Back to GetFilings.com
CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2001
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission file number 1-4881
AVON PRODUCTS, INC.
- ----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 13-0544597
- ----------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1345 Avenue of the Americas, New York, N.Y. 10105-0196
(Address of principal executive offices)
(212) 282-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ----------------------------------------------------------------
Common stock (par value $.25) New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ].
The aggregate market value of Common Stock (par value $.25) held
by non-affiliates at February 28, 2002 was $12.2 billion.
The number of shares of Common Stock (par value $.25) outstanding
at February 28, 2002 was 236,825,272.
Documents Incorporated by Reference
Parts I and II Portions of the 2001 Annual Report to Shareholders.
Part III Portions of the Proxy Statement for the 2002 Annual
Meeting of Shareholders.
Forward-Looking Statements
Certain statements in this report which are not historical facts or
information are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are based on management's reasonable current assumptions and
expectations. Such forward-looking statements involve risks,
uncertainties and other factors which may cause the actual results,
levels of activity, performance or achievement of Avon Products, Inc.
("Avon" or the "Company") to be materially different from any future
results, levels of activity, performance or achievement expressed or
implied by such forward-looking statements, and there can be no
assurance that actual results will not differ materially from
management's expectations. Such factors include, among others, the
following: general economic and business conditions in the Company's
markets; Avon's ability to implement its business strategy; Avon's
ability to successfully identify new business opportunities; Avon's
access to financing; the impact of substantial currency fluctuations in
Avon's principal foreign markets; Avon's ability to attract and retain
key executives; Avon's ability to achieve anticipated cost savings and
profitability targets; changes in the industry; competition; the effect
of regulatory, tax and legal proceedings and restrictions imposed by
domestic and foreign governments; and other factors discussed in Item 1
of this Form 10-K. As a result of the foregoing and other factors, no
assurance can be given as to the future results and achievements of
Avon. Neither Avon nor any other person assumes responsibility for the
accuracy and completeness of such forward-looking statements, nor
undertakes an obligation to update them.
PART I
Dollars in Millions
ITEM 1. BUSINESS
General
Avon commenced operations in 1886 and was incorporated in the State
of New York on January 27, 1916. Avon is a global manufacturer and
marketer of beauty and related products. Avon's products fall into three
product categories: "Beauty" which consists of cosmetics, fragrance and
toiletries ("CFT"); "Beauty Plus" which consists of jewelry, watches and
apparel and accessories; and "Beyond Beauty" which consists of home
products, gift and decorative and candles. In 2001, Avon
-1-
launched an entirely new global product category in the area of women's
health and wellness. This new line expands the definition of beauty to
include inner health, as well as outward appearance. The new products
are sold through a separate catalog and include vitamins and nutrition
supplements, exercise and fitness items, and a variety of self-care and
stress relief products. Vitamins and nutritional supplements have been
developed for Avon by Roche Consumer Healthcare and are marketed under
the name VitAdvance. Health and Wellness products are divided among all
three product categories based on product segmentation. Additionally, in
2001, Avon launched a retail line in the U.S. to sell a new line of Avon
products called "beComing" in selected stores of a major retailer, J.C.
Penney Company, Inc. ("J.C. Penney"). The new line offers beauty
products, as well as a selection of jewelry and accessories and health
and wellness products. The "beComing" line is priced significantly
higher than the core Avon line, but well below prestige brands. This
retail arrangement leverages Avon's product development and manufacturing
capabilities with the retail expertise of J.C. Penney. The retail
strategy is intended to enable Avon to access new customers that Avon is
not currently reaching through the direct selling channel. In 2003, Avon
plans to launch a new global business targeted to teenage girls to win
market share in the worldwide youth market.
Avon's business primarily is comprised of one industry segment,
direct selling, which is conducted in North America, Latin America, the
Pacific and Europe. The Company's reportable segments are based on
geographic operations. Financial information relating to the reportable
segments is incorporated by reference to the analysis of Net sales and
Operating profit by geographic area, and to Note 11 of the Notes to the
Consolidated Financial Statements, on pages 24 and 56 through 57,
respectively, in Avon's 2001 Annual Report to Shareholders.
Distribution
Avon presently has operations in 58 countries, including the United
States, and its products are distributed in 85 more for coverage in 143
markets. Sales are made to the ultimate customer principally through a
combination of direct selling and marketing by approximately 3.5 million
independent Avon Representatives, approximately 451,000 of whom are in
the United States. Representatives are independent contractors or
independent dealers, and are not agents or employees of Avon.
Representatives purchase products directly from Avon and sell them to
their customers. No single customer accounts for more than 10% of Avon's
net sales.
-2-
A Representative contacts customers, selling primarily through the
use of brochures which also highlight new products and specially-priced
items for each sales campaign. Sales campaigns are generally for a two-
week duration in the United States and a three to four week duration
outside the United States. Product samples, demonstration products and
selling aids such as make-up color charts are also used. Generally, the
Representative forwards an order to a designated distribution center. A
Representative can place an order 24 hours a day, 7 days a week using the
mail, telephone, fax or the Internet. This order is processed and the
products are assembled at the distribution center and delivered to the
Representative's home, usually by a local delivery service. The
Representative then delivers the merchandise and collects payment from
the customer for his or her own account.
Avon employs certain electronic order systems to increase
Representative support, which allows the Representatives to run their
businesses more efficiently as well as to improve order processing
accuracy. Additionally, Avon Representatives can utilize the Internet to
manage their business electronically. In the U.S., Avon Representatives
use a new online marketing tool called youravon.com, which was introduced
in 2000. The site features a complete line of Avon's products 24 hours a
day, 7 days a week, with no geographic boundaries. The site helps
Representatives build their own Avon business by enabling them to sell
online through their own personalized web pages, developed in partnership
with Avon. Additionally, these e-Representatives have the advantage of
business-to-business capabilities that connect them to Avon's order and
fulfillment systems. While their customers benefit from the speed,
convenience and delivery flexibility of online ordering, Avon e-
Representatives are able to promote special products, target specific
groups of customers, place and track orders online, and capitalize on e-
mail to share product information, selling tips and marketing incentives.
Self-paced online training also is available, as well as up-to-the-minute
news about Avon. Globally, Avon has internet sites in more than 20
markets. Most are consumer information sites, but in 2001, the U.K.,
Brazil, Argentina, Mexico and Hungary also piloted business-to-business
sites to support Representatives.
