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UNITED STATES

(Mark One)

	þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

OR

	o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to                 .

Commission file number 333-106666

Jafra Worldwide Holdings (Lux), S.àR.L.

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ          No o

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

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o          No þ

      The registrant does not have a class of equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 and there is no public market for voting stock of the registrant.

      As of March 15, 2004, the registrant had outstanding 151 shares of common stock, par value $100.00 per share.

Documents Incorporated by Reference

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L

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PART I

General

      Jafra Worldwide Holdings (Lux) S.àr.l., a Luxembourg société à responsabilité limitée (the “Parent”) is a wholly-owned subsidiary of CDRJ North Atlantic (Lux) S.àr.l. CDRJ North Atlantic (Lux) S.àr.l., a Luxembourg société à responsabilité limitée (“North Atlantic”), is a wholly-owned subsidiary of CDRJ Investments (Lux) S.A. a Luxembourg société anonyme (“CDRJ”).

      The Parent is a holding company that conducts all of its operations through its subsidiaries. Prior to the Recapitalization (as defined below), the historical operations of CDRJ were equivalent to the operations of the Parent. CDRJ and its subsidiaries and the Parent and its subsidiaries are referred to collectively as “the Company” or “Jafra.”

      The Company is a direct seller of skin and body care products, color cosmetics, fragrances and other personal care products. The Company sells its Jafra brand products through a network of approximately 412,000 independent consultants, who market and sell the Company’s products to their customers. The Company generated approximately 89% of its total net sales in 2003 in Mexico and the United States, which are the fourth and first largest direct selling markets, respectively.

      The Jafra business was founded 48 years ago and was acquired in April 1998 by an affiliate of Clayton, Dubilier & Rice, Inc., a New York-based private investment firm, along with a newly formed management team highly experienced direct selling professionals.

      On May 20, 2003, the Parent, Jafra Cosmetics International, Inc. (“JCI”) and Distribuidora Comercial Jafra S.A. de C.V. (“Jafra Distribution” and together with JCI, the “Issuers”) completed a recapitalization of their operations by entering into $90 million of new senior 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 Cosmetics International, S.A. de C.V. (“Jafra Cosmetics S.A.”), to repay all amounts outstanding under the existing credit facilities of JCI and Jafra Cosmetics S.A. and to make certain payments to CDRJ and employees of JCI and Jafra Cosmetics S.A. The stockholders of CDRJ then resolved that CDRJ be liquidated and appointed the Parent to act as its liquidator. Thereafter, CDRJ made an initial liquidating distribution of such proceeds to its stockholders. In connection with the liquidation of CDRJ, North Atlantic transferred all of its assets and liabilities, including its direct and indirect holdings of JCI, Jafra Cosmetics S.A. and Jafra Distribution, to the Parent in exchange for additional shares of common stock of the Parent. Jafra Distribution and Jafra Cosmetics S.A. are collectively referred to as “Jafra Mexico.”

Recent Developments—Announcement of Sale to Vorwerk & Co. KG

      On March 30, 2004, it was announced that a subsidiary of Vorwerk & Co. KG, a family-owned company based in Wuppertal, Germany, entered into an agreement whereby it will acquire all of the issued and outstanding common stock of North Atlantic, which will be the Company’s top-tier holding company upon completion of the liquidation of CDRJ Investments, from its shareholders. The transaction is expected to close in the second quarter of 2004 and is subject to the satisfaction of customary closing conditions, including customary regulatory approvals. The agreement may be terminated if the transaction is not consummated by July 31, 2004. The Company and its subsidiaries will remain responsible for their outstanding debt following the closing of this transaction.

