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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
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.
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(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
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(New address of principal executive offices)
(212) 282-5000
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(Telephone number)
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, 1997 was $7.8 billion.
The number of shares of Common Stock (par value $.25) outstanding at
February 28, 1997 was 133,032,198.
Documents Incorporated by Reference
Parts I and II Portions of the 1996 Annual Report to Shareholders.
Part III Portions of the Proxy Statement for the 1997 Annual
Meeting of Shareholders.
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PART I
ITEM 1. BUSINESS
Avon Products, Inc. ("Avon" or "Company") is one of the world's leading
manufacturers and marketers of beauty and related products, which include
cosmetics, fragrance and toiletries; gift and decorative; apparel; and fashion
jewelry and accessories. Avon commenced operations in 1886 and was
incorporated in the State of New York on January 27, 1916. Avon's business is
comprised of one industry segment, direct selling, with worldwide operations.
Financial information relating to geographic areas is incorporated by
reference to the analysis of net sales and pretax income from operations by
geographic area on page 31 in Avon's 1996 Annual Report to Shareholders.
Distribution
Avon's products are sold worldwide by approximately 2.3 million
Representatives, approximately 440,000 of whom are in the United States.
Almost all Representatives are women who sell on a part-time basis.
Representatives are independent contractors or independent dealers, and are
not agents or employees of Avon. Representatives purchase products directly
from Avon and sell them directly to their customers.
The Company's products are sold to customers through a combination of
direct selling and marketing utilizing independent Representatives, the mail,
by phone or fax. Representatives go where the customers are, either in the
home or in the workplace.
In the United States, the Representative contacts customers, selling
primarily through the use of brochures which also highlight new products and
specially priced items for each two-week sales campaign. Product samples,
demonstration products and make-up color charts are also used. Generally the
Representative forwards an order every two weeks to a designated distribution
center. 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 their own account. Payment by the
Representative to Avon is customarily made when the next order is forwarded to
the distribution center. The cost of merchandise to the Representative varies
according to the product category and/or to the total order size for each two-
week sales campaign and averages approximately 60 percent of the recommended
selling price.
In order to increase Representative support in the United States and
allow them to run their business more efficiently as well as to improve order
processing accuracy,
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Avon employs certain electronic order systems technology. One of these systems
permits Avon Representatives to submit add-on orders with a touch-tone
telephone, enabling them to augment orders already submitted by placing a
phone call. Another system, Avon's Personal Order Entry Terminal, permits the
top-producing Representatives in the United States to transmit orders
electronically by phone line, 24 hours a day, seven days a week.
Outside the United States, each sales campaign is generally of a three or
four week duration. Although terms of payment and cost of merchandise to the
Representative vary from country to country, the basic method of direct
selling and marketing by Representatives is essentially the same as that used
in the United States, and substantially the same merchandising and promotional
techniques are utilized.
The recruiting and training of Representatives are the primary
responsibility of district managers. In the United States, each district
manager has responsibility for a market area covered by 225 to 300
Representatives. District managers are employees of Avon and are paid a salary
and a commission based on the increase over the prior year's sales of Avon
products by Representatives in their district. Personal contacts, including
recommendations from current Representatives and local advertising, constitute
the primary means of obtaining new Representatives. 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.
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 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 toward
giving selling assistance to the Representatives by making available 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 product and image
enhancing media advertising are used. In addition, Avon seeks to motivate its
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Representatives through the use of special incentive programs that reward
superior sales performance. Periodic sales meetings with Representatives are
conducted by the district manager. 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. Cosmetic, fragrance and toiletry
products are available each sales campaign at a constant low price, while
maintaining introductory specials and periodic sales on selected items for
limited time periods.
From time to time, various regulations or laws have been proposed or
adopted that would, in general, restrict the frequency or duration of,
or volume of sales resulting from new product introductions, special prices or
other special price offers. The Company's pricing flexibility and broad
product lines are expected to be able to mitigate the effect of these
regulations.
Competitive Conditions
The cosmetic, fragrance and toiletry; 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 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.
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The number of competitors and degree of competition that Avon faces in
its foreign cosmetics, fragrance, toiletries and fashion jewelry markets
varies widely from country to country. Avon is one of the leading
manufacturers and distributors in the cosmetics, fragrance and toiletries
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
Representatives; the high quality, attractive designs and reasonable prices of
its products; new product introductions; and the guarantee of satisfaction are
significant factors in establishing and maintaining its competitive position.
