A
REPORT
ON
AVON PRODUCTS

Submitted to: Submitted by:
Mr. Vikas Anand Neha Sharma
Faculty, LPU RR1002B37 11009270

COMPANY PROFILE

Avon Products, Inc. (NYSE: AVP) is a US cosmetics, perfume and toy seller with markets in over 140 countries across the world and sales of $9.9 billion worldwide as of 2007.
AVON PRODUCTS was founded in 1886, Inc. (Avon) is the largest direct seller of beauty and beauty- related products. With $10.7 billion in annual revenues in 2008(up 8% from 2007), Avon and its approximately 42,000 associates now serve valued customers in more than 100 countries worldwide. Our primary distribution channel is direct selling by our more than 5.8 million Avon sales representatives. Together, these
”Avon ladies” as they are affectionately known, help us to reach millions of customers around the world and handle upwards of one billion transactions annually.

Company style

Avon Products is a multi-level marketing company. The company's chairman and CEO is Andrea Jung, who was promoted to the position in 1999. She has completed a decade as CEO and is the longest tenured female CEO among Fortune 500 companies.
Avon uses both door-to-door sales people ("Avon ladies," primarily and a growing number of men) and brochures to advertise its products. In the United States, products may be found through Representatives selling through online shops to customers all over the country. In addition to selling, Avon offers representatives the ability to be involved in the Leadership program, Avon’s network marketing opportunity, where Representatives recruit, mentor and train others to succeed.
Although the company has always been more directed toward female customers, Avon's line of male products continues to expand, and its children's products (such as shampoos and toys) have also proved successful.

History

The company was founded in 1886 by then 28-year-old David H. McConnell who sold books door-to-door and gave out perfume to entice women to buy his books. His perfume proved to be much more popular than his books, so he then founded the California Perfume Company (CPC) in New York, New York in a 500-square-foot (46 m2) manufacturing and shipping office at 126 Chambers Street. As the company grew, he hired his first representative, Mrs. P.F.E. Albee. In 1897, McConnell built a small (3000 square foot) laboratory in Suffern, New York. In 1906, the West Coast office in San Francisco was destroyed in the Great Earthquake. In 1914 the first non-US office was opened in the Canadian province of Quebec. The California Perfume Company was incorporated on January 28, 1916 by David H. McConnell and Alexander D. Henderson (businessman) in Suffern, New York.By 1918, five million units were sold in North America and by 1928, and sales reached $2 million. In October 1939, the name was changed to Avon Products, Inc. The company was taken public in 1946. By 1954, sales reached $55 million, and the "Avon Calling" advertising campaign introduced. By 1971 the lab would grow into the Avon Suffern Research and Development facility. By 1979, sales reached $3 billion, with one million direct sales agents. Today sales exceed $10 billion worldwide. In 2005 they opened a $100 million dollar 225,000-square-foot (20,900 m2) R&D facility to house its over 300 research and development scientists on the original site in Suffern, NY. There is a state of the art distribution facility in Zanesville, Ohio, which recently won the LEED Gold Certificate.
In June 1989, Avon became the first major cosmetic company to announce a permanent end to animal testing on all Avon-manufactured products. Avon does not conduct animal testing on any of its products or raw ingredients and does not require that suppliers of raw ingredients and finished products produced for Avon conduct animal testing on our behalf.

Early Avon Trademark

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The drawing stylized word AVON mark is a expired trademark at the USPTO, and owned by Avon Products, Inc.
The California Perfume Company, Inc. of New York, NY filed their first trademark application for Avon on June 3, 1932 with the USPTO. Part of the description for goods and services provided to the USPTO included "perfumes, toilet waters, powder and rouge compacts, lipsticks," and other toiletry products. First use and commercial use for Avon by the California Perfume Company was on September 1, 1929. Registration was granted on August 30, 1932. The trademark is owned by Avon Products, Inc. of New York, NY. The status of the original stylized word mark for Avon is expired.

Avon Sales Leadership

The Avon Leadership Program, launched in 1992, is Avon’s voluntary network marketing opportunity offered to all Representatives who enjoy helping others and who want to establish career-level earnings, as well as offers a great way for motivated individuals to establish lucrative earnings. Leadership Representatives recruit, train and mentor teams to work for collective success, and they earn bonuses from the sales of their team with Avon. Leadership Representatives are rewarded by the success they nurture in their downlines, thus ensuring the integrity of the program and the company’s nearly 125 year tradition.

Avon Foundation

In addition to its corporate pursuits, the Avon corporation is involved in philanthropic causes. The Avon Foundation is an accredited 501(c)(3) public charity founded in 1955 to improve the lives of women and their families. The Avon Foundation is currently focused on two key causes: breast cancer and domestic violence. Through 2007, Avon raised and awarded $580 million worldwide.

Avon Breast Cancer Crusade

The Avon Breast Cancer Crusade launched in 1992, and through 2009 has raised and donated more than $640 million in more than 50 countries to accelerate breast cancer research and advance access to care, with a focus on assisting the medically underserved. Funding supports awareness and education; screening and diagnosis; access to treatment; support services; and scientific research. Beneficiaries range from leading cancer centers to community-based non-profit breast health programs, creating a powerful network focused on eradicating breast cancer and ensuring access to care for all. Avon philanthropy has educated more than 100 million women globally about breast health care and provided mammograms to more than 14 million women. [8] In 2004, the Avon Foundation expanded its philanthropy to include a second core issue: domestic and gender violence.
The Avon Walk for Breast Cancer is the Avon Foundation for Women's largest annual fundraising initiative. The series of nine Avon Walks for Breast Cancer are held each year from April to October in Houston, TX, Washington, D.C., Boston, MA, Chicago, IL, Rocky Mountains, CO, San Francisco, CA, Santa Barbara, CA, New York, NY, and Charlotte, NC. From 2003 through mid-2010, the Avon Walks have raised more than $350 million. The Avon Walk for Breast Cancer also raises awareness as participants spend an entire weekend walking 39 miles through cities and towns around the country. In 2009, hundreds of thousands of donors supported more than 21,000 walkers and crew who participated, raising more than $52 million.
The U.S. Avon Foundation helps guide the global efforts of Avon Breast Cancer Crusade programs that raise awareness and funds in more than 50 countries. Programs include the sale of unique fundraising products, special events, and award-winning public service advertising. In 2005, Avon launched an annual Avon Walk Around the World for Breast Cancer, a global fundraising initiative that spans the globe, encompassing walks, runs, concerts, conferences, and workshops. In many parts of the world, these events help break the cultural, social, medical and financial barriers to access to care and finding a cure for breast cancer.

Avon Foundation Speak Out Against Domestic Violence program

The Avon Foundation Speak out against Domestic Violence program works to end the cycle of domestic violence. To date nearly $7 million has been awarded to more than 400 US domestic violence organizations for awareness, education, direct services and prevention programs, especially to assist children affected by domestic violence.
In addition, the Avon Foundation and Avon Products Inc. together respond to national and international emergencies and since 2001 have awarded $17.5 million for women and their families affected by natural disaster or crises

"Mark."

"Mark." (Targeted to younger, college-aged women) has helped the company reach out into markets it had not previously serviced. Mark has proven to be successful in reaching a new generation of recruits, primarily young women ages 18–25, with a monthly "magalog" featuring its products.
Approach

At Avon, our beliefs have stood the test of time. We maintain the same vision, mission, values and principles today that have long earned our company trust and respect from our stakeholders. We believe that, in practice, these convictions help to generate long-term value for our employees, customers, investors and community members.

Our founding principles guide us in the conduct of our business and are vital to our ability to realize our vision for the future.

Our Values and Principles

These five values, and our guiding principles, outlined below, have served as a continuing source of strength within our organization. They remain at the heart of who we are and who we strive to be.

The Avon Values

Trust means we want to live and work in an environment where communications are open—where people feel free to take risks, to share their points of view and to speak the truth as they see it. Trust people to do the right thing—and help them to understand your underlying reasoning and philosophy—and they won’t disappoint.

Respect helps us to value differences, to appreciate each person for her or his unique qualities. Through respect, we help bring out the full potential of each person.

Belief is the cornerstone of empowering associates to assume responsibilities and be the very best they can be. Believe in someone—and show it—and that person will move mountains to prove you’re right.

Humility simply means we’re not always right—we don’t have all the answers—and we know it. We’re no less human than the people who work for us, and we’re not afraid to ask for help.

Integrity should be the hallmark of every Avon associate. In setting and observing the highest ethical standards and doing the right thing, we fulfill a duty of care, not only to our Representatives and customers in the communities we serve, but to our colleagues and ourselves.

Principles that Guide Avon

• To provide individuals an opportunity to earn in support of their well-being and happiness.

• To serve families throughout the world with products of the highest quality backed by a guarantee of satisfaction.

• To render a service to customers that is outstanding in its helpfulness and courtesy.

• To give full recognition to employees and Representatives, on whose contributions Avon depends.

• To share with others the rewards of growth and success.

• To meet fully the obligations of corporate citizenship by contributing to the well-being of society and the environment in which it functions.

• To maintain and cherish the friendly spirit of Avon.

Vision and Mission

Avon’s Mission

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The Avon Vision: to be the company that best understands and satisfies the product, service and self-fulfillment needs of women—globally.
The Global Beauty Leader

We will build a unique portfolio of beauty and related brands, striving to surpass our competitors in quality, innovation, and value, and elevating our image to become the world’s most trusted beauty company.

The Women’s Choice for Buying

We will become the shopping destination for women, providing a personal, high-touch experience that helps create lifelong customer relationships.

The Premier Direct Seller
We will expand our presence in direct selling, empowering women to achieve economic independence by offering them a superior earnings opportunity as well as recognition, service and support, making it easy and rewarding to be affiliated with Avon.

The Best Place to Work
We will be known for our leadership edge, including our passion for high standards, our respect for diversity, and our commitment to create exceptional opportunities for professional growth so that associates can fulfill their highest potential.