      There can be no assurance that this transaction will be completed as announced, or at all. If this transaction is completed as contemplated, it will constitute a change of control as defined in the Senior Credit Agreement and in the indenture governing the Company’s 10  3/4% Notes. Upon completion of this transaction, the Company expects that North Atlantic will withdraw the registration statement filed on February 13, 2004

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Strategy

      The Company’s strategy consists primarily of the following key initiatives:

      Continue Core Strategy of Expanding and Retaining Consultant Base. The Company intends to drive growth in its business by focusing on sponsoring and retaining loyal consultants. The Company believes that the attractive income opportunities offered by its compensation structure and its operational and cultural focus on providing support to its consultants have been instrumental in achieving robust consultant and net sales growth over the past five years. The Company believes the emphasis it places on providing its consultants with superior customer service, training, effective sales and marketing materials, brochures, and new product demonstrations, will continue to differentiate Jafra from its competitors. Additionally, the Company intends to continue to stimulate net sales growth by motivating its consultant base at local recognition events and by offering travel rewards, gifts and other incentives to its most productive consultants.

      Capitalize on Leading Market Position and Brand Equity in Mexico. The Company believes its leading market position and the strength of the Jafra brand in Mexico position it to benefit from favorable demographic trends and will facilitate the Company’s efforts to continue to expand its consultant base and capture additional market share. Currently, the average age of a Jafra consultant is 35, while over 40% of the Mexican population is under the age of 20 and 60% is under the age of 30. As the Mexican population ages and more adults seek career and income opportunities, the Company believes that its brand equity and the scale of its consultant base will position Jafra as an attractive career opportunity and facilitate consultant recruitment.

      Continue Successful U.S. Divisional Strategy. The Company will continue to pursue its successful strategy of differentiating itself from other direct selling companies by focusing on demographic characteristics of its consultants and their target customers. In late 2000, the Company bifurcated its 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 the Company to customize its marketing efforts. The Company has focused on those separate segments of the population and will continue to provide its U.S. Spanish and non-Spanish speaking consultants with tailored recruiting programs, training materials, seminars and product presentations. In particular, the Company believes that it will continue to benefit from the growth of the U.S. Hispanic population and its increasing buying power. The Company believes these trends will continue to benefit its sales and recruitment efforts. The Company’s divisional approach to the U.S. market facilitates the interaction of Jafra consultants with their customers and contributed to the 7% net sales growth of the U.S. business during fiscal 2003 and a 16% increase in net sales during 2002.

      Maintain Strong New Product Pipeline. The development and introduction of new products and line extensions are fundamental to the Company’s direct selling business model in that they serve to motivate the consultants by providing them with new and exciting products to demonstrate and market to their customers. As part of each of the Company’s consecutive two-month marketing and promotion cycles, the Company regularly introduces line extensions, such as new colors within the 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, the Company employs a 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 Jafra’s acquisition in 1998, the Company has primarily focused on growing its loyal consultant base and establishing a cost-effective distribution infrastructure and superior support structure for its consultants. The Company has recently begun to assess incremental growth opportunities through the development of new products in complementary categories, such as health and wellness (including weight loss), vitamins, nutritional supplements and other products outside its current core product lines, that leverage the Jafra brand equity and ultimately could

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      Continue to Identify Operating Efficiencies and Benefit from Economies of Scale. From the time of the Company’s acquisition in 1998 to December 31, 2003, management has increased the Company’s gross profit margin by approximately 5.5 percentage points from 71.1% to 76.6% and reduced selling, general and administrative expenses, less one-time charges related to the May 2003 recapitalization, as a percentage of net sales by approximately 3.8 percentage points from 64.4% to 60.6%, primarily by reducing manufacturing and overhead costs, streamlining marketing efforts and improving working capital management. Selling, general and administrative expenses, including one-time charges related to the Company’s May 2003 recapitalization, as a percentage of net sales were 65.0% during the year ended December 31, 2003. The Company intends to continue to pursue additional opportunities to realize cost savings and operating efficiencies in order to increase profitability. The Company recently announced its intention to transfer skin care and body care manufacturing to its facilities in Mexico. Further, the Company believes its direct selling business model will continue to generate significant organic growth and that the resulting scale will afford increasing opportunities to leverage the fixed cost base and increase efficiencies in the Company’s purchasing, manufacturing, marketing, training and technology functions.

Products

      The Company continuously introduces new and revitalized products based on changes in consumer demand and technological advances in order to enhance the quality, image and price positioning of its products. During 2002, the Company launched 129 new products, of which 74 related to the 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 $1.3 million, in the year ended December 31, 2003, $1.5 million in the year ended December 31, 2002 and $1.8 million in the year ended December 31, 2001.