Avon's consolidated net sales, by classes of principal products, are as
follows:
Years ended December 31
------------------------
1996 1995 1994
---- ---- ----
(In millions)
Cosmetics, fragrance and toiletries............. $2,946.8 $2,797.2 $2,604.2
Gift and decorative............................. 934.1 780.6 769.2
Apparel......................................... 556.3 500.5 480.3
Fashion jewelry and accessories................. 377.0 413.8 412.8
-------- -------- --------
$4,814.2 $4,492.1 $4,266.5
======== ======== ========
International Operations
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.
Avon's international operations are conducted primarily through
subsidiaries in 41 countries and Avon's products are distributed in some 89
other countries.
Manufacturing
Avon manufactures and packages almost all of its cosmetic, fragrance and
toiletry 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.
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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 supply its products.
Avon has nineteen manufacturing laboratories around the world, three of
which are principally devoted to the manufacture of fashion jewelry. In the
United States, Avon's cosmetic, fragrance and toiletry products are produced
in three manufacturing laboratories for the four distribution centers. Most
products sold in foreign countries are manufactured in Avon's facilities
abroad.
The fashion jewelry line is generally developed by Avon's staff and
produced in its two manufacturing laboratories in Puerto Rico, and Avon's
manufacturing laboratory in Ireland or by several independent manufacturers.
Trademarks and Patents
Although Avon owns several patents and has several more patent
applications pending in the United States Patent Office, its business, both in
the United States and abroad, is not materially dependent upon patents or
patent protection. Avon has no material licenses, franchises or concessions.
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.
Contingencies
Various 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. The Company is also involved in a number
of proceedings arising out of the federal Superfund law and similar state
laws. In some instances Avon, along with other companies, has been designated
as a potentially responsible party which may be liable for costs associated
with these various hazardous waste sites. In the opinion of Avon's management,
based on its review of the information available at this time, the difference,
if any, between the total cost of resolving such contingencies and reserves
recorded by Avon at December 31, 1996 should not have a material adverse
impact on Avon's consolidated financial position, results of operations, or
cash flows.
SEASONAL NATURE OF BUSINESS
Avon's sales and earnings have a marked seasonal pattern characteristic
of many companies selling cosmetics, fragrance and toiletries; gift and
decorative products; apparel; and fashion jewelry. Christmas sales cause a
sales peak in the fourth quarter of the year. Fourth quarter net sales were 31
6
percent of total net sales in 1996 and 1995 and fourth quarter pretax income
from continuing operations was 42 percent and 40 percent in 1996 and 1995,
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. In addition, Avon's research and
development supports its environmental responsibilities.
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 extends
Avon's own research to deliver new formulas and ingredients. Each year, Avon
researchers test and develop more than 600 products in the cosmetic,
fragrance, toiletry and jewelry categories as well as analyze, evaluate and
develop gift and decorative products.
Avon has pioneered many innovative products, including Skin-So-Soft, its
best-selling bath oil; BioAdvance, the first skin care product with stabilized
retinol, the purest form of Vitamin A; and Collagen Booster, the premier
product to capitalize 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.
The amounts incurred on research activities relating to the development
of new products and the improvement of existing products were $30.2 million in
1996, $27.8 million in 1995 and $27.9 million in 1994. 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
cosmetic, fragrance and toiletry 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 in such categories as waste disposal and air and water
emissions. A corporate environmental operations committee ensures that
opportunities for environmental performance improvements are reflected in our
products and packaging.
In general, compliance with environmental regulations which impact Avon's
global operations has not had, and is not anticipated to have, any material
effect upon the capital expenditures, financial position or competitive
position of Avon.
EMPLOYEES
At December 31, 1996, Avon employed approximately 33,700 people. Of
7
these, approximately 7,800 were employed in the United States and
approximately 25,900 in other countries. The number of employees tends to rise
from a low point in January to a high point in November and decreases somewhat
in December when Christmas shipments are completed.
ITEM 2. PROPERTIES
Avon's principal properties consist of manufacturing laboratories for the
production of cosmetics, fragrances and toiletries and fashion jewelry 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; and the distribution centers are located in
Atlanta, GA; Glenview, IL; Newark, DE; and Pasadena, CA. International
properties include four manufacturing laboratories, including a fashion
jewelry manufacturing laboratory in Ireland, and ten distribution centers in
Europe; five manufacturing laboratories and eleven distribution centers in
Latin America; one manufacturing and one distribution center in Canada; and
four manufacturing laboratories and ten distribution centers in the Pacific.
During 1996, the Company added one manufacturing and two distribution centers
in Europe and one distribution center in the Pacific. 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 facilities in Puerto Rico. During 1995, the Company signed new
leases, commencing in 1997, for office facilities for the U.S. and global
operations, which will be relocated within New York City.