In the United States, Avon also sells its products to the ultimate
customer through licensed kiosks located in shopping malls across the U.S
and on Avon's internet site if the customer chooses not to purchase
through a Representative. Avon also sells products at the Avon Centre, a
spa, salon and retail store located in Trump Tower, New York City. The
Avon Centre emphasizes health and beauty and offers a selection of Avon
beauty products created exclusively for use at the Avon Centre. As
previously discussed, in 2001, Avon opened Avon Centers in selected
stores of J.C. Penney to sell a new line of Avon products.
-3-
Primarily in the Asia Pacific region, Avon uses decentralized
branches and satellite stores to serve Representatives and customers.
Representatives come to a branch near their homes to place and pick up
product orders for their customers. The branches also create visibility
for Avon with consumers and help reinforce the Company's beauty image. In
markets such as China, Taiwan, Malaysia, the Philippines and Venezuela,
Representatives can manage Avon beauty boutiques, beauty counters,
licensed Avon beauty centers and other retail-oriented opportunities to
build their careers and bring Avon to new customers in complementary ways
to direct selling.
The recruiting and training of Representatives are the primary
responsibilities of District Sales Managers. District Sales Managers are
employees of Avon and are paid a salary and a sales incentive based
primarily on the increase over the prior year's sales of Avon products by
Representatives in their district. Personal contacts, including
recommendations from current Representatives (including the Sales
Leadership program), and local advertising constitute the primary means
of obtaining new Representatives. The Sales Leadership program is a
modified multi-level selling system which gives Representatives the
opportunity to earn commissions on their own sales, as well as from
downstream sales of Representatives they recruit. This program limits
the number of levels to three and continues to focus on individual
product sales. The Sales Leadership program is active in 24 countries,
including the U.S., Poland and Hungary. Ten additional markets are
scheduled to launch this program in 2002. Because of the high rate of
turnover among Representatives, a characteristic of the direct-selling
method, recruiting and training of new Representatives are continually
necessary.
Avon also has a Representative development strategy in the U.S.
that focuses on the professional training and development of
Representatives through the Avon Beauty Advisor program. Under this
program, Representatives enroll in a series of courses designed to
enhance their product knowledge and professional beauty consulting
skills.
From time to time, the question of the legal status of
Representatives has arisen, usually in regard to possible coverage under
social benefit laws that would require Avon (and in most instances, the
Representatives) to make regular contributions to social benefit funds.
Although Avon has generally been able to address these questions in a
satisfactory manner, the matter has not been fully resolved in all
-4-
countries. If there should be a final determination adverse to Avon in a
country, the cost for future, and possibly past, contributions could be
so substantial in the context of the volume of business of Avon in that
country that it would have to consider discontinuing operations in that
country.
Promotion and Marketing
Sales promotion and sales development activities are directed at
assisting the Representatives, through sales aids such as brochures,
product samples and demonstration products. In order to support the
efforts of Representatives to reach new customers, especially working
women and other individuals who frequently are not at home, specially
designed sales aids, promotional pieces, customer flyers and other
advertising are used. In addition, Avon seeks to motivate its
Representatives through the use of special incentive programs that reward
superior sales performance. Periodic sales meetings with Representatives
are conducted by the District Sales Managers. The meetings are designed
to keep Representatives abreast of product line changes, explain sales
techniques and provide recognition for sales performance.
A number of merchandising techniques, including the introduction of
new products, the use of combination offers, the use of trial sizes and
the promotion of products packaged as gift items, are used. In general
for each sales campaign, a distinctive brochure is published, in which
new products are introduced and selected items are offered at special
prices or are given particular prominence in the brochure. CFT products
are available each sales campaign at consistently low prices, while
introductory specials and periodic sales are maintained on selected items
for limited time periods.
Avon is marketing a more vibrant beauty image through increased
advertising and image-building programs focused on the consumer. In
2000, Avon launched its first-ever global advertising campaign entitled
"Let's Talk", increased investments in product sampling and development
and upgraded the quality of its brochure to further strengthen its
worldwide beauty image. In 2001, "Let's Talk" advertising campaigns
included the Williams sisters, accomplished young sports professionals
who, through their embodiment of Avon's values of empowerment and self-
fulfillment, serve as role models for women everywhere.
From time to time, various regulations or laws have been proposed or
adopted that would, in general, restrict the frequency, duration or
-5-
volume of sales resulting from new product introductions, special
prices or other special price offers. Avon's pricing flexibility and
broad product lines are expected to be able to mitigate the effect of
these regulations.
Competitive Conditions
The CFT; gift and decorative; apparel; and fashion jewelry and
accessory industries are highly competitive. Avon is one of the leading
manufacturers and distributors of cosmetics and fragrances in the United
States. Its principal competitors are the large and well-known cosmetics
and fragrances companies that manufacture and sell broad product lines
through various types of retail establishments. There are many other
companies that compete in particular products or product lines sold
through retail establishments.
Avon has many competitors in the gift and decorative products and
apparel industries in the United States, including retail establishments,
principally department stores, gift shops, specialty retailers and
direct-mail companies, specializing in these products.
Avon is one of the leading distributors of fashion jewelry and
accessories for women in the United States. Its principal competition
in the fashion jewelry industry consists of a few large companies and
many small companies that manufacture and sell fashion jewelry for women
through retail establishments.
The number of competitors and degree of competition that Avon faces
in its foreign CFT and fashion jewelry markets varies widely from country
to country. Avon is one of the leading manufacturers and distributors in
the CFT industry in most of its foreign markets, as well as in the
fashion jewelry industry in Europe.
There are a number of direct-selling companies which sell product
lines similar to Avon's, some of which also have worldwide operations and
compete with Avon.
Avon believes that the personalized customer service offered by its
Representatives; the high quality, attractive designs and reasonable
prices of its products; new product introductions; innovative CFT
products; and its guarantee of satisfaction are significant factors in
establishing and maintaining its competitive position.
-6-
International Operations
Avon's international operations are conducted primarily through
subsidiaries in 57 countries and Avon's products are distributed in some
85 other countries. The Company has entered 30 new markets since 1990,
including Russia and China and rapidly emerging nations throughout
Central Europe, and is currently evaluating several other markets in
Eastern Europe and the Pacific region.
Avon's international operations are subject to certain customary
risks inherent in carrying on business abroad, including the risk of
adverse currency fluctuations, currency remittance restrictions and
unfavorable economic and political conditions.
Manufacturing
Avon manufactures and packages almost all of its CFT products. Raw
materials, consisting chiefly of essential oils, chemicals, containers
and packaging components, are purchased from various suppliers. Packages,
consisting of containers and packaging components, are designed by its
staff of artists and designers.