The Largest Women’s Foundation
We will be a committed global champion for the health and well-being of women through philanthropic efforts, with a special focus on breast cancer, domestic violence and women’s empowerment.

The Most Admired Company
We will deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities while maintaining our commitment to be a socially responsible, ethical company that is watched and emulated as a model of success.

The Avon Great Oak

Great oaks from little acorns grow.

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The great oak is a fitting symbol for Avon: from the smallest of beginnings, the great oak spreads its branches wide and tall, supported by deep roots, ever constant, ever changing.

The “great oak” that is today Avon started as the idea of a single individual – David H. McConnell – who left his father’s farm in Oswego, NY in 1878 to make his fortune. After only eight years as a traveling salesman of various products, McConnell, in his own words penned in 1903, wished to “manufacture a line of goods superior to any other, to put the moneyed value into the goods themselves, and just enough money in the package to make them respectable, and take these goods through canvassing agents direct from the laboratory to the consumer.”

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In New York City in 1886, after “most careful and thorough investigation,” he “started the perfume business in a space scarcely larger than an ordinary kitchen pantry. At first I manufactured but five fragrances,” and, as McConnell described it, “I myself filled the position of correspondent, cashier, bookkeeper, shipping clerk, office boy and manufacturing chemist.” The company, called the California Perfume Company in reference to the romance and mystery of California, launched with a single “general agent” selling the five fragrances, a Mrs. P.F.E. Albee of Winchester, NH, and for six months she was the sole sales agent for the fledgling company.

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Just as acorns swell into a great oaks, so over the years the California Perfume Company flourished: the five fragrances grew into hundreds and then thousands of products, Mrs. P.F.E. Albee was joined by a veritable “army” of sales agents, the business expanded first into a headquarters in Suffern, NY, and then into sites across the country and around the world. By 1939 the company had already outgrown its name and became Avon Products.

In 1955 the Avon Foundation was founded, formalizing McConnell’s principle of giving back to society. The philanthropy started with a single scholarship of $400 and today has become a “great oak” in its own right, as a global leader in the causes of breast cancer and domestic violence.

The roots of Avon are as strong as the “spreading branches” of the company. The principles that guide Avon today are the same that have been with us from the beginning – the principles of opportunity, service, recognition, reward, corporate citizenship and a friendly spirit. Quality products are still delivered direct “from the laboratory to the consumer.” The corporate headquarters are back in New York City, where the company started. The research and development center is on the same site, in Suffern, NY, as McConnell’s original factory, albeit in a new, multi-million dollar state-of-the-art building.

McConnell was described as “honest, industrious and energetic,” and those same words can be used to describe the company he founded. As he wrote over a century ago, “the limit of this business is measured only by the amount of hard work and energy we put in it. If we stop and look over the past and then into the future, we can see that the possibilities are growing greater and greater every day.”

Environment

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While we face the challenges that are typical of any global organization that strives to reduce environmental impacts, we remain determined to address them, and we are more committed then ever to meeting our environmental goals and our stakeholders' expectations.
Our commitment to the environment has been deeply rooted in Avon’s principles for more than a century. At our locations worldwide, we remain committed to reducing our global environmental footprint, including the issue of climate change, by recycling, reducing waste, conserving energy and water, and monitoring and reducing greenhouse gas emissions. New Avon facilities are developed using green building standards, and we are proud of recent LEED, BREEAM and equivalent certifications in countries including Brazil, the US and the UK, where Avon received a “Green Apple Award” for the Northampton facility. We are dedicated to ensuring compliance with environmental regulations around the world, and we strive to continuously improve our environmental performance by setting and achieving measurable goals.

In addition to the ongoing environmental stewardship of our operations, to help drive institutional and individual “green” behavior, Avon launched Hello Green Tomorrow in 2009 to empower a global environmental movement to nurture nature.

In 2004, we established environmental goals and targets for 2008 and have reached or exceeded nearly every one, and new goals have been set for 2012. We encourage you to read about our progress in the following pages, and we hope you will return to this site for updates as we work to meet our commitment to the environment.

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Highlights by the Numbers

• Water consumption per unit decreased by 26% from 2004 levels

• Greenhouse gas (GHG) emissions per unit decreased by 23% from 2004 levels

• Energy consumption per unit decreased by 19% from 2004 levels

As demonstrated in the chart above, we have made significant progress since 2004. We have reduced our overall energy consumption per unit produced by 19 percent, water consumption per unit by 26 percent and greenhouse gas emissions per unit by 23 percent.

In addition, we work diligently to ensure that we meet, if not exceed, the environmental requirements of the countries in which we operate, and we continue to incorporate internationally approved standards for environmental management into our systems. Our objective is for all Avon facilities to demonstrate steady progress in future reporting periods.

Governance

Our Approach

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Our mission, values and principles have become an integral part of our culture and serve as our guide for good corporate governance.
At Avon, our actions are guided by our mission, our values and our principles. These core standards have become an integral part of our culture and serve as our guide for good corporate governance. We believe that, in turn, good governance serves as a foundation for corporate responsibility. Our focus on these core standards has contributed to Avon’s inclusion in Fortune magazine’s annual ranking of America’s Most Admired Companies, and Avon has been consistently ranked among the 100 Best Corporate Citizens named by The CRO magazine, as well as other recognition in the US and around the world.

Avon is also committed to sustainability and the many facets of corporate responsibility throughout our business enterprise. A new position of Vice President, Sustainability and Corporate Responsibility was created in November 2009, working with the Director of Corporate Responsibility. This team reports to the Senior Vice President, Human Resources and Corporate Responsibility, who is a member of the Avon Executive Committee that reports to the CEO.

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We are committed to continually improving our governance and corporate responsibility policies and practices as well as the transparency and accountability of our company’s management.

More information

Additional information on Avon’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, the Board of Directors and the board committees can be found on Avon’s corporate website at www.avoninvestor.com.

People & Diversity

From research and development and manufacturing to sales management, marketing, customer service and our many other operations, our 42,000 Avon associates worldwide play an integral role in our success. We attract passionate and dedicated individuals from every market (see chart below), and we seek to help them to reach their highest potential as part of our team.

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We recognize that every associate brings unique skills and experiences to our organization, and we seek to leverage these differences in the most effective ways possible. Just as we unite our associates through their similarities, we also recognize and appreciate their differences and seek to create an environment conducive to individual and collective excellence. We are committed to maintaining a work environment that affords all associates opportunities for development and advancement. Our vision is for all associates to feel comfortable enough to contribute their thoughts and ideas for the mutual benefit of all associates and the organization. We are also committed to maintaining a culture that supports associates as they balance their many, and sometimes competing, professional and personal responsibilities.

Because we seek to leverage the diversity of all of our associates, diversity and inclusion are fully embedded in our corporate culture. Andrea Jung, now in her ninth year as our chairman and CEO, is consistently recognized not only for the vision and perspective she brings to our company, but also as one of the foremost executives and one of the most powerful women in business. Her leadership and example are an inspiration to all Avon employees as we strive for our own personal excellence.

|Global associate distribution |
|Region |Number of associates |Percentage of global associates |
|Asia Pacific |4,000 |9.5 |
|Central and Eastern Europe |7,000 |16.7 |
|China |3,000 |7.1 |
|Latin America |16,000 |38.1 |
|North America |7,000 |16.7 |
|Western Europe, Middle East, and Africa |5,000 |11.9 |
|Total |42,000 |100 |

Philanthropy

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More than $660 million raised in over 50 countries worldwide to improve the lives of women.
Avon has been committed to advancing women since the company was founded in 1886, and philanthropy has always been a strong part of our heritage. In 1955 the company formalized philanthropic efforts with the creation of the Avon Foundation, which advances the mission to improve the lives of women and their families.

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The Avon Foundation’s first grant, more than half a century ago, was a single scholarship of $400. The Foundation’s main efforts are today focused on the critical issues of breast cancer and domestic violence, and Avon global philanthropy is advancing these causes in more than 50 countries. As committed global citizens, Avon and the Avon Foundation also support emergency and disaster relief, while a scholarship program for Avon associates and Sales Representatives maintains the tradition of supporting education.

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The latest Avon Foundation Impact Report and details on mission programs, grants, educational materials and financial reports can be found on the Avon Foundation website.

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Product Responsibility

• Our Approach

• Global Product Safety Standard

• Governance and Management

• Cosmetics Safety Evaluation

• Recall Policy

• Public Perceptions

• Animal Testing

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Product responsibility - our pledge to deliver safe and effective products - will always be our top priority.
Product responsibility—our pledge to deliver safe and effective products—will always be our top priority. At Avon, we are committed to selling products made of the highest quality ingredients and will continue to take all steps necessary to guarantee our customers’ safety and satisfaction, starting with a 100 percent satisfaction guarantee. We seek to ensure that when our products reach our valued customers, they deliver results as promised. Accordingly, we substantiate the safety, efficacy and claims regarding all of our beauty products—cosmetics, toiletries and fragrances—through a variety of scientific methods.

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Product responsibility at Avon means managing our regulatory responsibilities as well. Our products either meet or exceed the safety regulations in every country in which we operate. We closely monitor all existing, new and proposed legislation governing the sale of our products so that we are fully informed and in compliance with the law.

Stakeholder Engagement

Avon values the input of its many constituencies, including associates, Representatives, customers, investors, and communities. Understanding stakeholders’ concerns and interests, and integrating stakeholder feedback, are critical to the development of our strategies to being a responsible and successful enterprise. We have numerous mechanisms in place to ensure that we understand and respond to the concerns of our stakeholders.

For example, we regularly conduct employee surveys, gather feedback from Sales Representatives and provide the opportunity for customers to provide comments on our website. Click on the stakeholder groups listed in the menu to the left to learn how Avon is integrating stakeholder input into our strategy and operations.