ITEM 3. LEGAL PROCEEDINGS
Various 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 1991, a class action lawsuit was initiated against Avon on behalf of
certain classes of holders of Avon's Preferred Equity-Redemption Cumulative
Stock ("PERCS"). This lawsuit alleges various contract and securities law
claims relating to the PERCS (which were fully redeemed that year). Avon has
rejected the assertions in this case, believes it has meritorious defenses to
the claims and is vigorously contesting this lawsuit.
In the opinion of Avon's management, based on its review of the
information available at this time, the difference, if any, between the total
cost of resolving such contingencies and reserves recorded by Avon at December
8
31, 1996 should not have a material adverse impact on Avon's consolidated
financial position, results of operations, or cash flows.
Avon is involved in a number of proceedings arising out of the federal
Superfund law and similar state laws. In some instances Avon, along with other
companies, has been designated as a potentially responsible party which may be
liable for costs associated with these various hazardous waste sites. Based
upon Avon's current knowledge of the proceedings, management believes, without
taking into consideration any insurance recoveries, if any, that in the
aggregate they would not have a material adverse impact on Avon's consolidated
financial position, results of operations, or cash flows.
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, 1996.
______________
Executive Officers of the Registrant
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 1997 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 Officer
- ----- ---- --- -------
Chairman of the Board,
Chief Executive Officer and
Director.......................... James E. Preston 63 1971
President, Chief Operating Officer
and Director......................... Edward J. Robinson 56 1989
Senior Vice President, General Counsel
and Secretary........................ Ward M. Miller, Jr. 64 1993(1)
Senior Vice President, Chief
Financial and Administrative Officer. Edwina D. Woodbury 45 1990
Senior Vice Presidents.................. Christina A. Gold 49 1993
Marcia L. Worthing 54 1988
Group Vice President, Finance........... Robert J. Corti 47 1988
Vice President and Controller........... Michael R. Mathieson 44 1995(2)
9
(1) Ward M. Miller, Jr. was elected Senior Vice President, General Counsel
and Secretary in October 1994. Mr. Miller joined Avon in February 1993 as
Vice President. Prior to joining Avon, he was Senior Vice President and
General Counsel of Nabisco Brands; and Vice President, Associate General
Counsel and Secretary of its parent, RJR Nabisco.
(2) Michael R. Mathieson was elected Vice President and Controller in April
1995. Mr. Mathieson joined Avon in May 1990 as Assistant Corporate
Controller. Prior to joining Avon, he was Vice President and Director of
Accounting Research for Chase Manhattan Bank.
PART II
ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
This information is incorporated by reference to "Market Prices of Common
Stock by Quarter" on page 41 of Avon's 1996 Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information for the five-year period 1992 through 1996 is
incorporated by reference to the "Eleven-Year Review" on pages 58 and 59 of
Avon's 1996 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 29 through 40 of Avon's 1996 Annual Report to
Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is incorporated by reference to the "Consolidated
Financial Statements and Notes" on pages 42 through 56, together with the
report thereon of Coopers & Lybrand L.L.P., on page 57, and "Results of
Operations by Quarter" on page 41 of Avon's 1996 Annual Report to
Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
10
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 1997 Annual Meeting of
Shareholders. Information regarding executive officers is presented in Part I
of this report.
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 1997 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 1997 Annual Meeting of
Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to the "Compensation
Committee Interlocks and Insider Participation" section and the "Contracts
with Executives" section of Avon's Proxy Statement for the 1997 Annual Meeting
of Shareholders.
11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, 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 statement of income for
each of the years in the three-year
period ended December 31, 1996........ 42
Consolidated balance sheet at
December 31, 1996 and 1995............. 43
Consolidated statement of cash flows
for each of the years in the three-year
period ended December 31, 1996......... 44
Consolidated statement of changes in
shareholders' equity for each of
the years in the three-year period
ended December 31, 1996................ 45
Notes to consolidated financial
statements............................. 46-56
Report of Independent Accountants
Coopers & Lybrand L.L.P................ 57
(a) 2. Financial Statement Schedules
Report of Independent Accountants
Coopers & Lybrand L.L.P................ S-1
Consent of Independent Accountants
Coopers & Lybrand L.L.P................ S-2
Financial statement schedule for each
of the years in the three-year period
ended December 31, 1996................
II.--Valuation and qualifying
accounts............... S-3
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.
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(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 13, 1996 (incorporated by
reference to Exhibit 3.1 to Avon's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996).
3.2 By-laws of Avon, as restated, effective June 6, 1996 (incorporated by
reference to Exhibit 3.2 to Avon's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996).