      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. The Company continues to invest in the globalization and upgrading of its product lines by adding new formulations and contemporary fragrances. Through globalized product development, manufacturing and packaging, the Company believes that it has enhanced the consistency and quality of its products in all geographic areas and across all product lines.

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      The following table sets forth the net sales of the Company’s principal product lines for the years ended December 31, 2003, 2002 and 2001:

      Skin Care. The Company sells 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, the Company offers specialty products to enhance skin texture and encourage cell revitalization, including the Company 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. The Company is committed to maintaining contemporary formulas and routinely evaluating and updating its product offerings. During 2002, the Company 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, the Company had continued success with Intensive Retinol Treatment, capsules that release measured doses of retinol into the skin. In 2003, the Company launched two new products that address skin pigmentation problems: a pigment fade wand and a skin brightening serum.

      Body Care and Personal Care. The Company markets a broad selection of body, bath, sun and personal care products, including deodorants and shampoos. The Company’s 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 the Company varies its product offerings and continues to develop new products, Royal Almond and Precious Protein products have been top sellers for many years. In 2002, the Company leveraged the success of the Royal Almond brand by introducing Royal Ginger, a scent extension to the body care family. Also, the Company launched the Define Your Body line of four products, a complete line of technologically advanced body treatment products. The Company 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, the Company launched a new hair care line of salon quality products. Developed by Jafra, 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 Moiré body wash. For men, the Company

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      Color Cosmetics. The Company’s range of color cosmetics for the face, eyes, lips, cheeks and nails contribute significantly to its results. The Company internally develops lipstick formulas, foundations and mascaras. In 1999, the Company 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 through 2003, and has continued to drive the sales of color products. In 2001, the Company undertook a major re-stage of its entire color line.

      Fragrance. Direct selling is a significant distribution channel for fragrances, and the Company’s new scents have enabled the Company to participate on an increasingly larger scale in this channel. In 1996, the Company introduced Adorisse, a contemporary women’s fragrance, and Fm Force Magnétique, a prestige men’s fragrance. The Company further extended its fragrance line in 1997 with Le Moiré for women and Legend for Men. In 1998, the Company 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, the Company 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. Jafra has 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. Navîgo 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, the Company launched six fragrance brands: One new men’s fragrance, J-Sport, was introduced, and the Company re-launched the Hamilton fragrance for men, which had been discontinued. The Company also introduced an extension of the women’s fragrance brand Le Moiré, called Le Moiré (cerisse). Additionally, a new teen fragrance, Double Nature, was launched in Mexico along with a new baby fragrance called One 2 Four.

      Other Products. This category includes sales aids, such as party hostess gifts, demonstration products, etc., and promotional materials, which typically do not qualify for commissions or overrides. The Company is considering expanding its product line to include nutritional and wellness products. Any decision to offer such products will include consideration of the attendant risks, including potential product liability. The Company contemplates branching out into such new product categories in the first quarter of 2005.

Marketing

      Strategy and Product Positioning. The Company positions its products to appeal to a relatively wide range of market categories, demographic groups and lifestyles. The Company’s products generally price at the higher end of the mass market category, but slightly below prestige brands.

      Product Strategy. The Company’s product strategy is to provide customers with exciting and prestige quality product lines that fit into the Company’s value-added demonstration sales techniques and promote the sale of multiple products per sales call. To that end, the Company develops integrated products and actively promotes cross-selling among categories, thus encouraging multi-product sales and repeat purchases. Product variety and modernization are keys to the Company’s success. The Company continues to look for ways to expand product offerings and broaden its appeal in the marketplace. This led to the development of the Retinol capsules and the new color line.

      Marketing Material & Corporate Image. The Company supports its identity and corporate image through its energetic network of consultants and word-of-mouth. The Company uses a sophisticated and integrated promotional approach that includes meetings, marketing literature, and the Internet to create strong corporate imagery and support corporate identity.

