-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CQc3WuYCVm6FxyVrzysLU/wgU9o+9aQy72bmPY4ZS+a8+FeJxwu0Q00HyTylxV0+ hjCyL3cdBejdbQXW4bp49w== /in/edgar/work/20000814/0000008868-00-000005/0000008868-00-000005.txt : 20000921 0000008868-00-000005.hdr.sgml : 20000921 ACCESSION NUMBER: 0000008868-00-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVON PRODUCTS INC CENTRAL INDEX KEY: 0000008868 STANDARD INDUSTRIAL CLASSIFICATION: [2844 ] IRS NUMBER: 130544597 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04881 FILM NUMBER: 699261 BUSINESS ADDRESS: STREET 1: PECK & MIDLAND AVE CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 9149352152 MAIL ADDRESS: STREET 1: PECK & MIDLAND AVE CITY: RYE STATE: NY ZIP: 10580 10-Q 1 0001.txt JUNE 30, 2000 CONFORMED COPY FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2000 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ___ to ___ Commission file number 1-4881 AVON PRODUCTS, INC. (Exact name of registrant as specified in its charter) New York 13-0544597 (State or other jurisdiction of (I.R S. Employer Incorporation or organization) Identification No.) 1345 Avenue of the Americas, New York, N.Y. 10105-0196 (Address of principal executive offices) (212) 282-5000 (Telephone Number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of Common Stock (par value $.25) outstanding at July 31, 2000 was 237,421,646 Table of Contents Part I. Financial Information Page Numbers -------- Item 1. Financial Statements Consolidated Statements of Operations Three Months Ended June 30, 2000 and June 30, 1999.................................... 3 Six Months Ended June 30, 2000 and June 30, 1999.................................... 4 Consolidated Balance Sheets June 30, 2000 and December 31, 1999 .............. 5 Consolidated Statements of Cash Flows Six Months Ended June 30, 2000 and June 30, 1999................................... 6 Notes to Consolidated Financial Statements.......... 7-15 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition....... 16-25 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K................... 26 Signatures.................................................. 27 PART I. FINANCIAL INFORMATION AVON PRODUCTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Three months ended June 30 ----------------- 2000 1999 ---- ---- (unaudited) Net sales.................................. $1,378.1 $1,258.1 Costs and expenses: Cost of sales............................ 496.4 451.7 Marketing, distribution and administrative expenses................ 661.9 610.6 ------- -------- Operating profit .......................... 219.8 195.8 Interest expense......................... 22.8 8.9 Interest income.......................... (2.1) (2.2) Other expense, net....................... 4.5 0.7 ------- -------- Total other expenses....................... 25.2 7.4 ------- -------- Income before taxes and minority interest.. 194.6 188.4 Income taxes............................... 69.0 67.8 -------- -------- Income before minority interest............ 125.6 120.6 Minority interest.......................... (1.1) .8 -------- -------- Net income................................. $ 124.5 $ 121.4 ======== ======== Earnings per share: Basic ................................. $ .52 $ .46 ======== ======== Diluted................................ $ .52 $ .46 ======== ======== The accompanying notes are an integral part of these statements. AVON PRODUCTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Six months ended June 30 ---------------- 2000 1999 ---- ---- (unaudited) Net sales.................................. $2,703.0 $2,471.9 Costs, expenses and other: Cost of sales* .......................... 993.7 959.9 Marketing, distribution and administrative expenses................ 1,345.1 1,252.3 Special charge........................... - 105.2 -------- -------- Operating profit........................... 364.2 154.5 Interest expense......................... 42.7 17.9 Interest income.......................... (3.9) (5.4) Other expense(income), net .............. 14.8 (7.1) -------- -------- Total other expenses....................... 53.6 5.4 -------- -------- Income before taxes and minority interest.. 310.6 149.1 Income taxes............................... 110.2 79.2 -------- -------- Income before minority interest............ 200.4 69.9 Minority interest.......................... (1.1) 2.6 -------- -------- Net income................................. $ 199.3 $ 72.5 ======== ======== Earnings per share: Basic ................................. $ .84 $ .28 ======== ======== Diluted................................ $ .83 $ .27 ======== ======== *1999 includes a one-time charge of $46.0 for inventory write-downs. The accompanying notes are an integral part of these statements. AVON PRODUCTS, INC. CONSOLIDATED BALANCE SHEETS (In millions) June 30 December 31 2000 1999 ------ ----- (unaudited) ASSETS Current assets: Cash and equivalents................... $ 75.9 $ 117.4 Accounts receivable.................... 496.8 495.6 Inventories............................ 645.2 523.5 Prepaid expenses and other............. 202.1 201.3 -------- -------- Total current assets................... 1,420.0 1,337.8 -------- -------- Property, plant and equipment, at cost. 1,472.2 1,472.0 Less accumulated depreciation.......... 741.1 737.2 -------- -------- 731.1 734.8 -------- -------- Other assets........................... 467.1 456.0 -------- ------- Total assets........................... $2,618.2 $2,528.6 ======== ======== LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Debt maturing within one year.......... $ 117.4 $ 306.0 Accounts payable....................... 361.3 435.9 Accrued compensation................... 114.1 165.8 Other accrued liabilities.............. 368.5 411.6 Sales and taxes other than income...... 89.1 107.5 Income taxes........................... 296.4 286.0 -------- -------- Total current liabilities.............. 1,346.8 1,712.8 -------- -------- Long-term debt......................... 1,092.8 701.4 Employee benefit plans................. 397.5 398.1 Deferred income taxes.................. 34.5 36.7 Other liabilities...................... 92.6 85.7 Shareholders' deficit: Common stock........................... 88.3 88.1 Additional paid-in capital............. 833.9 819.4 Retained earnings...................... 948.6 837.2 Accumulated other comprehensive loss. . (373.6) (349.7) Treasury stock, at cost................ (1,843.2) (1,801.1) -------- -------- Total shareholders' deficit............ (346.0) (406.1) -------- -------- Total liabilities and shareholders' deficit $2,618.2 $2,528.6 ======== ======== The accompanying notes are an integral part of these statements. AVON PRODUCTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Six months ended June 30 ---------------- 2000 1999 ---- ---- (unaudited) Cash flows from operating activities: Net income...................................... $ 199.3 $ 72.5 Adjustments to reconcile net income to net cash (used)/provided by operating activities: Special and non-recurring (payments)charges..... (10.1) 107.9 Depreciation and amortization................... 