In 2009, Avon launched a new, focused engagement program, Hello Green Tomorrow, which has the mission to empower a global environmental movement to nurture nature. In the first year, the efforts focused on engaging associates worldwide with environmental education and action to drive change on an individual and institutional level. In 2010 the program rolled out externally to engage Sales Representatives, customers and the public in 60 countries. The dual goals of Hello Green Tomorrow are to drive “green” education and fundraising to help restore the Atlantic Rainforest in South America, and millions of dollars have been raised.

Supply Chain

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As a leading global manufacturer and marketer of consumer products, Avon recognizes that responsible supplier conduct is critical to our business. It impacts our ability to attract and retain a loyal customer base, dedicated employees and enthusiastic Sales Representatives, and helps us to maintain the reputation and trust that we have earned for the past 123 years. As standards evolve and as monitoring becomes more effective and efficient, Avon will continue to focus on its performance in this critical area.

For our beauty and beauty-related products, Avon utilizes both company-owned manufacturing facilities and third-party suppliers to source its products for consumers around the world. In all, Avon’s suppliers currently number approximately 16,000 and hail from 50 countries.

Our cosmetics, fragrances, and toiletries products—also known as beauty products—are the core of our business and comprise approximately 70 percent of our net sales. Eighty-nine percent of our beauty products are manufactured in Avon-owned facilities. Third-party manufacturers supply the remaining 11 percent of our beauty products.

All of our non-beauty products are sourced through third-party manufacturers in 25 countries across five continents.

Workplace Safety & Health

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Just as we pledge to provide safe, quality products to our customers through the rigorous application of manufacturing, distribution and research and development standards, we seek to protect the safety, health and well-being of our employees. All facilities have implemented a variety of safety activities and programs. Currently, we are engaged in a global initiative to make them more comprehensive and uniform across the company.

At Avon, we have placed safety, health and loss prevention under one umbrella. We believe combining them makes our work more effective and efficient. In addition, our efforts focus on not only the safety of our associates but also our contractors, visitors and Representatives when they are on our sites. We will refer to the three functions—safety, health and loss prevention—simply as “safety” for ease of communication.

Governance & Management

At Avon, we take our safety responsibility seriously, which is why our associates coordinating this function report to senior levels of management—site leaders, regional leaders or, at the global level, the Group Vice President of Global Manufacturing and Environment, Health and Safety (EHS). By residing in the operating areas of the company and reporting directly to senior management, the safety function becomes more effective and sends a clear message that ensuring safety is a basic management function and responsibility.

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Regulatory compliance is imperative. While our focus is on protecting people and property, we also work to achieve full compliance with applicable safety and fire protection-related regulations.

In the past few years, as a part of our major global initiatives, we have invested in many capital projects in which significant portions of project capital are allocated to improving safety and property protection. We regularly measure the safety performance of our sites and report it to the highest levels of management. We also hold our managers at various levels accountable for ensuring safety in their areas of responsibility by including safety-related objectives in our performance management and compensation system.

Guiding Safety Principles

Our efforts to improve safety are guided by the following three principles:

• Safety is performance driven

• Management plays a critical role

• Incidents are preventable

Global Safety Strategy

Our global safety strategy has six dimensions.

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1. Increase management involvement: We engage our managers at various levels in the safety effort by establishing expectations and then educating them on how to contribute to improved safety. To accomplish this objective, we have developed a safety leadership training program. This two-hour program has been presented so far at twelve Avon sites and attended by approximately 700 managers and supervisors. We will continue to present these sessions at the remaining sites and offer training packages that can be translated in local languages and presented to an even larger audience.

Our facility in Poland is a leader in this regard. Approximately 30 associates have attended presentations by our global safety team; they then translated the training materials into Polish and trained 12 people to become trainers themselves. These trainers have already trained approximately 200 managers and supervisors and now are preparing to train the next level of the organization, team leaders.

2. Strengthen basic safety: Safety basics include such technical aspects as electrical safety, chemical safety, machine guarding, machinery lock-out/tag-out, and confined space entry, working at height and fire protection. Within the next year we plan to introduce a comprehensive safety audit program. This program will help us to identify strengths, in addition to gaps, and help to improve safety. The strengths identified will be shared with others in the company as best practices. One such best practice was identified at our branch operation in Corby, UK. Empty wooden pallets are stored on their sides to create an obstacle course for training and testing forklift operations—a simple but powerful idea.

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Wooden pallets create an obstacle course used for training forklift operations in Corby, UK

3. Set goals and measure performance: In 2007, we issued detailed criteria to all facilities as to how to record incidents involving injuries or property damage. As a result, our manufacturing plants and distribution centers around the globe are now uniformly capturing and reporting incident information.

Using the data recorded by our system, we publish global safety reports quarterly. The reports are distributed to all sites as well as regional and global management. This allows Avon’s leaders to recognize those that demonstrate excellent performance, those that make big improvements and those that need further improvement with regard to safety. Every year, we set stretch targets for the sites. Our vision and our ultimate goal are to achieve a combined total recordable case (TRC) rate1 of below 1.0 for the entire company.

We are making steady progress toward meeting this long-term goal. Our manufacturing sector, which has maintained a strong focus on safety for many years, achieved a 42 percent reduction in TRC from 2006 to 2007 and improved further during 2008. The distribution centers, which began focusing more on safety in 2007, are also showing improvement. The TRC for this area of our operations has declined from 2.7 in 20072 to 1.2 in 2008.

Again, improvements at our Poland facility have been remarkable. Through the strong leadership of the plant director and focused efforts of the entire management team, safety staff and associates, this facility has reduced its TRC rate from 3.2 in 2006 to 0.9 in the first five months of 2008. Consequently, this site was selected for our “Excellence in Safety” award in 2008.

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4. Communicate and increase awareness: Frequent communication, two-way dialogue and repetition of certain key messages form the cornerstones of our efforts to increase the focus on safety across the company and to educate our associates. For example, we communicate across the company when an incident occurs so that managers can check operations and take additional precautions to prevent similar incidents from happening. We also share best practices with all sites so they can incorporate them into their safety efforts.

Our intranet hosts a safety and health section that contains a variety of information, including new programs, activities, and contact information. Our bulletins, which outline minimum safety requirements, are also available here for download by anyone within the company. This has become a popular part of our internal website.

5. Increase safety and health competence: We believe that our safety programs are good only if people can understand them. Therefore, Avon associates across the company—from management to technical staff to associates working in other areas—need to know the general safety policies as well as safety practices specific to their job functions.

For example, to ensure the safe use of flammable liquids, our processing staff must understand the features of explosion-proof equipment and how it provides protection. Our maintenance people must know how to complete repairs and maintenance so as not to defeat the protection provided. And our associates working in the processing areas must know how to ensure that this protection is effective.

We also focus on increasing the competence of our health and safety staff, so that they can assist the company in protecting our people and property. We work with external consultants to provide a higher level of expertise and supplement our safety staff’s efforts. On our safety and health intranet website, we have special sections dedicated to “safety resources” and “professional development,” from which the staff can review and download articles, guidelines and checklists.

6. Establish global standards: We are a global company, and we need to ensure that all of our sites, no matter where they are located, provide at least the minimum level of safety in their operations. Just meeting the requirements of local regulations is not enough in some cases, however, because local regulatory standards may be low. Therefore, we are in the process of establishing more stringent global safety requirements, which each site must meet. Indeed, if the local regulations have higher requirements, then they must meet those higher standards as well.

1 The TRC rate indicates the total number of “Avon Reportable” cases (lost time plus medical treatment beyond first-aid), per 100 full-time associates. In Avon’s previous Corporate Responsibility Report, Avon reported the Recordable Injury Case Rate and Lost Workday Case Rate, as defined by the Occupational Safety and Health Administration (OSHA). Beginning in 2008, however, Avon will report the total reportable case (TRC) rate only. Avon believes the TRC rate is more reflective of our overall safety performance because it is influenced less by local practices and chance factors beyond our control.

2 2007 is the first year of data for our distribution centers.

EHS Global Conference

As a testament to our determination to improve our Environmental, Health and Safety (EHS) performance at Avon, we welcomed 35 EHS associates from around the Avon world to a three-day conference to discuss performance, improvement opportunities, and model best practices.

Held in conjunction with Earth Day—April 22, 2008—the conference included an overview of Avon’s global EHS performance and discussion on various aspects of EHS. Several sessions focused on the ongoing importance of continuously improving Avon’s sustainability metrics, such as compliance, recycling, energy, waste and water reduction. Technical sessions on such topics as arc flash hazards and fall protection were presented, along with a variety of other sessions. On the fourth day, participants visited Underwriters Laboratories’ fire engineering testing facilities.

We will continue to host these conferences periodically as another way to benchmark our progress, inspire our EHS professionals to exceed their goals, and expand our commitment to the responsible EHS practices at Avon.