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Independent Consultants

      The Company had approximately 412,000 consultants worldwide as of December 31, 2003. Approximately 285,000 of these consultants are in Mexico, 75,000 are in the United States, 23,000 are in Brazil, 18,000 are in Europe, 9,000 are in the Dominican Republic and 2,000 are in Argentina. Of the 75,000 consultants in the United States, 47,000 are in the Hispanic Division and 28,000 are in the General Division. These consultants are not agents or employees of Jafra; they are independent contractors or dealers. They purchase products directly from the Company and sell them directly to their customers.

      The Company provides training to senior consultants, who have experience managing their own consultant networks, and recruit and train the Company’s field level organization. In addition, the Company uses a philosophy by which it provides special training to a select group of field leaders who, in turn, provide training to the remaining lineage leaders. The Company sells substantially all of its products directly to its 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. The Company’s independent sales force constitutes its primary marketing contact with the general public.

      Selling. The primary role of a Jafra consultant is to sell Jafra products. Although the majority of sales occur as a result of person-to-person sales, the Company also encourages its 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.

      The Company does not require consultants to maintain any inventory. The Company believes that inventory requirements can be onerous to consultants. Instead, Jafra consultants can wait to purchase products from the Company 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. The Company believes that it enjoys a competitive advantage in recruiting consultants due to its lower start-up costs and 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.

      The Company also emphasizes a 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 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. During 2003, the Company recorded $61.7 million as override expense within selling, general and administrative expenses and $4.1 million of commissions on personal sales paid to consultants as a reduction of net 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 the Company’s consultant managers. Managers train their downline consultants at monthly meetings using materials prepared by the Company. In training managers, the Company seeks to improve leadership and management skills, while teaching managers to motivate downline consultants to higher sales levels.

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      Income Opportunities and Recognition. Consultants earn income by purchasing products from the Company at wholesale prices and selling to consumers at suggested retail prices. The commissions earned by consultants on sales typically range from approximately 30% to 50% of suggested retail prices. Once a consultant becomes a manager, her compensation also includes overrides, or a percentage of the sales of the consultants she has recruited. These overrides range from 10% to 30% of the wholesale sales value of her downline consultants, depending of the level of the manager. The overrides are paid to motivate and compensate the managers to train, recruit and develop downline consultants. Additionally, managers often perform collection efforts on behalf of the Company as the overrides paid on a consultant’s downline productivity are paid only upon the collection of the receivables. The Company believes that its structure of discounts, commissions and overrides to consultants is generous.

      The Company also believes that public recognition of sales accomplishments serves the dual purpose of identifying successful role models and boosting consultant morale. Each year the Company sponsors major events in each of its geographic markets to recognize and reward sales and recruiting achievements and strengthen the bond between the independent sales force and the Company. 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

      The Company’s 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 the Company’s results in selected markets in which the Company operates, the Company recently adopted a strategic plan to focus on the strengths of the Mexican, U.S. and European markets. The Company terminated its operations in certain markets in South America and Thailand in 2003. These markets recorded losses of $5.8 million, $1.8 million, $0.6 million, $0.7 million and $0.8 million for the years ended December 31, 2003, 2002, 2001, 2000 and 1999, respectively. During the year ended December 31, 2003, the Company discontinued its operations in Venezuela, Colombia, Chile and Peru. At the same time, the Company reevaluated its strategy relative to Brazil and Argentina, which the Company considers to be good direct selling markets. During the fourth quarter of 2003, the Company completed an aggressive restructuring in Brazil, which included cost cutting and new product management strategies. The Company intends to pursue the continued development of these markets, which present a strategic opportunity, but the Company will carefully continue to evaluate the risks and rewards of doing so. During the period, the economies of countries like Venezuela and Colombia were characterized by a combination of high inflation, currency devaluation, exchange controls and a relative instability as a result of unstable political environments and high rates of violent crimes.