The design and development of new products are affected by the cost
and availability of materials such as glass, plastics and chemicals. Avon
believes that it can continue to obtain sufficient raw materials and
supplies to manufacture and produce its products.
Avon has 18 manufacturing laboratories around the world, one of
which is principally devoted to the manufacture of fashion jewelry. In
the first quarter of 2002, the laboratory that manufactures fashion
jewelry will be closed. Avon will outsource jewelry manufacturing and
purchase its full jewelry line from suppliers in Asia. In the United
States, Avon's CFT products are produced in three manufacturing
laboratories. Most products sold in foreign countries are manufactured
in Avon's facilities abroad.
Trademarks and Patents
Avon's business is not materially dependent on the existence of
third party patent or other intellectual property rights and Avon is not
a party to any ongoing material license, franchise or concession.
-7-
The Company, however, does seek to protect its key proprietary
technologies by aggressively pursuing comprehensive patent coverage in
all major markets.
Avon's major trademarks are protected by registration in the United
States and the other countries where its products are marketed as well as
in many other countries throughout the world.
Seasonal Nature Of Business
Avon's sales and earnings have a marked seasonal pattern
characteristic of many companies selling CFT; gift and decorative
products; apparel; and fashion jewelry. Holiday sales cause a sales peak
in the fourth quarter of the year. Fourth quarter net sales were
approximately 30 percent of total net sales in both 2001 and 2000,
respectively, and before special and non-recurring charges, fourth
quarter operating profit was 34 percent and 33 percent of total operating
profit in 2001 and 2000, respectively.
Research Activities
Avon's research and development department is a leader in the
industry, based on the number of new product launches, including
formulating effective beauty treatments relevant to women's needs.
A team of researchers and technicians apply the disciplines of
science to the practical aspects of bringing products to market around
the world. Relationships with well known dermatologists and other
specialists enhance Avon's ability to deliver new formulas and
ingredients to market.
Avon has pioneered many innovative products, including Skin-So-Soft,
BioAdvance, the first skin care product with stabilized retinol, and
Collagen Booster, a product that capitalizes on Vitamin C technology.
Avon also introduced the benefits of aromatherapy to millions of American
women, encapsulated color for the Color-Release line and introduced
alpha-hydroxy acid for cosmetic use in the Anew Perfecting Complex
products. Avon's Anew product line has been expanded to include
technologically advanced products such as Retroactive, Retinol Recovery
Complex PM Treatment, Night Force Vertical Lifting Complex, Clearly C 10%
Vitamin C Serum and Luminosity Brightening Complex. Retroactive utilizes
Avon's exclusive Rejuvi-cell complex, a blend of ingredients formulated
to enhance cellular communication and re-energize aging skin cells.
-8-
Night Force employs a patented material named AVC10, a molecule that was
engineered by Avon researchers over a three-year period. Luminosity
Brightening Complex contains Diamonex, Avon's exclusive skin brightening
system. Avon has introduced Hydra Finish Lip Color, the first lipstick
developed with 20% water, and Perceive, a fragrance which uses the mood-
enhancing effects of pheromone technology. In 2001, Avon updated
packaging for the Anew line and Anew Retroactive, launched Pure 02, a
facial lotion that increases oxygen delivery to skin cells and erases
signs of stress and fatigue; Avon Beyond Color Illuminating Radiance
Vitamin C Foundation; Avon Beyond Color Nutralush Plumping Lipstick and a
new fragrance called Little Black Dress. In 2000, the Company launched a
complete renovation of Avon Color with improved formulas and redesigned
packaging, rolled out a reformulated Anew All-In-One skin care regimen,
launched Positivity, a new line of skin care products for menopausal
women, and launched Advance Techniques, a full line of upscale patent-
pending hair-care products.
The amounts incurred on research activities relating to the
development of new products and the improvement of existing products
were $45.9 in 2001, $43.1 in 2000, and $38.2 in 1999. This research
included the activities of product research and development and package
design and development. Most of these activities are related to the
development of CFT products.
Environmental Matters
Pursuant to Avon's global environmental policy, environmental audits
are conducted to ensure Avon facilities around the world meet or exceed
local regulatory standards. A corporate environmental operations
committee ensures that opportunities for environmental performance
improvements are reflected in our products, packaging and manufacturing
processes.
In general, compliance with environmental regulations impacting
Avon's global operations has not had, and is not anticipated to have, any
material adverse effect upon the capital expenditures, financial position
or competitive position of Avon.
Employees
At December 31, 2001, Avon employed 43,800 people. Of these, 9,600
were employed in the United States and 34,200 in other countries. The
number of employees tends to rise from a low point in January to a high
point in November and decreases slightly in December after holiday
shipments are completed.
-9-
ITEM 2. PROPERTIES
Avon's principal properties consist of manufacturing laboratories
for the production of CFT and distribution centers where offices are
located and where finished merchandise is warehoused and shipped to
Representatives in fulfillment of their orders. Substantially all of
these properties are owned by Avon or its subsidiaries, are in good
repair, adequately meet Avon's needs and operate at reasonable levels of
productive capacity.
The domestic manufacturing laboratories are located in Morton Grove,
IL; Springdale, OH; and Suffern, NY. The distribution centers are located
in Atlanta, GA; Glenview, IL; Newark, DE; and Pasadena, CA. Other
properties include three manufacturing laboratories and eleven
distribution centers in Europe; six manufacturing laboratories and nine
distribution centers in Latin America; two manufacturing laboratories and
two distribution centers in North America (other than in the United
States); and four manufacturing laboratories and nine distribution
centers in the Pacific region. The research and development laboratories
are located in Suffern, NY. Avon leases space for its executive and
administrative offices in New York City and its fashion jewelry
manufacturing facility in Puerto Rico. The jewelry manufacturing
facility will be closed by March 2002.
Avon also has Avon beauty boutiques, licensed satellite stores and
Avon beauty centers in 32 countries.
ITEM 3. Legal Proceedings
Avon is a defendant in a class action suit commenced in 1991 on
behalf of certain classes of holders of Avon's Preferred Equity-
Redemption Cumulative Stock ("PERCS"). Plaintiffs allege various
contract and securities law claims related to the PERCS (which were fully
redeemed in 1991) and seek aggregate damages of approximately $145.0,
plus interest. A trial of this action took place in the United States
District Court for the Southern District of New York and concluded in
November 2001. At the conclusion of the trial, the judge reserved
decision in the matter. Avon believes it presented meritorious defenses
to the claims asserted. However, it is not possible to predict the
outcome of litigation and it is reasonably possible that the trial, and
any possible appeal, could be decided unfavorably. Management is unable
to make a meaningful estimate of the amount or range of loss that could
result from an unfavorable outcome but, under some of the damage theories
presented, an adverse award could be material to the Consolidated
Financial Statements.