BRANDS

Avon Color is Avon’s flagship global color cosmetics brand which offers a variety of color cosmetics products, including foundations, powders, lip, eye and nail products. Avon Color’s palettes contain shades that suit the skin tones of women of all ethnicities.
Avon Color provides superior innovation and high-technology in its products to deliver beauty and treatment-related benefits that make women look and feel their best. Avon Color has over the decades brought scientific advances to the beauty market with the launch of hit products such as Glimmersticks eyeliners and lipliners, slim-line mechanical color pencils that allow for a smoother application, and Glazewear Liquid Lip Color, which contains patented Thixotropic Gellant System that moisturizes lips with Vitamins A, C, and E.
Avon Color's product portfolio includes:
Mistake Proof Mascara is the first-ever mascara with a built-in “mistake” eraser. This multi-benefit mascara provides volume, length and lift on one end and a gel “eraser” on the other end to undo mascara mishaps.
Pro-To-Go Lipstick with its breakthrough design allows opening, applying and closing the lipstick all with one hand. With one slide of a button, Pro-To-Go Lipstick gives luscious color and hydrating lip care.
Jillian Dempsey for AVON Professional Collection, a new line of makeup that will leave you looking like you go to a professional make-up artist. The collection includes: • Kohl Eyeliner with Smudger, a creamy eye pencil that can be used as a liner or a shadow to create smoky eyes. Available in Black, Plum, Navy and Dark Brown. • Eyeshadow Trio, a palette containing two powder shadows to add dimension to the eyes and one cream formula to apply over the lids as a highlighter/base. Available in Ice Shimmer, Lavender Mist, Antique Bronze and Pebble Wash. • Lash Professional Mascara, a dual-ended mascara featuring the Extreme Volume formula and Perfect Wear waterproof formula. Available in Black, Brown, Brown Black and Burgundy.
SuperSHOCK Mascara, Avon’s biggest-ever, flexible bristle brush gives the maximum amount of mascara in just one dip. Each formula contains unique microfibers that expand and plump lashes, creating bold, dramatic lashes. Avon SuperSHOCK Mascara is currently available in Black, Brown Black, Brown and Navy.
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Beyond Color is a leading anti-aging color cosmetics brand enriched with sophisticated ingredients and Avon’s patented technology to improve and enhance skin’s texture around the eyes, cheeks and lips. Beyond Color combines the benefits of anti-aging technology and an expansive color palette of radiant hues that suit the skin tones of women of all ethnicities.
Beyond Color uses exclusive technologies such as Vita Color Complex, which helps boost cellular energy to smooth lines and wrinkles and firm and tighten skin. Other technologies used in Beyond Color products include Skin Lift Technology which contains a 3D polymer to tighten skin, and the Retinex Plumping Complex which contains retinol to exfoliate and restore skin to its more youthful counters.
Beyond Color’s product portfolio includes: • Avon Beyond Color Plumping Lip Color SPF with Double the Retinol, a lipstick formulated with a double dose of Retinol to help stimulate collagen renewal for lips that are firmer, youthful and more supple in appearance. • Avon Beyond Color Lip Recovery Cream, an Avon innovation, a full color lip balm that instantly reduces the appearance of chapped lips. Beyond Color Lip Recovery Cream is the first of its kind to combine treatment and color in one remarkable lip product, providing sumptuous color that re-texturizes and reconditions lips. • Avon Beyond Color Radiant Lifting Foundation SPF 12, a foundation with exclusive skin-lifting ingredients works to tone, firm and lift while liquid vitamin-enriched color blends seamlessly with your skin for a naturally flawless, radiant look. Anew is the world’s leading mass market anti-aging skin care brand offering breakthrough products infused with innovative technology at affordable prices.
Avon revolutionized skin care in 1992, when it was the first company to launch an anti-aging product containing Alpha Hydroxy Acids, which was Anew Perfecting Complex for Face.
The Anew brand boasts an assortment of skin care products that fight all stages of the aging process, whether our customer is preventing the early signs of aging in her 20s, or restoring the youthful texture of her complexion in her 50s. Anew is also well-known for pioneering products that serve as at-home alternatives to professional cosmetic treatments.
Anew ‘s product portfolio includes: • ANEW Clinical Derma-Full X3 Facial Filling Serum, an ultra-concentrated, lightweight serum with a unique helix formation that contains the injectable-grade Hyaluronic Acid to provide visible volume restoration, and contouring and deep wrinkle filling benefits. • ANEW Rejuvenate 24 Hour Eye Cream is a dual eye system with SPF 25 to fight aging throughout the day. Two creams, a day revitalizing cream and a night restoration cream, are packaged in a dual-chamber jar and exclusively engineered to continuously repair and protect skin against age damage in the delicate eye area. • ANEW Rejuvenate Night Revitalizing Cream is a lightweight gel-cream that delivers the rejuvenating results of a professional anti-aging facial. • ANEW Rejuvenate Flash Facial Revitalizing Concentrate is a concentrated serum treatment with three times the level of the exclusive Revita Fresh technology which helps increase cell-to-cell cohesion to help strengthen the skin’s surface layers. • ANEW Clinical Advanced Dermabrasion System utilizes aluminum oxide crystals and special polishing beads that resurface and refresh skin to reveal a radiant and more youthful appearance. Polyethylene polishing beads refine and refinish, while advanced polymers conditions skin. • ANEW Ultimate Contouring Eye System, a dual-formula eye treatment designed to recontour, repair and rebuild skin’s cellular structure for dramatic, refining results and younger-looking eyes. • Anew Clinical ThermaFirm Face Lifting Cream, a treatment with Triple Sonic Technology to firm, tighten and rejuvenate skin to look smoother and revitalized—the at-home alternative to thermal facelifts. • Anew Clinical Advanced Retexturizing Peel, a ready-to-use retexturing treatment that peels away dullness and visible age damage to restore skin’s radiance and youth. • Anew Clinical Eye Lift, the first-ever dual eye treatment that “lifts” both the lower and upper eye areas for dramatically younger-looking skin. • Anew Clinical Deep Crease Concentrate with Bo-Hylurox™ a powerful serum with a blend of natural, active ingredients. Formulated with portulaca, Avon’s patented extract to make hard-to-treat creases (or ‘expression lines’) look more relaxed. • Anew Clinical Line and Wrinkle Corrector, a skin care treatment that renews, rebuilds and regenerates skin from within. Quadruple-Patented Technology Derma-3X Technology™ stimulates production of the three key dimensions of age-vulnerable skin.
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Avon Solutions is Avon’s mid-tier skin care line of facial and body treatments formulated to meet our customers’ unique skin needs. Offered at slightly more affordable prices than the Anew brand, Avon Solutions products are infused with the Avon Daily Skin Allowance, a unique combination of nutrients and supplements developed by Avon that helps women maintain healthy skin.
In 2006, Avon Solutions introduced Ageless Results, its first line of skin care products which includes trickle-down technology, an adaptation of Avon’s world-class anti-aging skin care technology.
Avon Solutions’ product portfolio includes: • Avon Solutions a.m./p.m., a dual-chamber skincare system that includes a separate cleanser and moisturizer. Both the cleanser and the moisturizer have dual chambers with one side for morning and the other side for evening. The moisturizing technology features a light-activated delivery system triggered by an increase in environmental stresses like sun exposure; free radical fighting antioxidants including vitamin E and C to help counteract skin damaging environmental aggressors; and SPF protection. Solutions a.m./p.m. is currently available in two routines: Total Radiance for normal to combination skin, and Maximum Moisture for dry skin. • Ageless Results, Avon’s new anti-aging line of products formulated with soy, vitamin antioxidants and peptide to help restore the nutrients that aging takes away. • Super Shape Anti-Cellulite and Stretch Mark Cream, the first dual-action treatment that works to visibly diminish the look of cellulite and stretch marks, immediately leaving skin feeling firmer and tighter. • Slim and Sleek Leg Perfector, a treatment infused with naturally derived plant extracts, including alpha complex to help boost skin’s resiliency, carnitine to help energize skin, and sunflower seed extract to help protect skin’s firmness. • True Pore-Fection, a skin care line of lotions and cleansers for oily and combination skin. • Hydrofirming, a skin care line of lotions and cleansers for dry skin. Skin So Soft, is one of Avon’s best-loved brands offering a line of bath and body products for all skin types. Since the launch of the brand’s famous bath oil in 1961, Skin So Soft has evolved over the years to an extended line of brands that include Daily Moisture, Renew & Refresh, Soft & Glow, Fresh & Smooth and Soft & Firm that provide skin smoothing and skin caring benefits.
Skin So Soft has also expanded beyond bath and body care with the launch of products that help protect against insects. This led to the development of the Skin So Soft Bug Guard PLUS line of products that use IR 3535 in 8 DEET-free formulations that are easy to use for the whole family.
In February 2007, Avon will launch Skin So Soft Fusions Dual Softening Body Wash, the first body wash that fuses an exfoliating formula with an ultra-conditioning cleanser.
Recent Skin So Soft products include: • Avon Skin So Soft Fusions Dual Softening Body Moisturizer, is dually formulated to help skin maintain optimal hydration from above and deep within skin’s surface. One formula softens and smoothes the surface of the skin while the other works to fortify deep within skin’s surface to create a special hydrating cushion. Available in Soft & Sensual, Soft & Nourish, and Soft & Replenish. • Skin So Soft Bug Guard IR 3535 Expedition and Skin So Soft Bug Guard Plus Picaridin, deliver long-lasting insect repellency and are available as pump and aerosol sprays. • Skin So Soft Bug Guard Plus IR3535 Unscented SPF 15 Sunscreen Spray, an EPA-registered DEET-free SPF 15 aerosol. • Skin So Soft Satin Glow, a daily body moisturizer that gradually develops a natural, healthy summer glow. • Skin So Soft Fresh & Smooth, a line of hair removal products such as shaving gel and waxing kits to effectively remove hair, leaving skin silky and smooth.
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Avon Naturals is Avon’s popular line of value-priced bath and body care products. Dermatologically tested and fragrance-screened, Avon Naturals products are safe for all skin types.
Avon Naturals offers an array of gentle, moisturizing cleansers, lotions, and body sprays and shampoos that create a light bath experience and are available in a variety of refreshing scents such as lavender and chamomile, gardenia, raspberry, peach, and cucumber melon.
In 2005, Avon launched Avon Naturals Skincare, a line of products formulated with Bioseed Complex™, a unique blend of grapeseed, neem seed, and sunflower seed extracts to clean, soothe and protect skin.
Avon Naturals’ product portfolio includes: • Naturals Tea Tree and Grapefruit Gel Face Cream, a light cream that softens and hydrates skin. • Naturals Peach and Almond Milk Face Scrub an exfoliant that removes dry flaky skin to reveal a glowing complexion. • Naturals Lavender and Chamomile Shower Gel, Body Lotion and Body Spray gently cleanses and calms skin. • Naturals Black Cherry & Nutmeg Shower Gel, and Body Lotion cleanses and soothes skin. • Naturals Shampoos and Conditioners, effective shampoos and conditioners available in poppy seed and almond, ginger and mango, pink grapefruit and rose, scents. • Naturals Anti-Bacterial Liquid Soap, available in cucumber melon, peach, gardenia and vanilla. Advance Techniques salon-quality products serve the needs of every hair type, age group and ethnic background. As a recognized hair care brand among Avon customers, Advance Techniques delivers a wide range of shampoos, conditioners and styling products.
Advance Techniques launched in 2000, offering a broad selection of high performance hair care products to accommodate a diverse consumer base. Since then, Advance Techniques products have been reformulated to include Creatine, an essential skin care ingredient that strengthens and repairs hair from root to tip. Creatine also protects hair against damage caused by heat styling and chemical processes.
Advance Techniques offers shampoos, conditioners and styling products in the following four hair care categories to meet the needs of every woman.
Volume and Texture, formulated with Creatine Plus Amino Peptides to plump fine, lifeless hair.
Straight and Sleek, formulated with Creatine Plus Silicone Smoothers to tame and illuminate out of control hair for a smooth polished look.
Color Protection, formulated with Creatine Plus an Anti-Oxidant & UV Filter Complex to protect the brilliance and health of color-treated hair.
Daily Results, formulated with Creatine plus-Pro-Vitamin B5 to help improve the condition and manageability of hair.
Intense Repair, formulated with Creatine plus Hyaluronic Moisture System to treat and repair dry, damaged hair.
Avon Wellness provides rejuvenating health and fitness products that promote a well-balanced lifestyle. Launched in 2000, Avon Wellness embraces the philosophy of inner as well as outer beauty and the well-being of mind, body and spirit. Avon Wellness products are available in all of Avon’s markets across the world.