      The Company’s most important markets to date are Mexico, the United States and Europe, which represented approximately 63%, 26% and 9%, respectively, of total 2003 consolidated net sales. The Company has entered into foreign currency forward exchange and option contracts to help mitigate the risk that a potential currency devaluation in Mexico would have on operations and liquidity. See Item 7A “Quantitative and Qualitative Disclosures About Market Risk.” The Company does not generate any material revenues attributable to, or own any material assets in Luxembourg. The Company generates most of its revenues from sales in Mexico, the United States and Europe. See Note 13 to the consolidated financial statements appearing in Item 8. “Financial Statements and Supplementary Data.”

      In certain European markets, including Czech Republic, Denmark/Norway, Greece, Hungary, Ireland, Poland, Slovenia and Sweden the Company operates through distributors. The Company’s agreements with distributors are typically for renewable one year terms. The Company has the contractual right to terminate these arrangements if it chooses to operate directly in a given market. During the year ended December 31, 2003, the Company’s German subsidiary recorded approximately $0.2 million in net sales to these distributors.

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Manufacturing

      The Company owns an approximately 38,000 square foot manufacturing facility in Naucalpan, Mexico, which is near Mexico City. This facility produces color cosmetics and most of the Company’s fragrances. Until June of 1999, the Company produced skin care and personal use products at the Westlake Village, California manufacturing facility. In June of 1999, the Company outsourced the U.S. product manufacturing functions to a third-party contractor.

      The Company 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 the Company’s requirements for certain cosmetic and skin care products for an initial term of five years expiring in 2004. 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. On December 8, 2003, the Company notified the third-party contractor that the Company does not intend to renew the contract upon its expiration in 2004. As of mid-2004, the Company expects that most of the products currently produced by this third party will be manufactured at the Company’s Mexican facility.

      The Company purchases from other third-party suppliers certain finished goods and raw materials for use in its manufacturing operations. In general, the Company does not have written contracts with other suppliers. Finished goods and raw materials used in the Company’s products, such as glass, plastics, and chemicals, generally are available stock items or can be obtained to the Company’s specifications from more than one potential supplier.

Distribution

      As of December 31, 2003, the Company uses 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, the Company has historically outsourced virtually all of its distribution to third parties. However, in January 2002, the Company opened a distribution center in Lerma, Mexico and terminated the third-party distribution function. This distribution center services all consultants in Mexico. In addition, the Company has a distribution center in Kaufbeuren, Germany that services all of the 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

      The Company sells all of its 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 the Company’s products. Several direct sales companies compete with Jafra in sales of cosmetic products, and at least two such competitors, Mary Kay and Avon, are substantially larger than the Company in terms of total independent salespersons, sales volume and resources. In addition, the Company’s 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 the Company in terms of

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      The Company believes that its senior management team with a strong direct selling track record, motivated independent 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 its competitive position.

Patents and Trademarks

      The Company’s operations do not depend to any significant extent upon any single trademark other than the Jafra trademark. Some of the trademarks Jafra uses, however, are identified with and important to the sale of its products. Some of the more important trademarks are: Adorisse (a contemporary women’s fragrance), Eau D’Arômes (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). One of its most significant lines of products, Royal Jelly, is not protected by any registered trademark because it is a generic term. The Company’s operations do not depend to any significant extent on any single or related group of patents, although the Company has applied for or received patent protection in its major markets for certain skin cream dispensers and product containers, nor does it rely upon any single or related group of licenses, franchises or concessions. The Company has in the past licensed know-how from Gillette relating to the design, development and manufacture of its products and is permitted to continue to use such know-how in connection with its 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 the Company does 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 the Company. The Company has 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 the Company is not able to secure cancellation or abandonment of the applications and registrations in these jurisdictions, it may be prohibited from distributing its products in these jurisdictions.

Management Information Systems

      During 2001, the Company redefined its 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 33% of order volume by year end 2003. In Mexico, an e-commerce platform was launched during the second half of 2001. The Company also selected a new platform to run its 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 one of this implementation of the financial systems was implemented in April of 2002. Waves two and three, 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

      The Company’s 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. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Seasonality and Sales Cycles”.