4.1 Instrument defining the rights of holders of Avon's preferred share
purchase rights to purchase Avon's Series A Junior Participating
Preferred Stock (reference is made to Article IIIA of the restated
Certificate of Incorporation of Avon, filed with the Secretary of State
of New York State on August 12, 1988 and included as Exhibit 3.1 to the
1993 Annual Report on Form 10-K).
4.2 Rights Agreement, dated as of March 30, 1988 (the "Rights Agreement"),
between Avon and First Chicago Trust Company of New York (as successor
to Morgan Shareholder Services Trust Company) (incorporated by
reference to Exhibit 1 to Avon's Registration Statement on Form 8-A,
filed April 7, 1988 and refiled under Form SE as of December 31, 1996).
4.3 Amendment, dated as of January 3, 1989, to the Rights Agreement
(incorporated by reference to Exhibit 3 to Avon's Amendment No. 1 on
Form 8, filed January 4, 1989, amending its Registration Statement on
Form 8-A, filed April 7, 1988 and refiled under Form SE as of December
31, 1996).
4.4 Second Amendment, dated as of April 5, 1990, to the Rights Agreement
(incorporated by reference to Exhibit 4(c) to Avon's Current Report on
Form 8-K, dated April 5, 1990 and refiled under Form SE as of December
31, 1996).
4.5 Third Amendment, dated as of May 10, 1990, to the Rights Agreement
(incorporated by reference to Exhibit 4(d) to Avon's Current Report on
Form 8-K, dated May 10, 1990 and refiled under Form SE as of December
31, 1996).
4.6 Amended and Restated Revolving Credit and Competitive Advance Facility
Agreement, dated as of August 8, 1996, 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 September 30, 1996).
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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* Avon Products, Inc. 1994 Long-Term Incentive Plan, effective as of
January 1, 1994 (incorporated by reference to Exhibit 10.3 to Avon's
Annual Report on Form 10-K for the year ended December 31, 1993).
10.4* Avon Products, Inc. 1970 Stock Option Incentive Plan, as amended and
restated through May 4, 1989 (incorporated by reference to Exhibit 4.6
to Avon's Registration Statement on Form S-8, Registration No.
33-28653, filed May 18, 1989).
10.5* First Amendment, dated as of November 5, 1992, to the Avon Products,
Inc. 1970 Stock Option Incentive Plan as amended and restated through
May 4, 1989 (incorporated by reference to Exhibit 10.1 to Avon's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1993).
10.6* Supplemental Executive Retirement Plan and Supplemental Life Plan of
Avon Products, Inc., as amended and restated as of September 1, 1994
(incorporated by reference to Exhibit 10.6 to Avon's Annual Report on
Form 10-K for the year ended December 31, 1994).
10.7* 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).
10.8* Trust Agreement, amended and restated 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).
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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, as amended and
restated as of January 1, 1996.
10.13* 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).
10.14* Instrument of Amendment, effective as of April 1, 1990, amending
various employee benefit plans and agreements as stipulated in the
Instrument of Amendment (incorporated by reference to Exhibit 10.3 to
Avon's Quarterly Report on Form 10-Q for the quarter ended March 31,
1990 and refiled under Form SE as of December 31, 1996).
10.15* Employment Agreement, dated as of November 1, 1995, between Avon and
James E. Preston (incorporated by reference to Exhibit 10.16 to Avon's
Annual Report on Form 10-K for the year ended December 31, 1995).
10.16* Stock Option Agreement between Avon and James E. Preston dated
October 30, 1995 (incorporated by reference to Exhibit 10.17 to Avon's
Annual Report on Form 10-K for the year ended December 31, 1995).
10.17* Employment Agreement, dated as of September 1, 1994, between Avon and
Edward J. Robinson (incorporated by reference to Exhibit 10.1 to
Avon's Quarterly Report on Form 10-Q for the quarter ended September
30, 1994).
10.18* Restricted Stock Agreement, effective as of November 4, 1993, granted
by Avon to Edward J. Robinson (incorporated by reference to Exhibit
10.21 to Avon's Annual Report on Form 10-K for the year ended December
31, 1993).
10.19* Form of Employment Agreement, dated as of September 1, 1994, between
Avon and certain senior officers (incorporated by reference to Exhibit
10.2 to Avon's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994).
10.20* Avon Products, Inc. Directors' Retirement Plan, effective as of
January 1, 1988 (incorporated by reference to Exhibit 10.22 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).
15
10.21* First Amendment, dated as of November 5, 1992, to the Avon Products,
Inc. Directors' Retirement Plan (incorporated by reference to Exhibit
10.6 to Avon's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993).
