Jafra Reports Preliminary Estimated Financial Results For First Quarter
Of 2003
WESTLAKE VILLAGE, California, April 23, 2003 - CDRJ Investments (Lux)
S.A. and subsidiaries, doing business as Jafra Cosmetics International, Inc.
("Jafra" or "the Company"), today reported preliminary estimated financial
results for the first quarter of 2003.
Net sales in the first quarter of 2003 were $91.4 million compared to
$99.1 million in the first quarter of 2002. In weighted average local
currencies, net sales increased 4% compared to the first quarter of 2002 and
local currency sales in Mexico increased slightly. The 8% decrease in U.S.
dollar net sales resulted primarily from the weakening of the Mexican peso
relative to the U.S. dollar. The average exchange rate of the Mexican peso
compared to the U.S. dollar depreciated 16% in the first quarter of 2003
compared to the first quarter of 2002. The U.S. Hispanic Division recorded
double-digit growth in net sales and operating income. The U.S. General Division
demonstrated moderate net sales growth and a significant improvement in
operating income compared to the first quarter of 2002. The Company ended the
first quarter of 2003 with 401,000 consultants, up 8% compared to 372,000 a year
ago.
Net income decreased $7.4 million in the first quarter of 2003 compared
to the first quarter of 2002, primarily as a result of the impact of the
depreciation of the Mexican peso, severance and transaction related expenses,
exchange losses in the first quarter of 2003 compared to exchange gains in the
first quarter of 2002 and a higher effective tax rate. As part of the ongoing
strategic effort to exit its South American and Thailand operations, through
either sale or discontinuation, the Company also incurred severance, asset
impairment charges and asset writedown costs in the first quarter of 2003. The
Company has decided to continue its European operations.
The interim financial information of the Company as of March 31, 2003
and for the three months then ended included in this press release have not been
reviewed in accordance with Statement on Auditing Standards ("SAS") 100, Interim
Financial Information, (SAS 100 supersedes SAS 71 and is effective for interim
periods within fiscal years beginning after December 15, 2002), by the Company's
independent auditors. As required by the Securities and Exchange Commission,
such review will be complete by the required filing date of the Company's Report
on Form 10-Q for the quarter ended March 31, 2003. Consequently, the information
presented in this press release may be revised significantly in connection with
the preparation of the Company's Report on Form 10-Q for the Quarter ending
March 31, 2003.
The Company
Jafra is a manufacturer and marketer of premium skin and body care
products, color cosmetics, fragrances and other personal care products. Jafra
markets its products through a direct selling, multilevel distribution system
comprised of self-employed salespersons (known as "consultants") in 15 countries
and in a number of additional countries through distributors. The Company was
founded in 1956 by Jan and Frank Day, who believed that by partnering with
their consultants, they could enable consultants to achieve personal, economic,
and professional freedom. More information about Jafra and its products can be
found on the Company's website, http://www.jafra.com.
The statements in this press release that relate to future plans,
events or performance are forward-looking statements that involve risks and
uncertainties. Readers are cautioned that these statements are only predictions
and may differ materially from actual future events or results, and are referred
to the documents filed by the Company with the Securities and Exchange
Commission, specifically the most recent reports on Form 10-K and Form 10-Q,
which identify important risk factors that could cause actual results to differ
from those contained in the forward-looking statements, including risks
associated with future growth, dependence on new product offerings, currency
adjustments, international operations, competition, and financial risk
management, among others. The Company undertakes no obligation to update any
such forward-looking statements.
CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES
($ in Thousands)
(Unaudited)
Preliminary
Three Months Ended
March 31,
--------------------
2003 2002
-------- --------
Statement of Operations Data:
Net sales $ 91,400 $ 99,104
Net interest expense 2,580 2,931
Income tax expense 3,768 3,164
Cumulative effect of accounting changes -- 244
Net income $ 2,522 $ 9,901
Other Financial Data:
Depreciation and amortization $ 1,490 $ 1,143
Unrealized foreign exchange and hedging loss (gain) 1,741 (789)
Transaction related costs 770 18
Sale or writedown of assets 251 30
Losses from markets to be exited in 2003 2,030 1,568