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Environmental Matters

      The Company’s operations are subject to various federal, state, local and foreign laws or regulations governing environmental, health and safety matters. Some of its operations require environmental permits and controls and these permits are subject to modification, renewal and revocation by issuing authorities. Violations of or liabilities under environmental laws could result in fines or penalties, obligations to clean up contaminated properties or claims for property damage or personal injury. The Company believes that it is in material compliance with all such laws, regulations and permits, and under present conditions, it does not foresee that such laws and regulations will have a material adverse effect on its capital expenditures, earnings or competitive position.

Employees

      As of December 31, 2003, the Company had 923 full-time employees, of which 242 were employed in the United States and 681 in other countries. The Company also had 282 outside contract employees. In Mexico, approximately 219 of the Company’s employees are unionized. The Company has in the past experienced union-related work stoppages in Mexico. Within the past five years, none of these stoppages have exceeded 60 minutes; and none have had any material impact on operations. The Company believes its relations with its employees are generally good. The Company’s employees are not unionized in any market outside of Mexico.

      The Company is headquartered and maintains a warehouse and distribution facility in Westlake Village, California, 40 miles north of Los Angeles. Manufacturing is done on a global basis for the color and fragrance product lines at the Company’s facility in Naucalpan, Mexico. The Westlake Village, California and Naucalpan, Mexico facilities are owned by the Company, except for a small portion of the Naucalpan facility that is leased. In addition, the Company leases certain distribution facilities, sales offices and service centers to facilitate its operations globally, including distribution facilities in New Jersey and Kaufbeuren, Germany. As of January 1, 2002, the Company began utilizing a leased distribution center in Lerma, Mexico. The Company’s properties are suitable and adequate to meet its current and anticipated requirements.

      The Company is subject from time to time to various litigation and claims arising in the ordinary course of its business. The Company does not believe that any known litigation or claims pending against it would, if determined in a manner adverse to it, have a material adverse effect on its business, financial condition or results of operations.

      No matters were submitted to a vote of the security holders of the Company during the fourth quarter of 2003.

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PART II

      There is no established public trading market for the Parent’s common stock (the “Common Stock”). The Parent is a wholly-owned subsidiary of CDRJ North Atlantic (Lux) S.àr.l. The Parent has not paid in the past, and does not expect to pay for the foreseeable future, regular dividends on shares of its Common Stock. The declaration and payment of future dividends, if any, will be at the sole discretion of the Board of Directors of the Parent, subject to the restrictions set forth in the senior credit agreement and the Indenture for its senior subordinated notes (the “Indenture”), which currently restrict the payment of cash dividends to stockholders, and restrictions, if any, imposed by other indebtedness outstanding from time to time. See Item 7. “Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Overview — Recent Developments — Announcement of Sale to Vorwerk & Co. KG” and  “— Liquidity and Capital Resources.”

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      The following is a summary of selected consolidated financial data of the Company (amounts in millions except for consultant and consultant productivity data). The selected consolidated financial data, other than consultant data, as of December 31, 2003 and for the year ended December 31, 2003 are derived from the audited consolidated financial statements of Jafra Worldwide Holdings (Lux) S.àr.l. which appear in Item 8. “Financial Statements and Supplementary Data.” The selected consolidated financial data, other than data on consultants and consultant productivity, as of December 31, 2002 and for the years ended December 31, 2002 and 2001 are derived from the audited financial statements of CDRJ Investments (Lux) S.A., the former parent company, which appear in Item 8. “Financial Statements and Supplementary Data.” The selected consolidated financial data as of December 31, 2001 and 2000 and for the year ended December 31, 2000 are derived from the audited financial statements of CDRJ Investments (Lux) S.A. which are not included herein. The consolidated financial data as of and for the year ended December 31, 1999 are derived from the unaudited consolidated financial statements of CDRJ Investments, which are not included herein. The related selected financial data should be read in conjunction with such financial statements and notes thereto and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All other financial data presented has been derived from audited financial statements of the CDRJ Investments (Lux) S.A. which are not included herein.

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      The following discussion of the results of operations, financial condition and liquidity of the Company should be read in conjunction with the information contained in the consolidated financial statements and notes thereto included in Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. These statements have been prepared in conformity with accounting principles generally accepted in the United States and require management to make estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. Actual results could differ from these estimates. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods.

