SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[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.
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(Exact name of registrant as specified in its charter)
New York 13-0544597
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(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
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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/A or any amendment to
this Form 10-K/A. [ ].
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.
Introductory Note--Restatements
In connection with the settlement of the previously disclosed
investigation by the Securities and Exchange Commission ("SEC") relating to the
write off of an order management software system known as the "FIRST" project,
Avon has restated its Consolidated Financial Statements as of December 31,
2001, 2000 and 1999 and for the years then ended and for each of the fiscal
quarters ended March 31, 1999 through March 31, 2002. Avon had written off
$14.8 pretax, or $10.0 after tax, of FIRST assets in the first quarter of 1999
and $23.9 pretax, or $14.5 after tax, of FIRST assets in the third quarter of
2001. Avon has restated its financial statements to reflect the additional
write off as of March 31, 1999 of all capitalized costs ($23.3 pretax, or $14.0
after tax), associated with the FIRST project as of that date and a reversal of
the charge recorded in the third quarter of 2001. Other FIRST-related activity
(capitalized costs and amortization) recorded during 1999-2002 has also been
restated. A description of the adjustments that comprise the restatements is
set forth in Notes 2 and 15 of the Notes to Consolidated Financial Statements
filed with this Form 10-K/A.
The accompanying financial statements have been restated to reflect the
restatements discussed above as well as the accounting changes outlined in Note
2. No attempt has been made in this Form 10-K/A to modify or update any
disclosures except as required to reflect the results of the restatements
discussed above and any changes made to prior period financial information for
which a Form 10-K/A was not filed.
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/A. 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 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
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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, 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.
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
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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.
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.
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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 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
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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.
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.
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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.
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.
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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.
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.
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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.
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
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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 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.
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.
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PART II
ITEM 6. SELECTED FINANCIAL DATA (RESTATED)
The information for the five-year period 1997 through 2001 is incorporated
by reference to the "Eleven-Year Review" in Avon's Restated 2001
Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (RESTATED)
This information is incorporated by reference to "Management's Discussion
and Analysis" in Avon's Restated 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" in Avon's Restated 2001
Annual Report to Shareholders for information concerning market risk sensitive
instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (RESTATED)
This information is incorporated by reference to the "Consolidated
Financial Statements and Notes", together with the report
thereon of PricewaterhouseCoopers LLP, and "Results of Operations by
Quarter" in Avon's Restated 2001 Annual Report to shareholders.
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.
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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.
(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) Glemann 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
-11-
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.
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.
-12-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS
ON FORM 8-K (RESTATED)
Form 10-K/A
Page Number
-----------
(a) 1. Consolidated Financial Statements of
Avon Products, Inc. and Subsidiaries (as restated)
Consolidated Statements of Income for
each of the years in the three-year
period ended December 31, 2001........ 27
Consolidated Balance Sheets at
December 31, 2001 and 2000............. 28
Consolidated Statements of Cash Flows
for each of the years in the three-year
period ended December 31, 2001......... 29
Consolidated Statements of Changes in
Shareholders' (Deficit) Equity for each
of the years in the three-year period
ended December 31, 2001................ 30
Notes to Consolidated Financial
Statements............................. 31-62
Report of Independent Accountants
PricewaterhouseCoopers LLP............. 64
(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
-13-
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 (incorporated by reference to Exhibit 4.3 to Avon's
Annual Report on Form 10-K for the year ended December 31, 2001).
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).
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).
-14-
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 (incorporated by reference to Exhibit 10.7 to
Avon's Annual Report on Form 10-K for the year ended December 31,
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).
-15-
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 (incorporated by reference to Exhibit 10.13 to
Avon's Annual Report on Form 10-K for the year ended December 31,
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 (incorporated by reference to
Exhibit 10.19 to Avon's Annual Report on Form 10-K for the year ended
December 31, 2001).
-16-
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
(incorporated by reference to Exhibit 10.21 to Avon's Annual Report
on Form 10-K for the year ended December 31, 2001).
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 Restated 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 (incorporated by reference to Exhibit
21 to Avon's Annual Report on Form 10-K for the year ended December
31, 2001).
23 Consent of PricewaterhouseCoopers LLP (set forth on page S-2 of this
Annual Report on Form 10-K/A).
* The Exhibits identified above and in the Exhibit Index with an
asterisk (*) are management contracts or compensatory plans or
arrangements.
-17-
(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/A 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/A.
-18-
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.
Avon Products, Inc.
-------------------
(Registrant)
Date: August 12, 2002
/s/Janice Marolda
----------------------------
Janice Marolda
Vice President, Controller
Principal Accounting Officer
-19-
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, except for Notes 2 and 15 as to which the date is July
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/A, also included an audit of the
financial statement schedule listed in Item 14(a)(2) of this Form 10-K/A. 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, except for Notes 2 and 15 as to which the date is
July 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, except for Notes 2 and 15 as to which the date is July 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/A. We also consent to the incorporation by reference of our report dated
January 31, 2002, except for Notes 2 and 15 as to which the date is July 31,
2002, relating to the financial statement schedule, which appears in this Form
10-K/A.
PricewaterhouseCoopers LLP
New York, New York
August 12, 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
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM 10-K/A
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 (incorporated by reference to Exhibit 4.3 to Avon's Annual
Report on Form 10-K for the year ended December 31, 2001).
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 (incorporated by reference to Exhibit 10.7 to
Avon's Annual Report on Form 10-K for the year ended December 31,
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 (incorporated by reference to Exhibit 10.13 to
Avon's Annual Report on Form 10-K for the year ended December 31,
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 (incorporated by reference to
Exhibit 10.19 to Avon's Annual Report on Form 10-K for the year ended
December 31, 2001).
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
(incorporated by reference to Exhibit 10.21 to Avon's Annual Report
on Form 10-K for the year ended December 31, 2001).
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 Restated 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 (incorporated by reference to Exhibit
21 to Avon's Annual Report on Form 10-K for the year ended December
31, 2001).
23 Consent of PricewaterhouseCoopers LLP (set forth on page S-2 of
this Annual Report on Form 10-K/A).
* The Exhibits identified above and in the Exhibit Index with an asterisk
(*) are management contracts or compensatory plans or arrangements.