In 2005, Avon expanded its Wellness line when it partnered with the popular fitness franchise Curves. Through the Avon brochure, customers will find a host of Curves-branded fitness apparel, accessories and comfortable footwear that support a physically active lifestyle and healthy eating.

As the world’s largest manufacturer of mass market perfumes, Avon offers affordable scents with upscale packaging so that all women can enjoy the Avon fragrance experience.
Originally known as The California Perfume Company, Avon began its fragrance legacy in 1886 when it introduced Little Dot Perfumes. Since then, blockbuster icons like Little Black Dress, Far Away, Sweet Honesty, Rare Gold and Imari have been legendary among our customers.
In 2004, Avon launched its first prestige fragrance trilogy Today,Tomorrow, Always, supported by Avon spokeswoman Salma Hayek. Avon’s prestige fragrance collection is well-suited for the customer who is willing to spend more on her fragrance.
Avon also manufactures fragrances for men. In 2006, Avon launched Derek Jeter Driven its new fragrance by baseball star Derek Jeter. Other popular fragrances for men include Blue Rush, Black Suede and Wild Country.
Several of Avon fragrances for both men and women extend to a line of ancillary products such as body creams and lotions.
Avon fragrance portfolio includes: • Christian LaCroix Absynthe, a new Oriental Green scent exclusively designed by Christian Lacroix for Avon. Its top notes include absinthe extract, golden freesia and green anise with midnotes of orchid, saffron, and narcissus nectar. Antique wood, ebony musk, myrrh and amber create this fragrance’s smoky drydown. • U by Ungaro for Her and U by Ungaro for Him, was designed exclusively for Avon by haute couture designer Emanuel Ungaro. U by Ungaro for Her carries an alluring scent made up of fresh blossoming florals surrounded by sensual blonde woods and is packaged in the shape of a soft pink hourglass. U by Ungaro for Him blends an airy crispness that leads to a sophisticated blend of rich, textural woods and is packaged in a sleek rectangular shape paired with translucent glass. • Christian Lacroix Rouge, was exclusively created for Avon by haute couture designer Christian Lacroix is a bold floral chypre based on natural Patchouli Heart, contrasted with an exhilarating introduction of Spanish carnation and energizing white pepper. • Derek Jeter Driven, the new fragrance for men Extraordinary which combines the richness of chocolate truffles and the sparkling effervescence of champagne • Today, Tomorrow, Always, Avon’s first prestige fragrance trilogy promoted by Avon spokesperson Salma Hayek. M-The Men’s Catalog, is Avon’s brochure exclusively for our male customer showcasing Avon’s collection of personal care products for men. The Men’s Catalog, published quarterly in the United States, was introduced to meet the needs of a consumer base with a growing interest in grooming products.
Since its launch in 2004, The Men’s Catalog, has expanded to include skin care brands for men, such as PROSport Daily Performance and PROExtreme Maximum Performance which offers products for all skin types. Also available in the The Men’s Catalog are fragrances and ancillary products such as after shave lotions and gels, and hair and body washes. The Men’s Catalog also features an array of watches and apparel, gadgets and tools.
To support the The Men’s Catalog, Avon has developed partnerships with well-known names and personalities to gauge the interest of the male consumer. In 2006, Avon announced a marketing alliance with baseball star Derek Jeter to create his new men’s fragrance Derek Jeter Driven, sold through The Men’s Catalog as well as Avon’s core brochure. The Men’s Catalog has also affiliated with popular brands such as the National Football League and Nascar.
Avon’s product lines and products for men include:
PROExtreme Maximum Performance, a line of moisturizers, lotions and deep cleansing washes to fight problem skin.
PROSport Daily Performance, a line of skin care and shaving products that meets men’s daily grooming needs.
Derek Jeter Driven, the new fragrance for men
Blue Rush, a fresh aquatic fragrance energized with ocean mist, crisp basil and tropical woods.
Black Suede, a confident and smooth fragrance with warm woody notes and a hint of leather.

NEW YORK, Sept 20, 2005 /PRNewswire via COMTEX News Network/ -- Avon recently conducted a "global dialogue" which queried women on their opinions on the topics of self- indulgence, physical appearance and skincare. A common theme among the respondents of the Avon 2005 Global Women's Survey was the importance women put on finding ways to stay young and healthy.
"As the company for women, this global dialog is important to us as we continually work to identify key insights about women's beauty needs and attitudes," said Debbie Eisser, Vice President, Global Marketing Research for Avon. "While there are some interesting differences by geography and age, this fourth bi-annual survey reveals once again that women are overwhelmingly united in their views on beauty."
The survey participants were asked to share their opinions on the three topics and some of the findings were surprising. 80% of women ages 15-24 say they are already experiencing signs of aging! And more than half of women say the first thing they would do when signs of aging emerge would be to reach for an appropriate facial skin care product, preferably one that contains both natural herbs and medicinal plants, and modern science's most advanced ingredients. Respondents also reported that while appearance is important, cosmetic surgery is not a consideration for most women.
Following are more detailed findings of the 2005 Avon Global Women's Survey.
Self-Indulgence - What do I do just for me?
Shopping is cited as women's favorite indulgence with 42% of women around the world saying that when they want to do something special for themselves, they buy clothes! Other popular indulgences are having their hair done (30%), eating out (23%), and buying make-up (23%). While the popularity of individual indulgences varies by region, buying clothes is the most popular indulgence in all regions except Eastern/Central Europe, where buying make-up and eating sweets is more popular.
In terms of age groups and regions the frequency with which "women indulge" does vary. Women in Western Europe and Latin/South/Central America are the most likely to indulge frequently - 60% and 57% respectively do so at least once a week. By age, younger women aged 15-24 are the most likely to frequently do something special for themselves - 61% do so at least once a week.
Physical Appearance/Aging - "Fountain of Youth Options"
Appearance is important, but despite the importance placed on it, the majority of women prefer healthier alternatives to protect how they look with 93% of women globally saying they put some effort into improving their overall appearance. The top things women are currently doing to improve their physical appearance are: eating healthy (51%), drinking plenty of water (49%), exercising (38%), following a facial skin care routine (38%), and getting plenty of sleep! (36%)
Where do women look the best for their age? Japan at 11% with both the US and France tied at 10% and Brazil at 9%. Regionally, women were perceived to age best in Asia-Pacific (31%) and Western Europe (30%).
What do women do when they notice the first signs of aging? More than half of women globally stated that if they were to notice a new sign of aging on their face they would opt to try a facial product that promised to address it. In the US, 71% of women prefer a fusion of natural and scientifically advanced ingredients in their facial skin care products to help them fight the signs of aging.
Skincare
Wrinkles and fine lines are still the most common signs of aging, with 48% of women saying they have started to notice them. For most women (57%), the first place they experience the first sign of aging is around their eyes; this is the most common first sign for women of all regions and ages.
Most remarkable is the fact that much younger women, ages 15-24 say they are already acknowledging signs of aging! The top sign of aging these young women are reporting are dry, flaky, chapped skin at 30%, followed by sunken under-eyes at 22%.
What do women look for in their skincare products? 78% of women say they wish anti-aging products were made with more natural ingredients. However, when given a choice, six-in-ten women (61%) would prefer their facial skin care products to contain both natural herbs and medicinal plants, and modern science's most advanced ingredients.
Although awareness of cosmetic procedures is fairly high it is not the first course of action in the "race against time" and skin care. Globally, 95 % of women say that they have not had any cosmetic surgery - the main reasons for not having surgery are: the high cost (42%), a lack of interest (35%), and concerns about the risks involved (28%).

Avon (NYSE:AVP) makes beauty and personal care products, including various types of cosmetics - lipstick, eyeliner, mascara, basically anything that would make a wonderful Mother's Day gift - apparel and accessories, and home and decoractive products. Avon's products face intense competition, from companies like Estee Lauder Companies (EL) and Revlon (REV), in all of its markets from both global and regional mid-end brand personal care products. To combat competition and improve brand recognition in US and global markets, Avon launched a Turn-around Plan in 2005 that included strategic initiatives to reduce costs, increased advertising spending, improve product quality, and improve sales profitability. The company expects an annualized savings of $430 million when the plan is completely implemented in 2011-2012 as well as improved market share and increased sales performance.