Overview

      The Company is a direct seller of skin and body care products, color cosmetics, fragrances and other personal care products. The Company sells its Jafra brand products through a direct selling network of approximately 412,000 independent consultants, who market and sell the Company’s products to their customers. The Company’s largest markets are Mexico and the United States, which together contributed approximately 89% of its total net sales in 2003.

Recent Developments — Announcement of Sale to Vorwerk & Co. KG

      On March 30, 2004, it was announced that a subsidiary of Vorwerk & Co. KG, a family-owned company based in Wuppertal, Germany, entered into an agreement whereby it will acquire all of the issued and outstanding common stock of North Atlantic, which will be the Company’s top-tier holding company upon completion of the liquidation of CDRJ Investments, from its shareholders. The transaction is expected to close in the second quarter of 2004 and is subject to the satisfaction of customary closing conditions, including customary regulatory approvals. The agreement may be terminated if the transaction is not consummated by July 31, 2004. The Company and its subsidiaries will remain responsible for their outstanding debt following the closing of this transaction.

      There can be no assurance that this transaction will be completed as announced, or at all. If this transaction is completed as contemplated, it will constitute a change of control as defined in the Senior Credit Agreement and in the indenture governing the Company’s 10  3/4% Notes. Upon completion of this transaction, the Company expects that North Atlantic will withdraw the registration statement filed on February 13, 2004 in connection with its proposed initial public offering of its common stock (the “Registration Statement”) and that it will not consummate the redemption of 35% of the 10  3/4% Notes described in the Registration Statement.

Markets

      The Company’s business operates in four primary markets: Mexico, the United States, Europe and South America. Of these, Mexico is the largest, with approximately 63% of total net sales. Net sales in the United States, Europe and South America represented 26%, 9% and 2%, respectively, of total net sales for the year ended December 31, 2003. In 2000, the Company divided the United States into two divisions: the General Division and the Hispanic Division, which is comprised of Spanish-speakers, and represents approximately two-thirds of the total U.S. business. In Europe, the Company operates in Germany, Switzerland, Italy, Austria and the Netherlands, and several other countries through distributors. The Company has renewed its focus on the strengths of the Mexican, U.S. and European markets and, in the third quarter of 2003, the Company discontinued its operations in Chile, Colombia, Peru and Venezuela, and in the fourth quarter of 2003, the Company ceased its operations in Thailand. Consequently, the historical financial statements have been revised for all periods presented to reflect the operations in these markets, except Thailand, as discontinued operations and the number of consultants has been reduced accordingly. The historical financial statements have not been revised to reflect operations in Thailand as discontinued operations because management believes the impact of such a restatement would be immaterial. The Company also reevaluated its strategy in Brazil and Argentina, which management believes are good market opportunities for the

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Seasonality and Sales Cycles

      The 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 the 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 the consultant base as measured at the end of intra-year reporting periods the Company experiences a rate of consultant turnover of over 125% from year to year, which the Company believes is typical of the direct sales industry. In addition, the consultant base and net sales also fluctuate within quarterly reporting periods because the Company has six two-month sales cycles in each fiscal year. The second and fifth sales cycle straddle the first and second, and third and fourth quarters, respectively. As a result, the 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 the second and fourth quarters, which each include the second half of that sales cycle.

      The Company typically schedules sales promotions to coincide with the beginning of a new sales cycle, but 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 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 be representative of the Company’s growth potential.

      The following table illustrates the Company’s net sales among the four quarters of each of the last three fiscal years (dollars in millions):

Measures of Consultant Performance

      In evaluating the results of operations, management utilizes several key measures relating to the performance of the Company’s independent consultants.

      Consultants at End of Period or Consultant Base. The Company defines the 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. The Company uses period-to-period comparisons of its consultant base as an indicator of the growth of the business. As a result of this four-month convention, the number of consultants

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      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. The Company uses period-to-period comparisons of the average number of consultants as an indicator of the growth of the 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 the Company’s 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. Management believes that productivity in local currency is a better indicator of the business’s 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 the Company’s consultants. The activity rate is defined as the percentage of consultants included in the base who have placed an order during any given period.

