Corporate Press Releases

Avon Statement on Voluntary Disclosure

Oct 20, 2008

Avon Products, Inc. (NYSE: AVP) announced today, October 20, 2008, that it is voluntarily conducting an internal investigation of its China operations, focusing on compliance with the Foreign Corrupt Practices Act ("FCPA"). The Company, under the oversight of the Audit Committee, commenced in June 2008 an internal investigation after it received an allegation that certain travel, entertainment and other expenses may have been improperly incurred in connection with the Company's China operations. The company has voluntarily contacted the Securities and Exchange Commission and the United States Department of Justice to advise both agencies that an internal investigation is underway. The internal investigation is in its early stage and no conclusion can be drawn at this time as to its outcome.

Avon, the company for women, is a leading global beauty company, with over $10 billion in annual revenue. As the world's largest direct seller, Avon markets to women in more than 100 countries through over 5.5 million independent Avon Sales Representatives. Avon's product line includes beauty products, fashion jewelry and apparel, and features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals, and Mark. Learn more about Avon and its products at


Statements in this release that are not historical facts or information are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "estimate," "project," "forecast," "plan," "believe," "may," "expect," "anticipate," "intend," "planned," "potential," "can," "expectation" and similar expressions, or the negative of those expressions, may identify forward-looking statements. 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 to be materially different from any future results 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:

  --  our ability to implement the key initiatives of and realize the
      operating margins and projected benefits (in the amounts and time
      schedules we expect) from our global business strategy, including our
      multi-year restructuring initiatives, product mix and pricing
      strategies, enterprise resource planning, customer service
      initiatives, product line simplification program, sales and operation
      planning process, strategic sourcing initiative, outsourcing
      strategies, zero-overhead-growth philosophy, cash flow from operations
      and cash management, tax, foreign currency hedging and risk management
  --  our ability to realize the anticipated benefits (including our
      projections concerning future revenue and operating margin increases)
      from our multi-year restructuring initiatives or other strategic
      initiatives on the time schedules or in the amounts that we expect,
      and our plans to invest these anticipated benefits ahead of future
  --  the possibility of business disruption in connection with our
      multi-year restructuring initiatives or other strategic initiatives;
  --  our ability to realize sustainable growth from our investments in our
      brand and the direct selling channel;
  --  a general economic downturn or recession in one or more of our
      geographic regions, such as North America, and the ability of our
      broad-based geographic portfolio to withstand a downturn in a
      particular region;
  --  the inventory obsolescence and other costs associated with our product
      line simplification program;
  --  our ability to effectively implement initiatives to reduce inventory
      levels in the time period and in the amounts we expect;
  --  our ability to achieve growth objectives or maintain rates of growth,
      particularly in our largest markets and developing and emerging
  --  our ability to successfully identify new business opportunities and
      identify and analyze acquisition candidates, and our ability to
      negotiate and consummate acquisitions as well as to successfully
      integrate or manage any acquired business;
  --  the effect of political, legal and regulatory risks, as well as
      foreign exchange or other restrictions, imposed on us, our operations
      or our Representatives by governmental entities;
  --  our ability to successfully transition our business in China in
      connection with the resumption of direct selling in that market, our
      ability to operate using the direct selling model permitted in that
      market and our ability to retain and increase the number of Active
      Representatives there over a sustained period of time;
  --  the impact of substantial currency fluctuations on the results of our
      foreign operations;
  --  general economic and business conditions in our markets, including
      social, economic and political uncertainties in Latin America, Asia
      Pacific, Central and Eastern Europe and the Middle East;
  --  the risk of disruption in Central and Eastern Europe associated with a
      change to a more rapid selling cycle with more frequent brochures;
  --  information technology systems outages, disruption in our supply chain
      or manufacturing and distribution operations, or other sudden
      disruption in business operations beyond our control as a result of
      events such as acts of terrorism or war, natural disasters, pandemic
      situations and large scale power outages;
  --  the risk of product or ingredient shortages resulting from our
      concentration of sourcing in fewer suppliers;
  --  the quality, safety and efficacy of our products;
  --  the success of our research and development activities;
  --  our ability to attract and retain key personnel and executives;
  --  competitive uncertainties in our markets, including competition from
      companies in the cosmetics, fragrances, skin care and toiletries
      industry, some of which are larger than we are and have greater
  --  our ability to implement our Sales Leadership program globally, to
      generate Representative activity, to increase Representative
      productivity, to improve Internet-based tools for our Representatives,
      and to compete with other direct selling organizations to recruit,
      retain and service Representatives;
  --  the impact of the seasonal nature of our business, adverse effect of
      rising energy, commodity and raw material  prices, changes in market
      trends, purchasing habits of our consumers and changes in consumer
      preferences, particularly given the global nature of our business and
      the conduct of our business in primarily one channel;
  --  our ability to continue to help offset higher commodity costs through
      the savings and benefits from our strategic initiatives, strategic
      price increases and holding cost growth below our revenue growth;
  --  our ability to protect our intellectual property rights;
  --  the risk of an adverse outcome in our material pending and future
  --  our ratings and our access to financing and ability to secure
      financing at attractive rates; and
  --  the impact of possible pension funding obligations, increased pension
      expense and any changes in pension regulations or interpretations
      thereof on our cash flow and results of operations.

Additional information identifying such factors is contained in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2007, filed with the U.S. Securities and Exchange Commission. We undertake no obligation to update any such forward-looking statements.

First Call Analyst:
FCMN Contact:

SOURCE: Avon Products, Inc.

CONTACT: Renee Johansen, +1-212-282-5320, for Avon Products, Inc.

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