While the majority of Avon's competitors distribute their products to resellers such as department stores, drugstores, or cosmetic stores, Avon sells its products solely through its direct-selling channel of independently-contracted Active Sales Representatives and through its online website. However, the company's direct-selling business model is at risk for incurring more costs due to Representative dissatisfaction and global legal restrictions. In 2004, four Avon Representatives filed a class-action lawsuit against Avon, charging AVP for charging Representatives unfairly for products and refusing refunds of unsold products. In 1998, China banned direct-selling and did not reinstate Avon's license for direct-selling until 2006, resulting in large revenue losses for Avon as it could not longer use its main business model in the Chinese market during this time. Due to the company's reliance on its direct-selling business model, earning potential and satisfaction of its Representatives and maintaining its business model are essential for the company's success in global markets.

Market Share

Avon produces and sells consumer packaged goods worldwide through its direct selling boutique store channel and its online channel.

Business Segments[pic]

Avon's revenues come from three main categories:

Beauty (72.0% of net sales)[pic]

cosmetics, fragrances, and personal care products. In FY2009, sales of this segment fell 2.6% compared to sales in 2008.

Fashion (17.0% of net sales)[pic]

jewelry, watches, apparel and accessories. In FY2009, sales of this segment fell 5.1% compared to sales in 2008.

Home (11.0% of net sales)[pic]

Home products and decorative products. In FY2009, sales of this segment fell 1.2% compared to sales in 2008.

Emerging Markets[pic]

Avon continued to expand its business worldwide in FY2009, especially in emerging markets such as Brazil, China, Colombia, Russia, Turkey, and Venezuela, aiming for high market share and brand recognition in these markets. The only positive regional revenue growth that the company had were in the Latin America and China at 5.6% and 0.7%.

Avon Acquires Silpada[pic]

On July 12, 2010, Avon announced that it was acquiring Silpada Designs in an effort to expand its jewelry business. Silpada is a direct seller of sterling silver jewelry in the U.S., Canada and the U.K. Silpada makes more expensive jewelry than Avon, with prices ranging from $12 to $279, with an average of $64. Avon is acquiring Silpada for $650 million and says that Silpada will continue to operate as a standalone business with its existing 32,000 independent sales representative.

Avon Sells Japanese Operations

In early November 2010, Avon announced that it was selling 75% of its operations in Japan to TPG Capital for $90 million. Avon is looking to focus more on emerging markets that have high growth potential -- Avon Japan contributed about 2% of the company's total sales. The company doesn't expected the sale to have a material impact on financial statements. TPG Capital also released a counter offer to buy the remaining shares of Avon Japan.

[pic]Business Growth[pic]

FY 2009 (ended December 31, 2009)

▪ AVP's net income fell 29%, from $875 million in FY2008 to $625 million in FY2009. The significant decline in net earnings was due to weak international sales (due to foreign exchange pressures) and declining operating profit. ▪ Total revenue was $10.4 billion in FY2009, down 3% from total revenue of the prior-year quarter. However, on a local-currency bases, total revenues actually increased 6% as foreign exchange pressured growth down by 9%. The decline came despite a 9% increase in active representatives. Overall international sales were down, with the hardest hit segment being Central and Eastern Europe where revenues fell 13%. Domestically, sales in North America fell 9% for the year. In addition, all of Avon's product categories had negative sales growth. ▪ Operating profit for FY2009 was $1.02 billion, and operating margin was 9.8% of net sales. This is a 270 bps decrease from the previous year, during which operating margin was 12.5%. The decrease in profit margins was due to a 1.4% increase in SG&A expenses. ▪ International sales fueled Avon in 2009 as more than 80% of consolidated revenue came from overseas. Sales in Latin America, which totaled $4.1 billion, were the highest for the company. In second were sales in North America which totaled $2.3 billion.

Q1 FY 2010 (ended March 31, 2010)

▪ Avon's net income was $43 million, a 64% decrease from Q1 FY 2009 net income of $117 million. The decrease was mainly caused by AVP's effective tax rate being a 66.1% due to the devaluation of Venezuelan currency. Excluding this negative impact, net income was actually $144 million. ▪ Total revenue increased 14% to $2.5 billion. The number of active representatives grew by 6% as the recessionary environment attracted many unemployed people to Avon's independent selling business strategy. Additionally, the company's Beauty segment grew by 14%. ▪ Avon had mixed sales results internationally, as it had a 2% sales decline in North America, a 22% sales increase in Latin America, a 31% sales decrease in China, a 28% sales increase in Eastern Europe, and a 23% sales increase in Western Europe and Africa. ▪ The company spent $96 million on advertising -- a 23% increase from the same quarter last year.

Q2 FY 2010 (ended June 30, 2010)[pic]

▪ The company's Net Income was $167.6 million more than double the year-ago quarter value of $82.9 million. ▪ Net sales rose 8% to $2.68 billion. Sales in all of the company's product categories increased with 16% growth in perfume and 12% growth in color cosmetics. ▪ Avon increased advertising in the quarter to $97 million, up 19% from the prior year quarter. The company increased advertising mainly in Latin America. ▪ Geographically, Avon's revenue increased 16% in Latin America from strength in Brazil and Mexico. Sales in North America remained flat.

Q3 FY 2010 (ended September 30, 2010)

▪ Avon's Net income in the third quarter of 2010 increased 7% to $167 million. The increase was short of what many analysts had expected as the company had higher costs due to advertising and weak sales from large markets like China and Brazil. ▪ Net Revenue increased 4% to $2.66 billion, compared to $2.56 billion in the prior year quarter. The company benefited from higher sales in Latin America (8% growth) and Western Europe, the Middle East, and Africa (11% growth). However, sales in North America remained stagnant with a 2% decline in growth and sales in China fell by 30% as Avon tries to transition away from retail stores in the region in favor of a direct selling method that it uses in its other markets. ▪ Advertising costs increased 36% as the company promoted its fragrances as well as its two new product categories hair and acne.
Trends and Forces[pic]

Direct-Selling Model Dependent on Earnings from Active Sales Representatives[pic]

In both domestic and global markets, Avon's sales largely come from direct selling through its Active Sales Representatives. The 6.2 million Representatives that Avon employs are independent contractors that receive a percentage commission for their sales but do not enjoy employee benefits. The idea behind the direct-selling model is that if Avon can eliminate the middle-man (department and cosmetic stores) and get its products directly to consumers, they will be able to cut costs and increase profits. One of the goals of the 2005 Turn-around Plan to increase the number of Representatives paid off in 2007 when the company had a 13% increase in net sales as a result of the increase in the number of Representatives.

Due to its reliance on direct-selling through representatives, Avon not only competes for the end consumer but also for representatives that are knowledgeable about the industry and about beauty products. Avon's dependence on the productivity and profitability of the representative direct-selling model exposes it to cost and litigation risks. In 2004, four Avon representatives filed a class action lawsuit against the company for alleged "channel stuffing," where Avon supposedly shipped products representatives without an order and held representatives responsible for payment for the unordered shipments. It is likely that AVP will incur future costs through litigation and resolution of the lawsuit, which may include terms that would increase costs and decrease profits for Avon.

Multi-year Cost Restructuring Initiative May be Unable to Reduce Costs and Support Increased Advertising[pic]

In late 2005, Avon launched a Turn-around plan that included several strategic initiatives to realign costs, improve products, and increase market share through brand competitiveness. Avon expects annualized savings of more than $430 million when the plan is fully implemented in 2011-2012. However, with the global economic downturn and slowing demand for non-essential personal care products, Avon may not be able to achieve its savings target. For example, Avon has dropped its prices so far that at the end of Q2 2009, 70% of its products were prices less than $5. Falling short of its savings targets would be detrimental to Avon's profitability as it would not longer be able to support its increased advertising spending. In 2009, Avon decreased advertising costs by 10% which was in contrast to the 48% increase in 2007 and 83% increase in 2006 - a sign that the company was cutting back due to the economic downturn. to support new product launches and improve brand recognition as part of the turn-around plan. Although Avon does not want to reduce advertising spending, which means success of the turn-around plan is vital to supporting Avon's increased advertising costs as well as costs incurred by the company's entry and expansion in new global markets, the economic downturn has forced the company to cut back on advertising. In Q1 2009, Avon's focused shifted from advertising to recruiting more sales representatives - the number of representatives increased by 7% during the quarter. However, the company plans to further cut costs by cutting 1,200 jobs, or about 2.8 percent of its global workforce, by 2013. At the end of 2009, the company revised its turn-around plan and now hopes to save $200 by 2011-2012.

Direct-Selling Business Model Exposed to Regulations in the Global Market[pic]

Avon has become synonymous with the direct-selling business model - the process by which the company hires independent contractors, called Active Sales Representatives, and pays them percentage of commission to sell Avon prodcuts directly to customers. By removing the need for a middle distrubutor, such as a department or cosmetic store, Avon hopes to eliminate costs and increase profits. In 1998, the Chinese government banned direct-selling in response to abuses perpetrated by some corporations. The company's business in the region was crippled in the short-term and strongly disadvantaged in the long-term as the company was forced to abandon its direct-selling strategy and had to open its own retail stores in order to sell products. Not until 2006 did China re-licensed Avon for direct-selling, which allowed Avon's revenues from China to increase rapidly from 2006 to 2008. Total revenue from China rose from $212 million in 2006 to $353 million in 2009. Similar situations may arise in Avon's other emerging market segments, which would negatively impact Avon's revenue growth globally.

Large Presence in Global Market Exposes AVP to Currency Fluctuation Risks[pic]

80% of Avon's sales revenues come from markets outside of the United States, making the company very sensitive to currency fluctuations and the strength of the dollar.A weakening of the dollar against foreign currencies would allow Avon products to become more competitively priced in global markets, thus positively affecting sales revenue from foreign markets; however, a weak dollar would also mean higher costs for products manufactured overseas. For example, in 2009 the unfavorable impact of foreign exchange lowered operating margin by an estimated 2.5 points and lowered total revenues by 9 percentage points. In Q1 FY 2010, for example, AVP had a 64% decrease in net income compared to Q1 FY 2009 due to the devaluation of Venezuelan currency, despite total revenue increasing 14%.