45.9 39.5 Provision for doubtful accounts................. 48.2 43.6 Translation loss/(gain)......................... 1.5 (.7) Deferred income taxes........................... 5.1 (8.0) Other........................................... 5.4 2.0 Changes in assets and liabilities: Accounts receivable........................... (61.2) (58.5) Inventories................................... (137.3) (67.6) Prepaid expenses and other.................... (16.3) (1.9) Accounts payable and accrued liabilities...... (139.2) (123.6) Income and other taxes........................ (3.8) (2.6) Noncurrent assets and liabilities............. 18.0 7.9 ------ ------ Net cash (used)/provided by operating activities. (44.5) 10.5 ------ ------ Cash flows from investing activities: Capital expenditures........................... (76.5) (72.1) Disposal of assets............................. 5.2 5.2 Other investing activities..................... (1.1) (15.3) ------ ------ Net cash used by investing activities.......... (72.4) (82.2) ------ ------ Cash flows from financing activities: Cash dividends................................. (89.7) (95.7) Debt, net (maturities of three months or less). 221.7 254.8 Proceeds from short-term debt.................. 25.6 22.1 Retirement of short-term debt.................. (42.7) (19.5) Retirement of long-term debt................... (.1) (.2) Repurchase of common stock..................... (42.1) (125.5) Proceeds from exercise of stock options, net of taxes................. 10.5 21.4 ------ ------ Net cash provided by financing activities...... 83.2 57.4 ------ ------ Effect of exchange rate changes on cash and equivalents............................ (7.8) (17.5) ------ ------ Net decrease in cash and equivalents........... (41.5) (31.8) Cash and equivalents at beginning of period.... 117.4 105.6 ------ ------ Cash and equivalents at end of period.......... $ 75.9 $ 73.8 ======== ======= The accompanying notes are an integral part of these statements. AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) 1. ACCOUNTING POLICIES The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the Notes thereto contained in Avon's 1999 Annual Report to Shareholders. The interim statements are unaudited but include all adjustments, consisting of normal recurring accruals, that management considers necessary to fairly present the results for the interim periods. Results for interim periods are not necessarily indicative of results for a full year. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In June 1999, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standard ("FAS") No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FAS No. 133", which delayed the effective date of FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", by one year. FAS No. 133 is now effective for all fiscal quarters of all fiscal years beginning after June 15, 2000 (January 1, 2001 for the Company). In June 2000, the FASB issued FAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an amendment of FASB Statement No. 133". FAS No. 138 amends FAS 133 and will be adopted concurrently with FAS No. 133. FAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives will be recorded each period in current earnings or accumulated other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction. For fair-value hedge transactions in which the Company is hedging changes in the fair value of an asset, liability, or firm commitment, changes in the fair value of the derivative instrument will be included in the income statement along with the offsetting changes in the hedged item's fair value. For cash- flow hedge transactions in which the Company is hedging the variability of cash flows related to a variable rate asset, liability, or a forecasted transaction, changes in the fair value of the derivative instrument will be reported in accumulated other comprehensive income. The gains and losses on the derivative instruments that are reported in accumulated other comprehensive income will be reclassified to earnings in the periods in which earnings are impacted by the variability of the cash flows of the hedged item. The ineffective portion of all of the hedges will be recognized in current period earnings. The impact of FAS No. 133 as amended by FAS 138 on the Company's financial statements will depend on a variety of factors, including the future level of forecasted and actual foreign currency transactions, the extent of the Company's hedging activities, the types of hedging instruments used and the effectiveness of such instruments. Based on an analysis of Avon's financial instruments outstanding at June 30, 2000, the Company does not expect the adoption of FAS No. 133 as amended by FAS 138 to have a material impact on its earnings or statement of financial position. To conform to the 2000 presentation, certain reclassifications were made to the prior periods' consolidated financial statements and the accompanying footnotes. AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) 2. INFORMATION RELATING TO THE STATEMENT OF CASH FLOWS "Net cash (used)/provided by operating activities" includes the following cash payments for interest and income taxes: Six months ended June 30 ---------------- 2000 1999 ---- ---- Interest................................. $ 50.6 $19.5 Income taxes, net of refunds received.... 102.0 73.1 3. EARNINGS PER SHARE Basic earnings per share ("EPS") are computed by dividing net income by the weighted-average number of shares outstanding during the year. Diluted earnings per share are calculated to give effect to all potentially dilutive common shares that were outstanding during the year. For the three and six months ended June 30, 2000 and 1999, the number of shares used in the computation of basic and diluted earnings per share are as follows: Three Months ended Six Months ended June 30 June 30 ------ ------- 2000 1999 2000 1999 ---- ---- ---- ---- Basic EPS Weighted-average shares 237.50 261.54 237.57 261.77 Incremental shares from assumed conversion of stock options and settlement of forward contracts(1) 2.06 3.47 1.78 3.09 ------ ------ ------ ------ Diluted EPS Adjusted weighted- average shares 239.56 265.01 239.35 264.86 ------ ------ ------ ------ (1) At June 30, 2000 and 1999, stock options and forward contracts to purchase Avon common stock totaling 2.3 million shares and 2.6 million shares, respectively, are not included in the earnings per share calculation since their impact is anti-dilutive. The Company purchased approximately 1,060,255 shares of common stock for $42.1 during the first six months of 2000, as compared to approximately 2,756,500 shares of common stock for $125.5 during the first six months of 1999. AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) 4. INVENTORIES June 30 December 31 2000 1999 ---- ---- Raw materials................ $180.6 $156.9 Finished goods............... 