10.22* 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).
10.23* 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).
11.1 Statement re computation of primary income per share.
11.2 Statement re computation of fully diluted income per share.
13 Portions of the Annual Report to Shareholders for the year ended
December 31, 1996 incorporated by reference in response to Items 1,5
through 8 in this filing.
21 Subsidiaries of the registrant.
23 Consent of Coopers & Lybrand L.L.P. (set forth on page S-2 of this
Annual Report on Form 10-K).
24 Power of Attorney
27 Financial Data Schedule
99 Financial statements for the Avon Products, Inc. Employees' Savings and
Stock Ownership Plan and the Avon Mirabella/Lomalinda Employees' Savings
Plan for the year ended December 31, 1996 will be filed by amendment.
* 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
There was no Form 8-K filed during the fourth quarter of 1996.
(c) Avon's Annual Report on Form 10-K for the year ended December 31, 1996,
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.
16
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 27th day
of March 1997.
Avon Products, Inc.
By /s/WARD M. MILLER, JR.
-------------------------
Ward M. Miller, Jr.
Senior Vice President, General
Counsel and Secretary
17
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
- --------- ----- ----
*
___________________________
James E. Preston Chairman of the Board and
Chief Executive Officer -
Principal Executive
Officer and Director March 6, 1997
*
___________________________
Edward J. Robinson President, Chief Operating
Officer and Director March 6, 1997
*
___________________________
Edwina D. Woodbury Senior Vice President,
Chief Financial Officer -
Principal Financial Officer March 6, 1997
*
___________________________
Michael R. Mathieson Vice President and
Controller - Principal
Accounting Officer March 6, 1997
BRENDA BARNES* )
RICHARD S. BARTON* )
REMEDIOS DIAZ OLIVER* )
EDWARD T. FOGARTY* )
STANLEY C. GAULT )
GEORGE V. GRUNE* ) Directors March 6, 1997
CHARLES S. LOCKE* )
ANN S. MOORE* )
CHARLES R. PERRIN* )
JOSEPH A. RICE* )
CECILY C. SELBY* )
/s/WARD M. MILLER, JR.
____________________________________ March 6, 1997
Ward M. Miller, Jr. Attorney-in-fact
S-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Avon Products, Inc.
Our report on the consolidated financial statements of Avon Products, Inc.
and subsidiaries as of December 31, 1996 and 1995 and for each of the years in
the three-year period ended December 31, 1996 has been incorporated by
reference in this Form 10-K from page 57 of the 1996 Annual Report to
Shareholders of Avon Products, Inc. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule for each of the years in the three-year period ended December 31,
1996, as listed in the Index under Item 14(a)2 of this Form 10-K.
In our opinion, the financial statement schedule for each of the years in
the three-year period ended December 31, 1996 referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
New York, New York
February 6, 1997
S-2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the following Registration
Statements of Avon Products, Inc.: Form S-8 (Reg. No. 2-37955), Form S-8 (Reg.
No. 2-48080), Form S-8 (Reg. No. 2-61285), Form S-8 (Reg. No. 2-83235), Form
S-8 (Reg. No. 2-94959), Form S-8 (Reg. No. 33-28653), Form S-8 (Reg. No. 33-
47209), Form S-8 (Reg. No. 33-60218), Form S-8 (Reg. No. 33-60918), Form S-8
(Reg. No. 33-65998), Post Effective Amendment No. 1 to Form S-8 (Reg. No. 2-
98707), and Pre-Effective Amendment No. 1 to Form S-8 (Reg. No. 33-22099), of
our reports dated February 6, 1997 on our audits of (i) the consolidated
financial statements of Avon Products, Inc. as of December 31, 1996 and 1995
and for each of the years in the three-year period ended December 31, 1996,
which report is included in the 1996 Annual Report to Shareholders and
incorporated by reference in this Annual Report on Form 10-K and (ii) the
1996, 1995 and 1994 financial statement schedule of Avon Products, Inc., which
report is included in this Annual Report on Form 10-K.
New York, New York
March 27, 1997
S-3
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
---------- ---------- -------- ---------- ---------
1996
Allowance for
doubtful
accounts
receivable $32.6 $79.0 $ -- $75.2(a) $36.4
===== ===== ======= ===== =====
1995
Allowance for doubtful
accounts receivable $27.3 $78.0 $ -- $72.7(a) $32.6
===== ===== ======= ===== =====
1994
Allowance for doubtful
accounts receivable $22.0 $64.9 $ -- $59.6(a) $27.3
===== ===== ======= ===== =====
(a) Accounts written off, net of recoveries and foreign currency translation
adjustment.