      The Company intends to seek to continue to grow its consultant base by continuing to provide a variety of incentives and overrides, which encourage existing consultants and managers to sponsor new consultants. In the past, the Company’s net sales have typically grown in line with the growth in the Company’s consultant base. Conversely, consultant productivity is somewhat adversely affected by an increase in the relative percentage of newer consultants, as new consultants typically have lower productivity than experienced ones. Consequently, normal growth in the consultant base tends to increase net sales, while reducing average consultant productivity. From time to time, consultant liquidity is affected by the overall economic condition of a country in which the Company operates. In weaker economies, the collection cycle of payments from the ultimate consumer to the consultants to the Company sometimes increases slightly. However, even during these periods, the Company has historically had sufficient cash flow to satisfy its debt obligations.

Compensation of the Company’s Direct Selling Network

      Consultants earn income by purchasing products from the Company 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 paid 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 motivated to perform collection efforts on the Company’s behalf, as overrides paid on a consultant’s downline productivity are paid only upon the collection of receivables. The overrides represent a significant portion of the Company’s selling, general and administrative expense.

Research and Development

      Research and development is a key part of new product introductions that motivate the consultant base and increase net sales. The Company has its own in-house development department staffed with 10 trained professionals. The Company has chosen a strategy that allows it to focus most of its efforts on the development side. The Company utilizes research and industry developments as well as proven market concepts and products as a base for its development of new products. As a result, research and development expenses are less than 1% of net sales, but the Company has delivered a very steady stream of value-added new products, including some first-to-market concepts.

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Foreign Currency Translation

      The Company generates the majority of its net sales through peso-denominated sales to consultants in Mexico, which is its largest market. The Company also has operations in other overseas markets, each of which generates net sales in its respective local currency. Because the Company reports its financial results in, and nearly all of its debt is denominated in, U.S. dollars, the Company is exposed to significant foreign currency related risks in connection with the translation of its activities outside the United States from local currencies into U.S. dollars and the translation of currency for the repayment of debt, payment of interest expense and other dollar-denominated obligations into U.S. dollars.

Results of Operations

      Net Sales. The Company records net sales based on the wholesale price of product sold to its consultants. The Company’s net sales represents net revenue plus the shipping, handling and other fees paid to it by consultants, less any commissions paid by the Company to 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 the Company’s products is at the high end of the range for comparable direct selling merchants. The wholesale price is determined by the commission earned by the consultant based on the size of the order.

      Cost of Sales. The Company’s cost of sales primarily represents the cost to the Company of the products it sells to its consultants and costs associated with free product on certain promotional arrangements. Cost of sales also includes manufacturing and other production-related expenses and charges related to obsolete and slow-moving inventory. The Company’s gross margins may not be comparable to those of other entities because the Company includes certain costs related to distribution in selling, general and administrative expenses rather than in cost of sales.

      Selling, General and Administrative Expense. Selling, general and administrative expenses (“SG&A”) include sales promotional expenses, including the cost of various sales incentives, distribution expenses, and shipping and handling costs, as well as selling, marketing and administrative expenses, including general management, finance, human resources, and information technology. SG&A expenses also include override payments to lineage leaders who earn a percentage of the sales of the consultants in their downline and bad debt expense related to uncollectible accounts receivable.

      Loss on Discontinued Operations. During the year ended December 31 2003, the Company discontinued its operations in Venezuela, Colombia, Chile and Peru. Accordingly, the results of these markets have been classified as discontinued operations in all periods disclosed in the statements of operations.

      The following table represents selected components of the Company’s results of operations, in millions of dollars and as percentages of net sales.

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      The following tables represent selected components of the consolidated results of operations by market. Management evaluates 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, the Dominican Republic and Thailand are combined and included in the following tables under the caption “All Others.” The Company expects that in future periods, the results for the Dominican Republic will be included in the U.S. segment. Corporate expenses, reorganization and restructuring charges, unusual gains and losses and, in 2001, amortization of goodwill and other intangible assets are included under the caption “Corporate, Unallocated and Other.”

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