Avon is a defendant in an action commenced in 1997 in the Supreme
Court of the State of New York by Sheldon Solow d/b/a Solow Building
Company, the landlord of the Company's former headquarters in New York
-10-
City. Plaintiff seeks aggregate damages of approximately $80.0, plus
interest, for the Company's alleged failure to restore the leasehold
premises at the conclusion of the lease term in 1997. A trial of this
matter had been scheduled for February 2002, but has been stayed pending
the determination of (i) an interlocutory appeal by plaintiff of an order
that denied the plaintiff's motion for summary judgment and granted partial
summary judgment in favor of the Company on one of plaintiff's claims; and
(ii) an appeal by plaintiff of a decision in an action against another
former tenant that dismissed plaintiff's claims after trial. While it is
not possible to predict the outcome of litigation, management believes that
there are meritorious defenses to the claims asserted and that this action
should not have a material adverse effect on the Consolidated Financial
Statements. This action is being vigorously contested.
Various other lawsuits and claims (asserted and unasserted),
arising in the ordinary course of business or related to businesses
previously sold, are pending or threatened against Avon. In the
opinion of Avon's management, based on its review of the information
available at this time, the total cost of resolving such other
contingencies at December 31, 2001 should not have a material adverse
impact on Avon's Consolidated Financial Statements.
In 1998, the Argentine tax authorities denied certain past
excise tax credits taken by Avon's subsidiary in Argentina and
assessed this subsidiary for the corresponding taxes. Avon
vigorously contested this assessment through local administrative
and judicial proceedings since 1998. In the third quarter of 2001,
the Argentine government issued a decree permitting taxpayers to
satisfy certain tax liabilities on favorable terms using Argentine
government bonds as payment. Avon decided to settle this contested
tax assessment by applying for relief under this new government
program and purchased bonds to tender in settlement of the
aforementioned assessment. As a result, a pre-tax
charge of $6.4 ($3.4 after-tax, or $.01 per diluted share) was
included in Other expense, net in the Consolidated Statements of
Income in the third quarter of 2001.
Avon has been responding to a formal investigation by the Securities
and Exchange Commission ("SEC") which commenced in August 2000, and has
furnished to the SEC information that principally concerns a special
charge reported by Avon in the first quarter of 1999, which included the
write-off of approximately $15.0 in pre-tax costs associated with an
order management software system known as the FIRST project. The balance
of the FIRST project's development costs had been carried as an asset
until the third quarter of 2001, when Avon recorded a pre-tax charge of
$23.9 ($14.5 after-tax, or $.06 per diluted share) to write off the
carrying value of costs related to that project. As part of a resolution
of the investigation or at the conclusion of a contested proceeding,
there may be a finding that Avon knew or should have known in the first
quarter of 1999 that it was not probable that FIRST would be implemented
-11-
and therefore, the entire FIRST asset should have been written off as
abandoned at that time. In that connection, it may also be necessary for
Avon to restate its financial statements to write off the entire FIRST
asset in the first quarter of 1999. If Avon were to restate its
financial statements to write off the FIRST asset in the first quarter of
1999, then the charge recorded in the third quarter of 2001 and other
FIRST-related items recorded in prior periods would also be restated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
quarter ended December 31, 2001.
ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
This information is incorporated by reference to "Market Prices per
Share of Common Stock by Quarter" on page 37 of Avon's 2001 Annual Report
to Shareholders.
PART II
ITEM 6. SELECTED FINANCIAL DATA
The information for the five-year period 1997 through 2001 is
incorporated by reference to the "Eleven-Year Review" on pages 62 and 63
of Avon's 2001 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
This information is incorporated by reference to "Management's
Discussion and Analysis" on pages 21 through 35 of Avon's 2001 Annual
Report to Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information is incorporated by reference to "Risk Management
Strategies and Market Rate Sensitive Instruments" on pages 32 through 35
and Note 7 on pages 49 through 51 of Avon's 2001 Annual Report to
Shareholders for information concerning market risk sensitive instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is incorporated by reference to the "Consolidated
Financial Statements and Notes" on pages 38 through 60, together with the
report thereon of PricewaterhouseCoopers LLP, on page 61, and "Results of
Operations by Quarter" on page 36 of Avon's 2001 Annual Report to
shareholders.
-12-
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors is incorporated by reference to the
"Election of Directors" and "Information Concerning the Board of
Directors" sections of Avon's Proxy Statement for the 2002 Annual
Meeting of Shareholders.
Officers are elected by the Board of Directors at its first meeting
following the Annual Meeting of Shareholders. Officers serve until the
first meeting of the Board of Directors following the Annual Meeting of
Shareholders at which Directors are elected for the succeeding year, or
until their successors are elected, except in the event of death,
resignation or removal, or the earlier termination of the term of office.
Information regarding employment contracts between Avon and named
executive officers is incorporated by reference to the "Contracts with
Executives" section of Avon's Proxy Statement for the 2002 Annual Meeting
of Shareholders.
Listed below are the executive officers of Avon, each of whom
(except as noted) has served in various executive and operating
capacities with Avon during the past five years:
Elected
Title Name Age Executive Officer
- ----- ---- --- -----------------
Chairman of the Board,
Chief Executive Officer and Director......Andrea Jung 43 1997(1)
President and Chief Operating Officer,
and Director ..........................Susan J. Kropf 53 1997(2)
Executive Vice President and
Chief Financial Officer................Robert J. Corti 52 1988
Executive Vice President, Asia Pacific....Fernando Lezama* 62 1997
Executive Vice President, Asia
Pacific, Europe, Middle East
and Africa.............................Robert Toth* 49 2002(3)
Senior Vice President,
General Counsel and Secretary..........Gilbert L. Klemann,II 51 2001(4)
Senior Vice President, Human Resources....Jill Kanin-Lovers 50 1998
Senior Vice President and President,
Avon North America.....................Brian C. Connolly 46 2002(5)
Vice President and Controller.............Janice Marolda 41 1998
*Mr. Lezama will retire from Avon, effective March 31, 2002. On that date,
Mr. Toth will assume the position and title indicated above.
-13-
(1) Andrea Jung was elected Chairman of the Board of Avon in September
2001. She has been Chief Executive Officer of Avon since November
1999 concurrently holding the position of President until January
2001. Ms. Jung joined Avon in January 1994 as President, Product
Marketing and was promoted to Executive Vice President, Global
Marketing and New Business in March 1997. From January 1998 to
November 1999 she was President and Chief Operating Officer of
Avon.