464.6 366.6 ------ ------ $645.2 $523.5 ====== ====== 5. DIVIDENDS Cash dividends paid per share of common stock were $.185 and $.37 for the three and six months ended June 30, 2000, respectively, and $.18 and $.36 for the corresponding 1999 periods. On February 3, 2000, the Company increased the annual dividend rate to $.74 from $.72. 6. CONTINGENCIES Various lawsuits and claims (asserted and unasserted), arising in the ordinary course of business or related to businesses previously sold, are pending or threatened against Avon. In 1991, a class action suit was initiated against Avon on behalf of certain classes of holders of Avon's Preferred Equity- Redemption Cumulative Stock ("PERCS"). This lawsuit alleges various contract and securities law claims relating to the PERCS (which were fully redeemed that year). Avon has rejected the assertions in this case, believes it has meritorious defenses to the claims and is vigorously contesting this lawsuit. In the opinion of Avon's management, based on its review of the information available at this time, the total cost of resolving such contingencies at June 30, 2000 should not have a material adverse impact on Avon's consolidated financial position, results of operations or cash flows. AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) 7. COMPREHENSIVE INCOME For the three and six months ended June 30, 2000 and 1999, the components of comprehensive income are as follows: Three Months ended Six Months ended June 30 June 30 ------ ------- 2000 1999 2000 1999 ---- ---- ---- ---- Net income $124.5 $121.4 $199.3 $72.5 Other comprehensive(loss) income: Change in equity due to foreign currency translation and transaction adjustments (21.3) 1.4 (23.9) (40.2) ------ ------ ------- ------ Comprehensive income $103.2 $122.8 $175.4 $32.3 ====== ====== ======= ====== 8. SPECIAL AND NON-RECURRING CHARGES In October 1997, the Company announced a worldwide business process redesign program to streamline operations and improve profitability through margin improvement and expense reductions. The special and non-recurring charges associated with this program totaled $151.2 pretax ($121.9 net of tax, or $.47 per share on a basic and diluted basis) for the year ended December 31, 1999 and $154.4 pretax ($122.8 net of tax, or $.46 per share on a basic and diluted basis) for the year ended December 31, 1998. AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) The 1999 special and non-recurring charges by business segment are as follows: North America $ 33.6 Latin America 14.7 Europe 69.8 Pacific 11.8 Corporate 21.3 ------- Total $ 151.2 ------- The 1999 special and non-recurring charges by category of expenditures are as follows: Employee severance costs $ 57.0 Inventories 46.0 Write-down of assets to net realizable value 26.4 Recognition of foreign currency translation adjustment 9.8 Other 12.0 ------- Total $ 151.2 ------- Employee severance costs are expenses, both domestic and international, associated with the realignment of the Company's global operations. Certain employee severance costs were accounted for in accordance with the Company's existing FAS 112 ("Employers' Accounting for Postemployment Benefits") severance plans. Remaining severance costs were accounted for in accordance with other existing accounting literature. The workforce has been reduced by approximately 3,700 associates, or 9% of the total. Approximately one-half of the terminated employees related to facility closures. Inventory-related charges represent losses to write-down the carrying value of non-strategic inventory prior to disposal. The charges primarily result from a new business strategy for product dispositions which fundamentally changes the way the Company markets and sells certain inventory. This new strategy, approved and effective in March 1999, is meant to complement other redesign initiatives, with the objective of reducing inventory clearance sales, building core brochure sales and building global brands. The write-down of assets (primarily fixed and other assets) relates to the restructuring of operations in Western Europe, including the closure of a jewelry manufacturing facility in Ireland and the write-down of software, the use of which is no longer consistent with the strategic direction of the Company. By centralizing certain key functional areas and exiting unprofitable situations, the Company plans to increase operating efficiencies and ultimately, profit growth in the long-term. The recognition of a foreign currency translation adjustment relates to the closure of the jewelry manufacturing facility in Ireland. AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) The "Other" category primarily represents contract termination costs, legal and consulting fees and other costs associated with the facility closures. The liability balance at June 30, 2000 is as follows: Special Cost of Charge Sales Charge Total ------- ------------ ----- Balance at December 31, 1999 $ 26.2 $ - $ 26.2 Cash expenditures (10.1) (10.1) ------ ----- ------ Balance at June 30, 2000 $ 16.1 $ - $ 16.1 ====== ===== ====== The balance at June 30, 2000 relates primarily to employee severance costs that will be paid during 2000. AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) 9. SEGMENT INFORMATION Summarized financial information concerning the Company's reportable segments is as follows: Three Months Ended June 30 ------------------ 2000 1999 ---- ---- Net Operating Net Operating Sales Profit Sales Profit ----- --------- ----- --------- North America: U.S. $ 456.2 $ 96.6 $ 430.0 $ 91.0 Other* 58.5 6.7 54.2 7.9 -------- -------- -------- -------- Total 514.7 103.3 484.2 98.9 -------- -------- -------- -------- International: Latin America North** 211.5 56.4 181.1 46.0 Latin America South** 246.1 50.9 226.9 48.8 -------- -------- -------- -------- Latin America 457.6 107.3 408.0 94.8 Pacific 198.3 29.4 169.2 22.8 Europe 207.5 35.8 196.7 31.8 -------- -------- -------- -------- Total 863.4 172.5 773.9 149.4 -------- -------- -------- -------- Total from operations $1,378.1 275.8 $1,258.1 248.3 -------- -------- -------- -------- Global expenses (56.0) (52.5) -------- -------- Operating profit $ 219.8 $ 195.8 ======== ======== *Includes operating information for Canada and Puerto Rico. **Latin America North includes the major markets of Mexico, Venezuela and Central America. Latin America South includes the major markets of Brazil, Argentina, Chile and Peru. To conform to the 2000 presentation, certain reclassifications were made to the prior periods' segment information. AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) Six Months Ended June 30 ------------------ 2000 1999 ---- ---- Net Operating Net Operating Sales Profit Sales Profit ----- --------- ----- -------- North America: U.S. $ 909.3 $ 178.1 $ 858.9 $ 168.5 Other* 118.1 11.6 108.3 14.5 -------- -------- -------- -------- Total 1,027.4 189.7 967.2 183.0 -------- -------- -------- -------- International: Latin America North** 405.1 98.5 358.2 82.9 Latin America South** 467.9 83.0 428.2 77.4 -------- ------- -------- -------- Latin America 873.0 181.5 786.4 160.3 Pacific 389.6 52.3 326.6 36.3 Europe 413.0 57.6 391.7 45.9 ------- -------- -------- -------- Total 1,675.6 291.4 1,504.7 242.5 -------- -------- -------- -------- Total from operations $2,703.0 481.1 $2,471.9 425.5 -------- -------- -------- -------- Global expenses (116.9) (119.8) Special and non-recurring charges - (151.2) -------- -------- Operating profit $ 364.2 $ 154.5 ======== ======== *Includes operating information for Canada and Puerto Rico. **Latin America North includes the major markets of Mexico, Venezuela and Central America. Latin America South includes the major markets of Brazil, Argentina, Chile and Peru. To conform to the 2000 presentation, certain reclassifications were made to the prior periods' segment information. 