Competition[pic]

As a retailer of personal care products, AVP faces intense competition from other mid-end personal care product retailers. Most of its competitors use a reseller model and distribute its products to retail stores such as Walgreen, Wal-mart, Macy's, etc., while others also sells products through the direct-selling channels. Almost all competitors also advertise and sell products through an online channel.

Major Competitors

▪ L'oreal (LRLCY) - is a global cosmetics company that makes products for skin care, hair care, hair coloring, make-up, and styling products. ▪ Estee Lauder Companies (EL) - makes skin care, makeup, fragrance and hair care products. ▪ Revlon (REV) - makes cosmetics, women’s hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and personal care products. ▪ Bare Escentuals (BARE) - makes cosmetics, skin care and body care products. ▪ Elizabeth Arden (RDEN) - makes fragrance, skin care and cosmetics products. ▪
The Board of Directors
Avon Products Foundation, Inc.
We have audited the accompanying statement of financial position of Avon Products Foundation, Inc. (the “Foundation”) as of December 31, 2006, and the related statements of activities, functional expenses and cash flows for the year then ended. These financial statements are the responsibility of the Foundation's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Foundation’s 2005 financial statements and,in our report dated February 28, 2006 we expressed an unqualified opinion on those financialstatements.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Foundation's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Avon Products Foundation, Inc. as of December 31, 2006, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Avon Products Foundation, Inc.
Statements of Financial Position
December 31, 2006
(with comparative amounts as of December 31, 2005)

INCOME STATEMENT

| |2009 |2008 |2007 |2006 |2005 |
|Period End Date |12/31/2009 |12/31/2008 |12/31/2007 |12/31/2006 |12/31/2005 |
|Period Length |12 Months |12 Months |12 Months |12 Months |12 Months |
|Stmt Source |10-K |10-K |10-K |10-K |10-K |
|Stmt Source Date |02/25/2010 |02/25/2010 |02/25/2010 |02/21/2008 |03/10/2006 |
|Stmt Update Type |Updated |Restated |Restated |Reclassified |Updated |
| | | | | | |
|Revenue |10,284.7 |10,588.9 |9,845.2 |8,677.3 |8,065.2 |
|Other Revenue, Total |98.1 |101.2 |93.5 |86.6 |84.4 |
|Total Revenue |10,382.8 |10,690.1 |9,938.7 |8,763.9 |8,149.6 |
| | | | | | |
|Cost of Revenue, Total |3,888.3 |3,949.1 |3,941.2 |3,416.8 |3,125.3 |
|Gross Profit |6,396.4 |6,639.8 |5,904.0 |5,260.5 |4,939.9 |
| | | | | | |
|Selling/General/Administrative Expenses, Total |5,389.8 |5,274.2 |4,895.7 |4,356.9 |3,818.8 |
|Research & Development |66.7 |70.0 |71.8 |0.0 |0.0 |
|Depreciation/Amortization |0.0 |0.0 |0.0 |0.0 |0.0 |
|Interest Expense (Income), Net Operating |0.0 |0.0 |0.0 |0.0 |0.0 |
|Unusual Expense (Income) |19.8 |57.5 |157.3 |228.8 |56.5 |
|Other Operating Expenses, Total |0.0 |0.0 |0.0 |0.0 |0.0 |
|Operating Income |1,018.2 |1,339.3 |872.7 |761.4 |1,149.0 |
| | | | | | |
|Interest Income (Expense), Net Non-Operating |0.0 |0.0 |0.0 |0.0 |0.0 |
|Gain (Loss) on Sale of Assets |0.0 |0.0 |0.0 |0.0 |0.0 |
|Other, Net |-7.1 |-37.7 |-6.6 |-13.6 |-8.0 |
|Income Before Tax |926.5 |1,238.3 |796.1 |703.5 |1,124.2 |
| | | | | | |
|Income Tax - Total |298.3 |362.7 |262.8 |223.4 |269.7 |
|Income After Tax |628.2 |875.6 |533.3 |480.1 |854.5 |
| | | | | | |
|Minority Interest |-2.4 |-0.3 |-2.6 |-2.5 |-6.9 |
|Equity In Affiliates |0.0 |0.0 |0.0 |0.0 |0.0 |
|U.S. GAAP Adjustment |0.0 |0.0 |0.0 |0.0 |0.0 |
|Net Income Before Extra. Items |625.8 |875.3 |530.7 |477.6 |847.6 |
| | | | | | |
|Total Extraordinary Items |0.0 |0.0 |0.0 |0.0 |0.0 |
|Net Income |625.8 |875.3 |530.7 |477.6 |847.6 |
| | | | | | |
| | | | | | |
|[pic]Total Adjustments to Net Income |-5.2 |-6.0 |-3.3 |0.0 |0.0 |
|Preferred Dividends |
|0.0 |
|0.0 |
|0.0 |
|0.0 |
|0.0 |
| |
|General Partners' Distributions |
|0.0 |
|0.0 |
|0.0 |
|0.0 |
|0.0 |
| |
| | | | | | |
|Basic Weighted Average Shares |426.9 |426.36 |433.47 |447.4 |466.28 |
|Basic EPS Excluding Extraordinary Items |1.45 |2.04 |1.22 |1.07 |1.82 |
|Basic EPS Including Extraordinary Items |1.45 |2.04 |1.22 |1.07 |1.82 |
| | | | | | |
|Diluted Weighted Average Shares |428.54 |428.25 |436.02 |449.16 |469.47 |
|Diluted EPS Excluding Extrordinary Items |1.45 |2.03 |1.21 |1.06 |1.81 |
|Diluted EPS Including Extraordinary Items |1.45 |2.03 |1.21 |1.06 |1.81 |
| | | | | | |
|Dividends per Share - Common Stock Primary Issue |0.84 |0.8 |0.74 |0.7 |0.66 |
|Gross Dividends - Common Stock |360.8 |342.9 |322.7 |313.9 |308.0 |
|Interest Expense, Supplemental |104.8 |100.4 |112.2 |99.6 |54.1 |
|Depreciation, Supplemental |133.0 |141.9 |128.9 |115.6 |106.5 |
| | | | | | |
|Normalized EBITDA |1,219.0 |1,587.1 |1,203.1 |1,149.8 |1,345.1 |
|Normalized EBIT |1,038.3 |1,399.9 |1,031.0 |990.2 |1,205.5 |
|Normalized Income Before Tax |946.6 |1,298.9 |954.4 |932.3 |1,180.7 |
|Normalized Income After Taxes |641.83 |918.45 |639.34 |636.24 |897.45 |
|Normalized Income Available to Common |634.23 |912.15 |633.44 |633.74 |890.55 |
| | | | | | |
|Basic Normalized EPS |1.49 |2.14 |1.46 |1.42 |1.91 |
|Diluted Normalized EPS |1.48 |2.13 |1.45 |1.41 |1.9 |
|Amortization of Intangibles |47.7 |45.3 |43.2 |44.0 |33.1 |