(2) Susan J. Kropf was elected President and Chief Operating Officer,
effective January 2001. She had been elected Executive Vice
President, Chief Operating Officer, North America and Global
Business Operations effective November 1999. Previously she had
been Executive Vice President and President, North America and
prior to that she had served as Senior Vice President, U.S.
Marketing and Vice President, Product Development. Ms. Kropf has
been with Avon for 31 years.
(3) Robert Toth was elected Executive Vice President, Asia Pacific,
Europe, Middle East and Africa in December 2001, effective March
2002. Prior to that, Mr. Toth had been Senior Vice President and
OBU ("Operating Business Unit") Leader for Europe, Middle East and
Africa since 1999. From 1997 to 1999, Mr. Toth had been Group Vice
President for Eastern Europe, Middle East and Africa. Mr. Toth has
been with Avon since 1978.
(4) Gilbert L. Klemann, II was elected Senior Vice President and
General Counsel of Avon effective January 1, 2001, and was elected
Secretary effective June 1, 2001. Prior to joining Avon he had
been an Executive Vice President of Fortune Brands, Inc. (formerly
American Brands, Inc.) from 1998-1999 with responsibilities that
included corporate development, legal and administrative functions.
He was the Senior Vice President and General Counsel of American
Brands, Inc. during the period 1991-1997 and previously was a
partner in the New York law firm of Chadbourne & Parke.
(5) Brian C. Connolly was elected Senior Vice President and President,
North America on December 20, 2001. Prior to that, Mr. Connolly
has been President of Avon U.S. since 2000 and Senior Vice
President of Sales and Operations for Avon U.S. since 1999.
Previously, Mr. Connolly had been Group Vice President of Sales and
Customer Service for Avon U.S. since 1998 and Group Vice President-
Sales for Avon U.S. since 1997. Mr. Connolly joined Avon in 1978.
-14-
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference to the "Information
Concerning the Board of Directors" and "Executive Compensation" sections
of Avon's Proxy Statement for the 2002 Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference to the "Ownership of
Shares" section of Avon's Proxy Statement for the 2002 Annual Meeting of
Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to the "Contracts
with Executives" section of Avon's Proxy Statement for the 2002 Annual
Meeting of Shareholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS
ON FORM 8-K
Annual
Report to
Shareholders Form 10-K
Page Number Page Number
----------- -----------
(a) 1. Consolidated Financial Statements of
Avon Products, Inc. and Subsidiaries
Consolidated Statements of Income for
each of the years in the three-year
period ended December 31, 2001........ 38 27
Consolidated Balance Sheets at
December 31, 2001 and 2000............. 39 28
Consolidated Statements of Cash Flows
for each of the years in the three-year
period ended December 31, 2001......... 40 29
Consolidated Statements of Changes in
Shareholders' (Deficit) Equity for each
of the years in the three-year period
ended December 31, 2001................ 41 30
Notes to Consolidated Financial
Statements............................. 42-60 31-61
Report of Independent Accountants
PricewaterhouseCoopers LLP............. 61 63
-15-
(a) 2. Financial Statement Schedule
Report of Independent Accountants on
Financial Statement Schedule
PricewaterhouseCoopers LLP S-1
Consent of Independent Accountants
PricewaterhouseCoopers LLP S-2
Financial statement schedule for each
of the years in the three-year period
ended December 31, 2001...............
II. Valuation and qualifying
accounts............. S-3
-16-
Financial statements of the registrant and all other financial statement
schedules are omitted because they are not applicable or because the
required information is shown in the consolidated financial statements
and notes.
(a) 3. Exhibits
Exhibit
Number Description
- ------ -----------
3.1 Restated Certificate of Incorporation of Avon, filed with the
Secretary of State of the State of New York on May 8, 2000
(incorporated by reference to Exhibit 3.4 to Avon's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000).
3.2 By-laws of Avon, as restated, effective December 2, 1999
(incorporated by reference to Exhibit 3.2 to Avon's Annual Report
on Form 10-K for the year ended December 31, 1999).
4.1 Indenture, dated as of August 1, 1997, between Avon, as Issuer,
and The Chase Manhattan Bank, as Trustee, relating to the 6.55%
Notes due 2007 (incorporated by reference to Exhibit 4.2 to Avon's
Registration Statement on Form S-4, Registration Statement No. 33-
41299 filed December 1, 1997).
4.2 Rights Agreement, dated as of March 30, 1998 (the "Rights
Agreement"), between Avon and First Chicago Trust Company of New
York (incorporated by reference to Exhibit 4 to Avon's
Registration Statement on Form 8-A, filed March 18, 1998).
4.3 Indenture, dated as of May 11, 1998, between Avon Products, Inc.,
as Issuer, and The Chase Manhattan Bank, as Trustee, relating to
the 6.25% Putable/Callable Notes due May 1, 2018, Putable/Callable
May 1, 2003.
4.4 Indenture, dated as of November 9, 1999, between Avon, as Issuer,
and The Chase Manhattan Bank, as Trustee, relating to the 6.9%
Notes due November 15, 2004 and the 7.15% Notes due November 15,
2009 (incorporated by reference to Exhibit 4.4 to Avon's
Registration Statement on Form S-4, Registration Statement No. 33-
92333 filed December 8, 1999).
4.5 Indenture, dated as of July 12, 2000, between Avon, as Issuer, and
The Chase Manhattan Bank, as Trustee, relating to the Zero Coupon
Convertible Senior Notes due 2020 (incorporated by reference to
Exhibit 4.2 to Avon's Registration Statement on Form S-3,
Registration Statement No. 333-45808 filed September 14, 2000).
-17-
4.6 $600,000,000 Revolving Credit and Competitive Advance Facility
Agreement, dated as of May 1, 2001, among Avon, Avon Capital
Corporation and a group of banks and other lenders (incorporated
by reference to Exhibit 4.1 to Avon's Quarterly Report on Form 10-
Q for the quarter ended June 30, 2001).
4.7 Agency Agreement, dated September 20, 2001, between Avon and HSBC
Bank plc, as initial principal paying agent, relating to the JPY
9,000,000,000 1.06 percent Notes due 2006 (incorporated by
reference to Exhibit 4.1 to Avon's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001).
10.1* Avon Products, Inc. 1993 Stock Incentive Plan, approved by
stockholders on May 6, 1993 (incorporated by reference to Exhibit
10.2 to Avon's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993).