10. OTHER FINANCING ACTIVITIES The Company had entered into forward contracts to purchase approximately 1,698,200 shares of Avon common stock at an average price of $36.47 per share as of June 30, 2000. The contracts mature over the next 1-1/2 years and provide for physical or net share settlement to the Company. Accordingly, no adjustment for subsequent changes in fair value has been recognized. 11. SUBSEQUENT EVENT During July 2000, the Company issued in a private placement $735.8 principal amount at maturity of zero-coupon convertible senior notes due July 12, 2020 (the "Notes"), with proceeds of approximately $350.0. The issue price per note was $475.66, being 47.566% of the principal amount of $1,000 per Note at maturity. The Notes have a 3.75% yield to maturity and are convertible at any time into the Company's common stock at a conversion rate of AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except share data) 8.2723 shares of common stock per $1,000 principal amount at maturity of the Notes (equivalent to a conversion price of $57.50 per share based on the initial offering price of the Notes). The Notes may be redeemed at the option of the Company on or after July 12, 2003 at a redemption price equal to the issue price plus accrued original issue discount to the redemption date. The holders can require the Company to purchase all or a portion of the Notes on July 12, 2003, July 12, 2008, and July 12, 2013 at the redemption price per Note of $531.74, $640.29 and $771.00, respectively. The holders may also require the Company to repurchase the Notes if a fundamental change, as defined, involving Avon occurs prior to July 12, 2003. The Company has the option to pay the purchase price or, if a fundamental change has occurred, the repurchase price in cash or common stock or a combination of cash and common stock. The indenture under which the Notes were issued restricts the Company's ability to merge with or consolidate into another company or to sell substantially all of the Company's assets. The Company also granted to the initial purchasers of the Notes an over-allotment option to purchase an additional $105.0 of Notes. As of August 8, 2000, the over-allotment option had been exercised and additional Notes with an aggregate principal amount at maturity of approximately $105.0 were purchased by the initial purchasers from the Company, for proceeds of approximately $50.0. The net proceeds from the offering (including the proceeds of the over-allotment option) will be used for general corporate purposes, including the repayment of short-term debt. Accordingly, $391.8 of commercial paper borrowings were reclassified from short-term to long-term on the Consolidated Balance Sheet. AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) ITEM 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition Results of Operations - Three and Six Months Ended June 30, 2000 and 1999. Consolidated Avon's net income for the second quarter and six-month period of 2000 was $124.5 and $199.3, respectively, or $.52 and $.83 per share on a diluted basis, respectively, compared with net income of $121.4 and $72.5, respectively, or $.46 and $.27 per share on a diluted basis, respectively, in 1999. Operating profit was $219.8 and $364.2, respectively, in the second quarter and six-month period of 2000 compared with $195.8 and $154.5, respectively, in the same periods of 1999. Excluding special and non-recurring charges recorded in the first quarter of 1999 for the Company's business process redesign ("BPR") program, discussed below, net income and operating profit for the six-month period of 1999 would have been $194.4 and $305.7, respectively. Consolidated net sales for the second quarter and six-month period of 2000 increased 10% and 9%, respectively, over the same periods of 1999. The second quarter and year-to-date sales improvements were a result of increases in all geographic regions. Excluding the impact of foreign currency exchange, consolidated net sales for the second quarter and six- month period rose 13% and 12%, respectively, over the comparable periods of the prior year, with double-digit increases in all international regions. Gross margin decreased 0.1 percentage point in the second quarter but increased 2.0 percentage points in the six-month period of 2000 compared to the same periods of 1999. The cost of sales for the six months ended June 30, 1999 included a one-time charge of $46.0 for inventory write- downs related to the Company's BPR program. See Note 8 for further detail. Excluding the one-time charge in 1999, the gross margin increased 0.2 percentage points. The decreased gross margin for the second quarter resulted from decreases in the U.S., Mexico, Brazil and Germany, partially offset by increases in Venezuela, the United Kingdom, Japan and China. The increase in the June year-to-date gross margin was primarily due to increases in Venezuela, Chile, Russia, Japan and China, partially offset by decreases in Brazil and Germany. Marketing, distribution and administrative expenses increased $51.3, or 8%, and $92.8, or 7%, in the second quarter and six-month period of AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) 2000, respectively, over the same periods of 1999, in line with sales increases in all regions. For the second quarter of 2000, global expenses increased while for the six-month period, global expenses decreased. Operating expenses decreased as a percentage of sales to 48.0% in the second quarter of 2000 from 48.5% in 1999, and to 49.7% in the first six months of 2000 from 50.7% in the comparable period of 1999. The second quarter expense ratio decline resulted from improvements in North America, Latin America and Europe, partially offset by a slight increase in the Pacific Region. The six-month period expense ratio decline resulted from expense ratio improvements in Latin America, Europe and the Pacific, partially offset by an increase in North America. The June year-to-date 1999 results include a special charge of $105.2 for the Company's BPR program primarily related to employee severance benefits worldwide and the restructuring of operations in Western Europe. See Note 8 for further detail. Interest expense increased to $22.8 in the second quarter of 2000 as compared with $8.9 in 1999 and to $42.7 in the first six months of 2000 compared with $17.9 in 1999, primarily as a result of increased domestic borrowings