorporated herein by reference.