10.2* Form of Stock Option Agreement to the Avon Products, Inc. 1993
Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to
Avon's Annual Report on Form 10-K for the year ended December 31,
1993).
10.3* First Amendment of the Avon Products, Inc. 1993 Stock Incentive
Plan effective January 1, 1997, approved by stockholders on May 1,
1997 (incorporated by reference to Exhibit 10.1 to Avon's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1997).
10.4* Avon Products, Inc. 1997 Long-Term Incentive Plan, effective as of
January 1, 1997, approved by stockholders on May 1, 1997
(incorporated by reference to Exhibit 10.4 to Avon's Annual Report
on Form 10-K for the year ended December 31, 1997).
10.5* Supplemental Executive Retirement and Life Plan of Avon Products,
Inc., as amended and restated as of July 1, 1998 (incorporated by
reference to Exhibit 10.5 to Avon's Annual Report on Form 10-K for
the year ended December 31, 1998).
10.6* Benefit Restoration Pension Plan of Avon Products, Inc., effective
as of January 1, 1994 (incorporated by reference to Exhibit 10.7
to Avon's Annual Report on Form 10-K for the year ended December
31, 1994).
10.7* Amendment to Avon Products, Inc., Benefit Restoration Plan,
effective as of December 5, 2001.
10.8* Trust Agreement, dated as of March 2, 1990, between Avon and Chase
Manhattan Bank, N.A. (incorporated by reference to Exhibit 10.2 to
Avon's Quarterly Report on Form 10-Q for the quarter ended March
31, 1990 and refiled under Form SE for the year ended December 31,
1996).
- -18-
10.9* First Amendment, dated as of January 30, 1992, to the Trust
Agreement, dated as of March 2, 1990, by and between Avon and
Chase Manhattan Bank, N.A. (incorporated by reference to Exhibit
10.2 to Avon's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993).
10.10* Second Amendment, dated as of June 12, 1992, to the Trust
Agreement, dated as of March 2, 1990, by and between Avon and
Chase Manhattan Bank, N.A. (incorporated by reference to Exhibit
10.3 to Avon's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993).
10.11* Third Amendment, dated as of November 5, 1992, to the Trust
Agreement, dated as of March 2, 1990, by and between Avon and
Chase Manhattan Bank, N.A. (incorporated by reference to Exhibit
10.4 to Avon's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993).
10.12* The Avon Products, Inc. Deferred Compensation Plan, amended and
restated, effective as of July 1, 1998 (incorporated by reference
to Exhibit 4(b) to Avon's Registration Statement on Form S-8,
Registration No. 33-65989 filed October 22, 1998).
10.13* First Amendment to the Avon Products, Inc. Deferred Compensation
Plan, (as amended and restated as of July 1, 1998), effective
December 6, 2001.
10.14* Trust Agreement, dated as of April 21, 1995, between Avon and
Chemical Bank, amending and restating the Trust Agreement as of
August 3, 1989 between Avon and Manufacturers Hanover Trust
Company (incorporated by reference to Exhibit 10.14 to Avon's
Annual Report on Form 10-K for the year ended December 31, 1995).
10.15* Stock Option Agreement, dated November 4, 1999, between Avon and
Stanley C. Gault (incorporated by reference to Exhibit 10.13 to
Avon's Annual Report on Form 10-K for the year ended December 31,
1999).
10.16* Avon Products, Inc. 2000 Stock Incentive Plan (incorporated by
reference to Appendix A to the Company's Proxy Statement on Form
14A as filed with the Commission on March 27, 2000 (File No. 1-
04881)).
10.17* Employment Agreement, dated as of December 11, 1997, between Avon
and Andrea Jung (incorporated by reference to Exhibit 10.20 to
Avon's Annual Report on Form 10-K for the year ended December 31,
1997).
10.18* Form of Employment Agreement, dated as of September 1, 1994,
between Avon and certain senior officers and substantially similar
-19-
to the employment agreements entered into with other executive
officers (incorporated by reference to Exhibit 10.2 to Avon's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.19* Description of Consulting Arrangement between Avon and Fernando
Lezama, effective as of March 31, 2002.
10.20* Avon Products, Inc. Compensation Plan for Non-Employee Directors,
(as amended and restated as of June 1, 2000), effective as of May
1, 1997 (incorporated by reference to Exhibit 10.17 to Avon's
Annual Report on Form 10-K for the year ended December 31, 2000).
10.21* First Amendment to the Restated Avon Products, Inc. Compensation
Plan for Non-Employee Directors (as amended restated as of June 1,
2000), executed as of September 6, 2001 and effective January 1,
2002.
10.22* Avon Products, Inc. Board of Directors' Deferred Compensation
Plan, amended and restated, effective January 1, 1997
(incorporated by reference to Exhibit 10.23 to Avon's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.23* Trust Agreement, dated as of December 31, 1991, between Avon and
Manufacturers Hanover Trust Company (incorporated by reference to
Exhibit 10.23 to Avon's Annual Report on Form 10-K for the year
ended December 31, 1991 and refiled under Form SE for the year
ended December 31, 1996).
10.24* First Amendment, dated as of November 5, 1992, to the Trust
Agreement dated as of December 31, 1991, by and between Avon and
Manufacturers Hanover Trust Company (incorporated by reference to
Exhibit 10.7 to Avon's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993).
10.25* Stock Option Agreement, dated June 4, 1998, between Avon and
Andrea Jung (incorporated by reference to Exhibit 10.2 to Avon's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998).
13 Portions of the Annual Report to Shareholders for the year ended
December 31, 2001 incorporated by reference in response to Items
1,5 through 8 in this filing.
18 Preferability letter from PricewaterhouseCoopers LLP regarding
change in accounting principle (incorporated by reference to
Exhibit 18 to Avon's Annual Report on Form 10-K for the year ended
December 31, 1999).
- -20-
21 Subsidiaries of the registrant.
23 Consent of PricewaterhouseCoopers LLP (set forth on page S-2 of
this Annual Report on Form 10-K).
24 Power of Attorney
* The Exhibits identified above and in the Exhibit Index with an
asterisk (*) are management contracts or compensatory plans or
arrangements.
(b) Reports on Form 8-K
On October 12, 2001, the Company filed a Form 8-K to announce the
write-off of the carrying value of an order management system
known as the "FIRST" project.
(c) Avon's Annual Report on Form 10-K for the year ended December 31,
2001, at the time of filing with the Securities and Exchange
Commission, shall modify and supersede all prior documents filed
pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act
of 1934 for purposes of any offers or sales of any securities
after the date of such filing pursuant to any Registration
Statement or Prospectus filed pursuant to the Securities Act of
1933, which incorporates by reference such Annual Report on Form
10-K.