related to the acceleration of the share repurchase program which occurred in the second half of 1999 and working capital requirements. Interest income of $2.1 decreased $0.1 in the second quarter of 2000 and decreased $1.5 to $3.9 in the first six months of 2000 versus the comparable periods of 1999. The six-month decrease was primarily the result of reduced interest rates in Brazil and Mexico during 2000. Other expense(income), net of $4.5 in the second quarter of 2000 was $3.8 unfavorable to the comparable period of 1999 primarily due to a value- added tax refund in China in 1999 as well as unfavorable foreign exchange in 2000. Other expense(income) of $14.8 for the six-month period of 2000 was $21.9 unfavorable over the comparable period of 1999 mainly due to favorable foreign exchange in 1999 resulting from gains on Brazilian forward contracts. The effective tax rate for the second quarter 2000 was 35.5% versus 36.0% in 1999, and the effective tax rate was 35.5% in the first six months of 2000 versus 36.1% in 1999, excluding the 1999 special charge. The tax rate fluctuations result from the earnings mix and tax rates of international subsidiaries. The tax benefit of the special charge in 1999 was 19.4% due to the mix of countries and tax jurisdictions incurring the charges. Minority interest of $(1.1) in the second quarter and first six months of 2000 decreased $1.9 and $3.7, respectively, due to improved results in Japan and China in 2000. The following discussion addresses net sales and operating profit by reportable segment as presented in Note 9: North America Net sales increased 6% in both the second quarter and six-month period of 2000 over the same periods in 1999. The U.S. business, which represents almost 90% of the North American segment, reported a sales increase of 6% in both the second quarter and six-month period of 2000 over the same periods in 1999. The second-quarter U.S. increase resulted from a 10% increase in the AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) number of units sold as well as a 5% increase in customers served. U.S. sales of cosmetics, fragrance and toiletries ("CFT") increased 6%, reflecting a double-digit increase in color cosmetics, driven by nail, face and eye products, including strong growth in the Be Radiant Spring Shade Event. Additionally, fragrance sales grew double-digits, primarily due to the launch of Perceive for Men in 2000. These increases were partially offset by a decrease in skincare, reflecting softness in Anew and Brand Avon. Sales in the Beauty Plus category grew low single digits. Within this category, jewelry and watches increased over 20%, reflecting the success of several new watches, including the Radio Digital Sports watch, as well as a strong performance in fashion and fine jewelry. These increases were partially offset by a decline in apparel and accessories, reflecting a planned strategic decline in apparel and softer than expected luggage sales. Beyond Beauty and other sales increased 12% primarily due to gifts, reflecting the success of the Blushing Bride Barbie Doll and the Personal Data Organizer, as well as candles sales, new in 2000. On a June year-to-date basis, sales in the U.S. increased 6% resulting from a 9% increase in the number of units sold, as well as a 5% increase in customers served. This increase reflects a mid single-digit increase in the CFT category, with color cosmetics having a double-digit increase due to the successful launch of Glazewear and Nailwear, as well as a double-digit increase in fragrance. Sales in the Beauty Plus category grew 3%, including jewelry and watches which increased 17%, partially offset by a decline in apparel. Beyond Beauty and other sales grew 8% reflecting the introduction of candles sales in 2000. Operating profit in North America increased 4% in the second quarter and first six months of 2000 compared with 1999 primarily attributable to the region's increased sales, discussed above. While the operating profit increased in both the second quarter and six-month period, operating margin declined 0.4 and 0.5 points, respectively, for 2000 versus 1999. In the second quarter, the U.S. posted a 0.6 point decline in gross margin reflecting value merchandising in higher penetration CFT categories, as well as continued softness in the Anew brand, partially offset by an increase in apparel and accessories margins, due to improved sourcing and competitive bidding, and incremental supply chain savings. The U.S. gross margin decline was offset by a 0.6 point improvement in the expense ratio driven by aggressive expense management in marketing, as well as field and administration, partially offset by higher volume-related customer service expenses, higher fuel costs and advertising. Gross margin declines in Puerto Rico contributed to the operating margin decline in North America. The June year-to-date operating margin declined 0.5 points. The U.S. year-to-date gross margin declined 0.1 point due to the investment in CFT to drive customer transactions, as well as the success of lower margin items in the jewelry and watch segment. Partially offsetting these declines AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) was an increase in apparel and accessories due to improved sourcing and competitive bidding and incremental supply chain savings. The gross margin decline was offset by an expense ratio improvement of 0.1 point in the U.S. driven by cost containment and BPR savings, partially offset by increased spending on advertising and the Company's e-commerce initiatives. The North American operating margin decline was also attributable to higher expenses in Puerto Rico. International International U.S. dollar net sales for the second quarter and first six months of 2000 increased 12% and 11%, respectively, over the comparable periods in 1999. The sales growth in both periods was the result of double- digit increases in the Pacific and Latin America regions, as well as mid single-digit increases in Europe. Excluding the effect of foreign currency exchange, international sales increased 17% and 16%, respectively, with double-digit increases in all regions. In the Pacific Region, the 17% and 19% sales improvements in the second quarter and first six months of 2000 were driven by increases in nearly all markets resulting from double-digit increases in the number of units sold and active Representatives. In Japan, sales increased double-digits due to an increase in the number of units sold and active Representatives, partially offset by a decrease in average order. In Taiwan, order growth was the key sales driver in both the first and second quarters. In China, sales growth continues to be driven by channel expansion, led by beauty boutiques. Local currency sales in the Pacific Region increased 15% and 16%, respectively, including double-digit improvements in all markets excluding Japan, which posted a mid single-digit increase in both periods, and Taiwan and New Zealand, which posted mid single-digit increases in the second quarter. In Latin America, sales increased 12% and 