BALANCE SHEET

| |2009 |2008 |2007 |2006 |2005 |
|Period End Date |12/31/2009 |12/31/2008 |12/31/2007 |12/31/2006 |12/31/2005 |
| | | | | | |
|Stmt Source |10-K |10-K |10-K |10-K |10-K |
|Stmt Source Date |02/25/2010 |02/25/2010 |02/20/2009 |02/21/2008 |02/28/2007 |
|Stmt Update Type |Updated |Reclassified |Reclassified |Reclassified |Restated |
| | | | | | |
|Assets | | | | | |
|[pic]Cash and Short Term Investments |1,338.4 |1,144.8 |963.4 |1,198.9 |1,058.7 |
|Cash & Equivalents |
|1,311.6 |
|1,104.7 |
|963.4 |
|1,198.9 |
|1,058.7 |
| |
|Short Term Investments |
|26.8 |
|40.1 |
|0.0 |
|0.0 |
|0.0 |
| |
|[pic]Total Receivables, Net |1,219.9 |971.4 |1,038.3 |700.4 |634.1 |
|[pic]Accounts Receivable - Trade, Net |
|779.7 |
|687.8 |
|795.0 |
|700.4 |
|634.1 |
| |
|Accounts Receivable - Trade, Gross |
|945.2 |
|815.7 |
|936.1 |
|819.5 |
|744.2 |
| |
|Provision for Doubtful Accounts |
|-165.5 |
|-127.9 |
|-141.1 |
|-119.1 |
|-110.1 |
| |
| |
| |
|Receivables - Other |
|440.2 |
|283.6 |
|243.3 |
|0.0 |
|0.0 |
| |
|Total Inventory |1,067.5 |1,007.9 |1,041.8 |900.3 |801.7 |
|Prepaid Expenses |122.8 |126.0 |104.9 |534.8 |424.5 |
|Other Current Assets, Total |440.7 |306.8 |367.0 |0.0 |0.0 |
|Total Current Assets |4,189.3 |3,556.9 |3,515.4 |3,334.4 |2,919.0 |
| | | | | | |
|Property/Plant/Equipment, Total - Net |1,529.6 |1,343.9 |1,278.2 |1,100.2 |1,050.8 |
|Goodwill, Net |224.8 |224.5 |222.2 |203.7 |0.0 |
|Intangibles, Net |125.8 |126.9 |139.5 |128.2 |0.0 |
|Long Term Investments |49.8 |108.9 |127.3 |137.4 |0.0 |
|Note Receivable - Long Term |0.0 |0.0 |0.0 |0.0 |0.0 |
|Other Long Term Assets, Total |713.4 |712.9 |433.6 |334.3 |791.6 |
|Other Assets, Total |0.0 |0.0 |0.0 |0.0 |0.0 |
|Total Assets |6,832.7 |6,074.0 |5,716.2 |5,238.2 |4,761.4 |
| | | | | | |
|Liabilities and Shareholders' Equity | | | | | |
|Accounts Payable |754.7 |724.3 |800.3 |655.8 |538.2 |
|Payable/Accrued |0.0 |0.0 |0.0 |0.0 |0.0 |
|Accrued Expenses |1,247.3 |1,028.5 |1,221.3 |1,044.6 |854.8 |
|Notes Payable/Short Term Debt |0.0 |0.0 |0.0 |0.0 |0.0 |
|Current Port. of LT Debt/Capital Leases |138.1 |1,031.4 |929.5 |615.6 |882.5 |
|Other Current Liabilities, Total |134.7 |128.0 |102.3 |209.2 |224.2 |
|Total Current Liabilities |2,274.8 |2,912.2 |3,053.4 |2,525.2 |2,499.7 |
| | | | | | |
|[pic]Total Long Term Debt |2,307.8 |1,456.2 |1,167.9 |1,170.7 |766.5 |
|Long Term Debt |
|2,307.8 |
|1,456.2 |
|1,167.9 |
|1,170.7 |
|766.5 |
| |
|Deferred Income Tax |173.8 |168.9 |208.7 |55.0 |34.3 |
|Minority Interest |40.0 |37.4 |38.2 |37.0 |0.0 |
|Other Liabilities, Total |763.7 |824.4 |536.4 |659.9 |666.7 |
|Total Liabilities |5,560.1 |5,399.1 |5,004.6 |4,447.8 |3,967.2 |
| | | | | | |
|Redeemable Preferred Stock |0.0 |0.0 |0.0 |0.0 |0.0 |
|Preferred Stock - Non Redeemable, Net |0.0 |0.0 |0.0 |0.0 |0.0 |
|Common Stock |186.1 |185.6 |184.7 |183.5 |182.9 |
|Additional Paid-In Capital |1,941.0 |1,874.1 |1,724.6 |1,549.8 |1,448.7 |
|Retained Earnings (Accumulated Deficit) |4,383.9 |4,118.9 |3,586.5 |3,396.8 |3,233.1 |
|Treasury Stock - Common |-4,545.8 |-4,537.8 |-4,367.2 |-3,683.4 |-3,329.6 |
|Other Equity, Total |-692.6 |-965.9 |-417.0 |-656.3 |-740.9 |
|Total Equity |1,272.6 |674.9 |711.6 |790.4 |794.2 |
| | | | | | |
|Total Liabilities & Shareholders’ Equity |6,832.7 |6,074.0 |5,716.2 |5,238.2 |4,761.4 |
| | | | | | |
| | | | | | |
|Total Common Shares Outstanding |427.5 |426.3 |427.7 |441.3 |451.48 |
|Total Preferred Shares Outstanding |0.0 |0.0 |0.0 |0.0 |0.0 |

CASH FLOW

|2009 |2008 |2007 |2006 |2005 |
|Period End Date |12/31/2009 |12/31/2008 |12/31/2007 |12/31/2006 |12/31/2005 |
|Period Length |12 Months |12 Months |12 Months |12 Months |12 Months |
|Stmt Source |10-K |10-K |10-K |10-K |10-K |
|Stmt Source Date |02/25/2010 |02/25/2010 |02/25/2010 |02/21/2008 |03/10/2006 |
|Stmt Update Type |Updated |Reclassified |Reclassified |Reclassified |Updated |
| | | | | | |
|Net Income/Starting Line |628.2 |875.6 |533.3 |477.6 |847.6 |
|Depreciation/Depletion |133.0 |141.9 |128.9 |115.6 |106.5 |
|Amortization |47.7 |45.3 |43.2 |44.0 |33.1 |
|Deferred Taxes |-162.7 |-62.4 |-112.4 |-110.7 |-31.7 |
|[pic]Non-Cash Items |466.4 |397.8 |543.3 |403.4 |229.4 |
|Unusual Items |
|0.0 |
|0.0 |
|0.0 |
|8.0 |
|18.8 |
| |
|Other Non-Cash Items |
|466.4 |
|397.8 |
|543.3 |
|395.4 |
|210.6 |
| |
|[pic]Changes in Working Capital |-330.6 |-650.1 |-546.5 |-133.8 |-289.4 |
|Accounts Receivable |
|-261.0 |
|-174.6 |
|-236.6 |
|-188.3 |
|-163.5 |
| |
|Inventories |
|-125.5 |
|-174.3 |
|-341.0 |
|-240.3 |
|-152.6 |
| |
|Prepaid Expenses |
|-72.9 |
|-153.3 |
|-49.1 |
|-18.9 |
|-11.0 |
| |
|Payable/Accrued |
|126.2 |
|-148.9 |
|169.9 |
|323.4 |
|126.4 |
| |
|Taxes Payable |
|16.0 |
|47.5 |
|61.6 |
|40.3 |
|-21.9 |
| |
|Other Assets & Liabilities, Net |
|-13.4 |
|-46.5 |
|-151.3 |
|-50.0 |
|-66.8 |
| |
|Cash from Operating Activities |782.0 |748.1 |589.8 |796.1 |895.5 |
| | | | | | |
|[pic]Capital Expenditures |-296.9 |-380.5 |-278.5 |-174.8 |-206.8 |
|Purchase of Fixed Assets |
|-296.9 |
|-380.5 |
|-278.5 |
|-174.8 |
|-206.8 |
| |
|[pic]Other Investing Cash Flow Items, Total |78.0 |-22.9 |-8.7 |-33.1 |-136.3 |
|Sale of Fixed Assets |
|11.2 |
|13.4 |
|11.2 |
|16.4 |
|30.3 |
| |
|Sale/Maturity of Investment |
|61.9 |
|41.4 |
|46.1 |
|26.1 |
|97.9 |
| |
|Purchase of Investments |
|-0.9 |
|-77.7 |
|-47.0 |
|-75.6 |
|-264.5 |
| |
|Other Investing Cash Flow |
|5.8 |
|0.0 |
|-19.0 |
|0.0 |
|0.0 |
| |
|Cash from Investing Activities |-218.9 |-403.4 |-287.2 |-207.9 |-343.1 |
| | | | | | |
|[pic]Financing Cash Flow Items |-0.7 |15.1 |19.6 |8.1 |0.0 |
|Other Financing Cash Flow |
|-0.7 |
|15.1 |
|19.6 |
|8.1 |
|0.0 |
| |
|Total Cash Dividends Paid |-364.8 |-347.7 |-325.7 |-317.6 |-313.8 |
|Issuance (Retirement) of Stock, Net |4.5 |-90.7 |-581.3 |-322.6 |-666.6 |
|Issuance (Retirement) of Debt, Net |-0.8 |281.8 |290.3 |141.7 |753.7 |
|Cash from Financing Activities |-361.8 |-141.5 |-597.1 |-490.4 |-226.7 |
| | | | | | |
|Foreign Exchange Effects |5.6 |-61.9 |59.0 |42.4 |-36.6 |
|Net Change in Cash |206.9 |141.3 |-235.5 |140.2 |289.1 |
| | | | | | |
| | | | | | |
|Net Cash - Beginning Balance |1,104.7 |963.4 |1,198.9 |1,058.7 |769.6 |
|Net Cash - Ending Balance |1,311.6 |1,104.7 |963.4 |1,198.9 |1,058.7 |

Income Statement - 10 Year Summary (in Millions)

| |Sales |EBIT |Depreciation |Total Net Income |EPS |Tax Rate (%) |
|12/08 |10,588.9 |1,238.3 |187.2 |875.3 |2.03 |29.29 |
|12/07 |9,845.2 |796.1 |172.1 |530.7 |1.21 |33.01 |
|12/06 |8,677.3 |703.5 |159.6 |477.6 |1.06 |31.76 |
|12/05 |8,065.2 |1,124.2 |139.6 |847.6 |1.81 |23.99 |
|12/04 |7,656.2 |1,187.5 |133.7 |846.1 |1.77 |27.84 |
|12/03 |6,773.7 |993.5 |123.5 |664.8 |1.39 |32.1 |
|12/02 |6,142.4 |835.6 |124.8 |534.6 |1.11 |34.98 |
|12/01 |5,957.8 |689.7 |109.0 |444.9 |0.92 |34.84 |
|12/00 |5,681.7 |692.2 |95.9 |485.8 |1.01 |29.21 |

Balance Sheet - 10 Year Summary (in Millions)
| |Current Assets |Current Liabilities |Long Term Debt |Shares Outstanding |
|12/09 |6,832.7 |5,560.1 |2,307.8 |427.5 Mil |
|12/08 |6,074.0 |5,399.1 |1,456.2 |426.3 Mil |
|12/07 |5,716.2 |5,004.6 |1,167.9 |427.7 Mil |
|12/06 |5,238.2 |4,447.8 |1,170.7 |441.3 Mil |
|12/05 |4,761.4 |3,967.2 |766.5 |451.5 Mil |
|12/04 |4,148.1 |3,197.9 |866.3 |471.5 Mil |
|12/03 |3,581.6 |3,210.3 |877.7 |470.6 Mil |
|12/02 |3,327.5 |3,455.2 |767.0 |470.5 Mil |
|12/01 |3,181.0 |3,256.1 |1,236.3 |473.4 Mil |
|12/00 |2,826.4 |3,042.2 |1,108.2 |476.3 Mil |

|Growth Rates % |Company |Industry |S&P 500 |
|Sales (Qtr vs year ago qtr) |3.90 |2.30 |12.80 |
|Net Income (YTD vs YTD) |5.80 |10.70 |44.30 |
|Net Income (Qtr vs year ago qtr) |6.70 |2.00 |30.30 |
|Sales (5-Year Annual Avg.) |6.03 |6.44 |8.96 |
|Net Income (5-Year Annual Avg.) |-6.01 |7.64 |8.45 |
|Dividends (5-Year Annual Avg.) |8.45 |10.62 |4.97 |

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