-21-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 18th day of March 2002.
Avon Products, Inc.
/s/GILBERT L. KLEMANN, II
----------------------
Gilbert L. Klemann, II
Senior Vice President,
General Counsel and Secretary
-22-
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
- ---------------
Andrea Jung Chairman of the Board and
Chief Executive Officer
and Director -
Principal Executive Officer March 18, 2002
- ---------------
Susan J. Kropf President March 18, 2002
and Chief Operating Officer
and Director
- ---------------
Robert J. Corti Executive Vice President and
Chief Financial Officer -
Principal Financial Officer March 18, 2002
- ---------------
Janice Marolda Vice President and
Controller - Principal
Accounting Officer March 18, 2002
-23-
- ---------------
Brenda C. Barnes Director March 18, 2002
- ---------------
W. Don Cornwell Director March 18, 2002
- ---------------
Edward T. Fogarty Director March 18, 2002
- ---------------
Stanley C. Gault Director
March 18, 2002
- ---------------
Fred Hassan Director March 18, 2002
- ---------------
Maria Elena Lagomasino Director March 18, 2002
- ---------------
Ann S. Moore Director March 18, 2002
-24-
- ---------------
Paula Stern Director March 18, 2002
- ---------------
Lawrence A. Weinbach Director March 18, 2002
/s/GILBERT L. KLEMANN, II
- ---------------------
Gilbert L. Klemann, II Attorney-in-fact March 18, 2002
- -25-
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Avon Products, Inc.:
Our audits of the consolidated financial statements referred to in our
report dated January 31, 2002, appearing in the 2001 Annual Report to
Shareholders of Avon Products, Inc., which report and consolidated
financial statements are incorporated by reference in this Annual Report
on Form 10-K, also included an audit of the financial statement schedule
listed in Item 14(a)(2) of this Form 10-K. In our opinion, this
financial statement schedule presents fairly, in all material respects,
the information set forth therein when read in conjunction with the
related consolidated financial statements.
PricewaterhouseCoopers LLP
New York, New York
January 31, 2002
S-1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements on Form S-3 (Reg. No. 33-45808) and Form S-8 (Reg. Nos. 33-
43820, 33-47209, 33-65989 and 33-65998) of Avon Products, Inc. of our
report dated January 31, 2002 relating to the financial statements which
appear in the 2001 Annual Report to Shareholders, which is incorporated
in this Annual Report on Form 10-K. We also consent to the incorporation
by reference of our report dated January 31, 2002 relating to the
financial statement schedule, which appears in this Form 10-K.
PricewaterhouseCoopers LLP
New York, New York
March 18, 2002
S-2
AVON PRODUCTS, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(In millions)
Years ended December 31
Additions
---------------------
Balance at Charged to Charged Balance
beginning costs and to other at end
of period expenses accounts Deductions of period
--------- -------- -------- ---------- ---------
2001
Allowance for doubtful
accounts receivable $ 39.2 $ 105.6 $ - $99.7(a) $45.1
Deferred tax asset
valuation allowance 25.4 3.4(b) - - 28.8
======= ======= ======= ====== =====
2000
Allowance for doubtful
accounts receivable $ 40.0 $ 94.3 $ - $95.1(a) $39.2
Deferred tax asset
valuation allowance 46.7 (21.3)(c) - - 25.4
======== ======= ======== ====== =====
1999
Allowance for doubtful
accounts receivable $ 49.0 $ 87.5 $ - $96.5(a) $40.0
Deferred tax asset
valuation allowance 46.9 (0.2)(c) - - 46.7
======= ======= ======== ===== =====
(a) Accounts written off, net of recoveries and foreign currency translation
adjustment.
(b) Increase in valuation allowance for tax loss and tax credit carryforward
benefits is because it is more likely than not that some or all of the deferred
tax assets will not be utilized in the future.
(c) Decrease in valuation allowance for tax loss and tax credit carryforward
benefits is because it is more likely than not that a portion of the asset
balance will be utilized in the future.
S-3
CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2001
Commission file number 1-4881
- --------
AVON PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
- --------
EXHIBITS
INDEX TO EXHIBITS
(a)3. Exhibits
Exhibit
Number Description
- ------ -----------
3.1 Restated Certificate of Incorporation of Avon, filed with the
Secretary of State of the State of New York on May 8, 2000
(incorporated by reference to Exhibit 3.4 to Avon's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000).
3.2 By-laws of Avon, as restated, effective December 2, 1999
(incorporated by reference to Exhibit 3.2 to Avon's Annual Report
on Form 10-K for the year ended December 31, 1999).
4.1 Indenture, dated as of August 1, 1997, between Avon, as Issuer,
and The Chase Manhattan Bank, as Trustee, relating to the 6.55%
Notes due 2007 (incorporated by reference to Exhibit 4.2 to Avon's
Registration Statement on Form S-4, Registration Statement No. 33-
41299 filed December 1, 1997).
4.2 Rights Agreement, dated as of March 30, 1998 (the "Rights
Agreement"), between Avon and First Chicago Trust Company of New
York (incorporated by reference to Exhibit 4 to Avon's
Registration Statement on Form 8-A, filed March 18, 1998).
4.3 Indenture, dated as of May 11, 1998, between Avon Products, Inc.,
as Issuer, and The Chase Manhattan Bank, as Trustee, relating to
the 6.25% Putable/Callable Notes due May 1, 2018, Putable/Callable
May 1, 2003.
4.4 Indenture, dated as of November 9, 1999, between Avon, as Issuer,
and The Chase Manhattan Bank, as Trustee, relating to the 6.9%
Notes due November 15, 2004 and the 7.15% Notes due November 15,
2009 (incorporated by reference to Exhibit 4.4 to Avon's
Registration Statement on Form S-4, Registration Statement No. 33-
92333 filed December 8, 1999).
4.5 Indenture, dated as of July 12, 2000, between Avon, as Issuer, and
The Chase Manhattan Bank, as Trustee, relating to the Zero Coupon
Convertible Senior Notes due 2020 (incorporated by reference to
Exhibit 4.2 to Avon's Registration Statement on Form S-3,
Registration No. 333-45808 filed September 14, 2000).
4.6 $600,000,000 Revolving Credit and Competitive Advance Facility
Agreement, dated as of May 1, 2001, among Avon, Avon Capital
Corporation and a group of banks and other lenders (incorporated
by reference to Exhibit 4.1 to Avon's Quarterly Report on Form 10-
Q for the quarter ended June 30, 2001).