11% for the second quarter and first six months of 2000, respectively, due to increases in all markets, most significantly in Mexico, Brazil and Venezuela. The sales growth in Mexico was driven by solid increases in the number of units sold, orders, customers served and active Representatives. Higher average order was the main driver for the sales increase in Brazil. In Venezuela, second-quarter sales increased strong double-digits mainly due to an increase in the number of units sold, orders, customers and active Representatives. June year-to-date sales for Venezuela increased near double-digits despite the late 1999 flooding, which negatively affected operations at the beginning of 2000, along with the persistent uncertain economic and political environment. Excluding the impact of foreign currency exchange, sales in Latin America increased 18% and 15% in the second quarter and six-month period, respectively. In Europe, sales increased 6% and 5% in the second quarter and first six months of 2000, respectively, primarily due to growth in the United Kingdom, Central and Eastern Europe and Russia, partially offset by a sales decline in AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) Germany. The sales improvement in the United Kingdom arose from solid growth in average order size, as well as increases in units sold and customers served. The improvement in Central and Eastern Europe, primarily Poland, resulted from continued increases in active Representatives, units and customers served. The sales improvement in Russia was driven by strong performance in all indicators. The sales decline in Germany was primarily the result of a weak economic climate, as well as lower than expected performance of new Representatives. Excluding the impact of foreign currency exchange, Europe sales grew 16% and 17% for the second quarter and six-month period, respectively. International operating profit increased 16% and 20% in the second quarter and six-month period of 2000, respectively, compared to the same periods in 1999. Operating profit growth in the Pacific Region of 29% and 44% in the second quarter and first six-month period of 2000, respectively, resulted from the sales growth, discussed above, and operating margin improvements in nearly all markets, most significantly in Japan, the Philippines and China, partially offset by an operating margin decline in Taiwan. Japan's gross margin improved due to product cost savings initiatives and a favorable change of product mix from non-CFT to higher margin CFT products. While Japan's year- to-date expense ratio improved slightly, the second-quarter expense ratio increased primarily due to increased spending on advertising and sampling. An improved expense ratio in the Philippines was primarily due to timing of expenses related to a Representative event. China's operating expense ratio improvement was driven primarily by increased sales growth. In Taiwan, the operating expense ratio increased primarily due to increased costs resulting from moving to a new facility as well as increased spending to support sales growth; however, in the second quarter, the operating expense ratio increase was partially offset by an improved gross margin resulting from a shift in product mix. The second quarter and six-month period operating margin in the Pacific was 1.4 and 2.3 points above the prior year, respectively. In Latin America, operating profit grew 13% for both the second quarter and first six months of 2000 over 1999. In both periods, increased operating margins in Venezuela and Chile were partially offset by decreased margins in Brazil and Argentina. The improvement in Venezuela's operating margin resulted from the sales increase, discussed above, as well as pricing and cost improvements. Partially offsetting the six-month period operating margin improvement in Venezuela was an increased expense ratio resulting from higher expenses associated with the flooding in late 1999, including higher distribution and transportation expenses. The increased gross margin and improved expense ratio in Chile resulted from a favorable shift in product mix as well as tight controls over variable and fixed expenses. Despite sales increases over 1999, Brazil experienced a decline in gross margin as a result of difficult prior year comparisons due to strong vendor negotiations and foreign exchange gains that favorably impacted last year's margin. In Argentina, the expense ratio increased primarily due to higher advertising, incentives and commissions. In Mexico, operating profit increased double- digits; however, a second-quarter decline in gross margin resulted from increased sales of lower margin items, as well as the strategic decision to lower prices, partially offset by lower costs resulting from vendor negotiations. These lower costs contributed to Mexico's slight increase in operating margin in the six-month period. The operating margin for the second quarter and six-month period of 2000 in Latin America was 0.2 and 0.4 points above 1999, respectively. AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) Operating profit in Europe increased 13% in the second quarter resulting from sales increases discussed above, partially offset by margin declines in the United Kingdom and Poland. The expense ratio increase in the United Kingdom was due to increased brochure costs to support the strong sales growth, increases in volume-related costs and increased shipping and distribution costs due to reduced capacity of shipping lines during the transition to a new shipping system. In Poland, the expense ratio increase resulted from increased distribution costs to support order growth, as well as unfavorable timing of advertising and sampling. In the Europe Region, second quarter 2000 operating margin improved 1.1 points over the same period in 1999. Operating profit in Europe for the first six months of 2000 increased 26% over 1999, resulting from the sales increases discussed above coupled with operating margin improvements in Russia and Poland, partially offset by margin declines in the United Kingdom and Germany. The operating margin improvement in Russia was primarily due to a favorable comparison against last year's discount pricing policy as well as tight expense controls on a higher sales base. In Poland, the favorable expense ratio was due to timing of advertising, planned for the second half of 2000. Partially offsetting these improvements was an increased expense ratio in the United Kingdom resulting from increased advertising, consumer motivation and sampling activities to support strong sales growth, as well as increases in shipping and distribution costs due to reduced capacity of shipping lines during the transition to a new shipping system. Additionally, Germany had a decreased operating margin resulting from an unfavorable product mix, as well as a decreased sales base. In the Europe Region, June 2000 year-to-date operating margin improved 2.2 points above the same period in 1999. Global Expenses In the second quarter of 2000, global expenses increased 7% versus 1999 primarily due to increased strategic investments in information technology and e-commerce initiatives, partially offset by insurance proceeds received in 2000 related to 1998 hurricane losses in Central America. In the first half of 2000, global expenses decreased 2% versus 1999 primarily due to lower expenses related to the Company's long-term incentive plan, the aforementioned insurance proceeds and the timing of global marketing expenses, partially offset by increased investments in information technology and e-commerce initiatives. Liquidity and Capital Resources Cash Flows Excluding changes in debt, there was a net decrease in cash of $246.0 in the first six months of 2000 compared with a decrease of $289.0 in the comparable period of 1999. The $43.0 variance primarily reflects a decrease in repurchases of common stock, decreased cash used for investing activities due to the acquisition of a manufacturing facility in 1999 and a favorable effect of foreign currency exchange. These sources of cash were partially offset by higher net cash used by operations, reflecting higher working capital levels which included increased inventory levels due to growing sales trends and additional stock on hand to protect service levels, the payout of the long-term incentive plan in 2000 and the timing of cash payments, offset in part by a higher net income. AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) During the first half of 2000, the Company purchased approximately 1,060,255 shares of common stock for $42.1 compared with $125.5 spent for the repurchase of approximately 2,756,500 shares during the comparable period in 1999. Capital Resources Total debt increased $202.8 to $1,210.2 from $1,007.4 at December 31, 1999, principally due to working capital requirements and the payout of the Company's long-term incentive plan. Total debt of $1,210.2 at June 30, 2000 was $693.2 higher than total debt of $517.0 at June 30, 1999, primarily due to increased borrowings to fund the Company's share repurchase program which was significantly accelerated during the second half of 1999. In addition, at June 30, 2000 and December 31, 1999, other accrued liabilities include approximately $103.4 and $106.4, respectively, related to securities lending activities. At June 30, 2000, there were no borrowings under the amended and restated revolving credit and competitive advance facility agreement. This agreement is also used to support the Company's commercial paper borrowings of which $431.9 was outstanding at June 30, 2000. The Company has excluded $391.8 of these commercial paper borrowings from current liabilities as of June 30, 2000 because it intends to refinance a portion of the obligations on a long-term basis. The Company issued Notes in July and August 2000 to refinance these obligations (see Note 11 to the Consolidated Financial Statements for further details). At June 30, 2000, there was $9.6 of borrowings outstanding under uncommitted lines of credit, and there were no borrowings under the Company's bankers' acceptance facilities. Management currently believes that cash from operations and available financing alternatives are adequate to meet anticipated requirements for working capital, dividends, capital expenditures, the stock repurchase program and other cash needs. Working Capital As of June 30, 2000, current assets exceeded current liabilities by $73.2, while at December 31, 1999, current liabilities exceeded current assets by $375.0. The increase in current assets over current liabilities of $448.2 was primarily due to a decrease in short-term net debt (debt less cash equivalents) reflecting the refinancing of short-term commercial paper borrowings with the proceeds of the Notes discussed in the Capital Resources section above and Note 11 to the Consolidated Financial Statements, an increase in net inventories, primarily due to growing sales trends and additional stock on hand to protect service levels, and decreases in accounts payable, accrued compensation and other accrued liabilities. The decline in payables and accrued liabilities reflects the seasonal pattern of Avon's operations, the timing of cash payments and the payout of the cash component of the Company's three-year long-term incentive plan in 2000. Avon's liquidity results from its ability to generate significant cash flows from operations and its ample unused borrowing capacity. The aforementioned acceleration of the Company's share repurchase program resulted in a shareholders' deficit balance at June 30, 2000 of $346.0. Avon's credit agreements do not contain any provisions or requirements with respect to working capital. Financial Instruments and Risk Management Strategies The Company operates globally, with manufacturing and distribution facilities in various locations around the world. The Company may reduce AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) its exposure to fluctuations in interest rates and foreign exchange rates by creating offsetting positions through the use of derivative financial instruments. The Company currently does not use derivative financial instruments for trading or speculative purposes, nor is the Company a party to leveraged derivatives. The Company periodically uses interest rate swaps to hedge portions of interest payable on its debt. In addition, the Company may periodically employ interest rate caps to reduce exposure, if any, to increases in variable interest rates. At June 30, 2000, the Company had a five-year interest rate swap contract with a notional amount of $50.0 to effectively convert fixed interest on a portion of the Company's $100.0 bonds to a variable interest rate, based on LIBOR. The Company also has five-year and ten- year interest rate swap contracts with notional amounts of $200.0 and $300.0, respectively, to convert fixed interest on the Company's $200.0 five-year notes and $300.0 ten-year notes to a variable interest rate, based on commercial paper rates. In May 2000, the Company entered into an interest rate cap agreement with a notional amount of $150.0 expiring on May 31, 2001 to convert variable interest, resulting from the interest rate swaps above, to a fixed interest rate. The cap rate under this contract is 7%. The Company may periodically hedge foreign currency royalties, net investments in foreign subsidiaries, firm purchase commitments and contractual foreign currency cash flows or obligations, including third- party or intercompany foreign currency exposures and ensures that hedge contract amounts do not exceed the amounts of the underlying exposures. At June 30, 2000, the Company held foreign currency forward contracts with notional amounts totaling $233.1 and option contracts with notional amounts totaling $13.0 to hedge foreign currency items. Only $23.0 of these contracts have maturities after 2000. Also outstanding at June 30, 2000 were foreign currency forward contracts with notional amounts totaling $72.4 and option contracts totaling $33.0 which do not qualify as hedging transactions under the current accounting definitions and accordingly, have