4.7 Agency Agreement, dated September 20, 2001, between Avon and HSBC
Bank plc, as initial principal paying agent, relating to the JPY
9,000,000,000 1.06 percent Notes due 2006 (incorporated by
reference to Exhibit 4.1 to Avon's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001).
10.1* Avon Products, Inc. 1993 Stock Incentive Plan, approved by
stockholders on May 6, 1993 (incorporated by reference to Exhibit
10.2 to Avon's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993).
10.2* Form of Stock Option Agreement to the Avon Products, Inc. 1993
Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to
Avon's Annual Report on Form 10-K for the year ended December 31,
1993).
10.3* First Amendment of the Avon Products, Inc. 1993 Stock Incentive
Plan effective January 1, 1997, approved by stockholders on May 1,
1997 (incorporated by reference to Exhibit 10.1 to Avon's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1997).
10.4* Avon Products, Inc. 1997 Long-Term Incentive Plan, effective as of
January 1, 1997, approved by stockholders on May 1, 1997
(incorporated by reference to Exhibit 10.4 to Avon's Annual Report
on Form 10-K for the year ended December 31, 1997).
10.5* Supplemental Executive Retirement and Life Plan of Avon Products,
Inc., as amended and restated as of July 1, 1998 (incorporated by
reference to Exhibit 10.5 to Avon's Annual Report on Form 10-K for
the year ended December 31, 1998).
10.6* Benefit Restoration Pension Plan of Avon Products, Inc., effective
as of January 1, 1994 (incorporated by reference to Exhibit 10.7
to Avon's Annual Report on Form 10-K for the year ended December
31, 1994).
10.7* Amendment to Avon Products, Inc. Benefit Restoration Plan
effective as of December 5, 2001.
10.8* Trust Agreement, dated as of March 2, 1990, between Avon and Chase
Manhattan Bank, N.A. (incorporated by reference to Exhibit 10.2 to
Avon's Quarterly Report on Form 10-Q for the quarter ended March
31, 1990 and refiled under Form SE for the year ended December 31,
1996).
10.9* First Amendment, dated as of January 30, 1992, to the Trust
Agreement, dated as of March 2, 1990, by and between Avon and
Chase Manhattan Bank, N.A. (incorporated by reference to Exhibit
10.2 to Avon's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993).
10.10* Second Amendment, dated as of June 12, 1992, to the Trust
Agreement, dated as of March 2, 1990, by and between Avon and
Chase Manhattan Bank, N.A. (incorporated by reference to Exhibit
10.3 to Avon's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993).
10.11* Third Amendment, dated as of November 5, 1992, to the Trust
Agreement, dated as of March 2, 1990, by and between Avon and
Chase Manhattan Bank, N.A. (incorporated by reference to Exhibit
10.4 to Avon's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993).
10.12* The Avon Products, Inc. Deferred Compensation Plan, amended and
restated, effective as of July 1, 1998 (incorporated by reference
to Exhibit 4(b) to Avon's Registration Statement on Form S-8,
Registration No. 33-65989 filed October 22, 1998).
10.13* First Amendment to the Avon Products, Inc. Deferred Compensation
Plan, (as amended and restated as of July 1, 1998), effective
December 6, 2001.
10.14* Trust Agreement, dated as of April 21, 1995, between Avon and
Chemical Bank, amending and restating the Trust Agreement as of
August 3, 1989 between Avon and Manufacturers Hanover Trust
Company (incorporated by reference to Exhibit 10.14 to Avon's
Annual Report on Form 10-K for the year ended December 31, 1995).
10.15* Stock Option Agreement, dated November 4, 1999, between Avon and
Stanley C. Gault (incorporated by reference to Exhibit 10.13 to
Avon's Annual Report on Form 10-K for the year ended December 31,
1999).
10.16* Avon Products, Inc. 2000 Stock Incentive Plan (incorporated by
reference to Appendix A to the Company's Proxy Statement on Form
14A as filed with the Commission on March 27, 2000 (File No. 1-
04881)).
10.17* Employment Agreement, dated as of December 11, 1997, between Avon
and Andrea Jung (incorporated by reference to Exhibit 10.20 to
Avon's Annual Report on Form 10-K for the year ended December 31,
1997).
10.18* Form of Employment Agreement, dated as of September 1, 1994,
between Avon and certain senior officers and substantially similar
to the employment agreements entered into with other executive
officers (incorporated by reference to Exhibit 10.2 to Avon's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.19* Description of Consulting Arrangement between Avon and Fernando
Lezama, effective as of March 31, 2002.
10.20* Avon Products, Inc. Compensation Plan for Non-Employee Directors,
(as amended and restated as of June 1, 2000), effective as of May
1, 1997 (incorporated by reference to Exhibit 10.17 to Avon's
Annual Report on Form 10-K for the year ended December 31, 2000.
10.21* First Amendment to the Restated Avon Products, Inc. Compensation
Plan for Non-Employee Directors (as amended and restated as of
June 1, 2000), executed as of September 6, 2001 and effective
January 1, 2002.
10.22* Avon Products, Inc. Board of Directors' Deferred Compensation
Plan, amended and restated, effective January 1, 1997
(incorporated by reference to Exhibit 10.23 to Avon's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.23* Trust Agreement, dated as of December 31, 1991, between Avon and
Manufacturers Hanover Trust Company (incorporated by reference to
Exhibit 10.23 to Avon's Annual Report on Form 10-K for the year
ended December 31, 1991 and refiled under Form SE for the year
ended December 31, 1996).
10.24* First Amendment, dated as of November 5, 1992, to the Trust
Agreement dated as of December 31, 1991, by and between Avon and
Manufacturers Hanover Trust Company (incorporated by reference to
Exhibit 10.7 to Avon's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993).
10.25* Stock Option Agreement, dated June 4, 1998, between Avon and
Andrea Jung (incorporated by reference to Exhibit 10.2 to Avon's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998).
13 Portions of the Annual Report to Shareholders for the year ended
December 31, 2001 incorporated by reference in response to Items
1,5 through 8 in this filing.
18 Preferability letter from PricewaterhouseCoopers LLP regarding
change in accounting principle (incorporated by reference to
Exhibit 18 to Avon's Annual Report on Form 10-K for the year ended
December 31, 1999).
21 Subsidiaries of the registrant.
23 Consent of PricewaterhouseCoopers LLP (set forth on page S-2 of
this Annual Report on Form 10-K).
24 Power of Attorney
* The Exhibits identified above and in the Exhibit Index with an
asterisk (*) are management contracts or compensatory plans or
arrangements.