been marked to market. The mark-to-market adjustment at June 30, 2000 was not material. The Company's risk of loss on the options in the future is limited to premiums paid, which are not material. The Company has entered into forward contracts to purchase approximately 1,698,200 shares of Avon common stock at an average price of $36.47 per share as of June 30, 2000. The contracts mature over the next 1-1/2 years and provide for physical or net share settlement to the Company. Accordingly, no adjustment for subsequent changes in fair value has been recognized. The Company attempts to minimize its credit exposure to counterparties by entering into interest rate swap and cap contracts only with major international financial institutions with "A" or higher credit ratings as issued by Standard and Poor's Corporation. The Company's foreign currency and interest rate derivatives are comprised of forward contracts, swaps or options with major international financial institutions. Although the Company's theoretical credit risk is the replacement cost of the then estimated fair value of these instruments, management believes that the risk of incurring losses is remote and that such losses, if any, would not be material. AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In millions, except share data) Other Information Euro A single currency called the euro was introduced in Europe on January 1, 1999. Eleven of the fifteen member countries of the European Union adopted the Euro as their common legal currency on that date. Fixed conversion rates between these participating countries' existing currencies (the "legacy currencies") and the euro were estimated as of that date. The legacy currencies are scheduled to remain legal tender as denominations of the euro until June 30, 2002 after which they will be withdrawn from circulation. During this transition period, parties may settle transactions using either the euro or a participating country's legal currency. Beginning in January 2002, new euro-denominated bills and coins will be issued. Avon operating subsidiaries affected by the euro conversion have established plans to address issues raised by the euro currency conversion. These issues include, among others, the need to adapt information technology systems, business processes and equipment to accommodate euro-denominated transactions, the impact of one common currency on pricing and recalculating currency risk. Avon does not expect system and equipment conversion costs to be material. Due to the numerous uncertainties associated with the market impact of the euro conversion, the Company cannot reasonably estimate the effects one common currency will have on pricing and the resulting impact, if any, on results of operations, financial condition or cash flows. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements in this report which are not historical facts or information are forward-looking statements, including, but not limited to, the information set forth in "Other Information" herein. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievement of the Company, or industry results, to be materially different from any future results, levels of activity, performance or achievement expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; the ability of the Company to implement its business strategy; the Company's access to financing and its management of foreign currency risks; the Company's ability to successfully identify new business opportunities; the Company's ability to attract and retain key executives; the Company's ability to achieve anticipated cost savings and profitability targets; changes in the industry; competition; the effect of regulatory and legal restrictions imposed by foreign governments; the effect of regulatory and legal proceedings and other factors discussed in Item 1 of the Company's Form 10-K. As a result of the foregoing and other factors, no assurance can be given as to the future results and achievements of the Company. Neither the Company nor any other person assumes responsibility for the accuracy and completeness of these statements. AVON PRODUCTS, INC. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description ------ ----------- 3.4 Restated Certificate of Incorporation of Avon Products, Inc. effective May 8, 2000. 27 Financial Data Schedule (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the second quarter of 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AVON PRODUCTS, INC. ------------------- (Registrant) Date: August 14, 2000 By /s/ JANICE MAROLDA ------------------------------- Janice Marolda Vice President, Controller Principal Accounting Officer Signed both on behalf of the registrant and as principal accounting officer. EX-99 2 0002.txt EX-99 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________ FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended June 30, 2000 Commission file number 1-4881 ____________________________ AVON PRODUCTS, INC. (Exact name of registrant as specified in its charter) ____________________________ EXHIBITS AVON PRODUCTS, INC. INDEX TO EXHIBITS Exhibit Number Description - ------- ----------- 3.4 Restated Certificate of Incorporation of Avon Products, Inc. effective May 8, 2000 27 Financial Data Schedule. EX-3.4 3 0003.txt EX-3.4 EXHIBIT 3.4 RESTATED CERTIFICATE OF INCORPORATION OF AVON PRODUCTS, INC. Under Section 807 of the Business Corporation Law We, ANDREA JUNG, the President and Chief Executive Officer of AVON PRODUCTS, INC. (the "Corporation") and WARD M. MILLER, JR., the Secretary of the Corporation, do hereby certify as follows: 1. The name of the Corporation is AVON PRODUCTS, INC. and the name under which the Corporation was formed is California Perfume Company, Inc. 2. The Certificate of Incorporation was filed by the Department of State of the State of New York on January 27, 1916. 3. Article IIIA, which established a Series A Junior Participating Preferred Stock, has been deleted to reflect the expiration of a related Shareholder Rights Plan. Former ARTICLE IIIB, which established a Series B Junior Participating Preferred Stock related to the Shareholder Rights Plan that became effective March 31, 1998, has been re-captioned as new ARTICLE IIIA. The total number of shares will not be changed. 4. The text of the Certificate of Incorporation of the Corporation is hereby restated and amended to read as herein set forth in full: ARTICLE I: The corporate name is AVON PRODUCTS, INC. ARTICLE II: The purposes for which the Corporation is formed are: To develop, manufacture, produce, provide, operate, distribute and deal in and with services, property and goods of all kinds including without limitation engaging in the manufacture and distribution of cosmetics and toiletries. To engage in any lawful act or activity for which corporations may organized Under the Business Corporation Law and the Sate of New York. ARTICLE III: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 825,000,000 shares, divided into two classes consisting of 800,000,000 shares of Common Stock, par value $.25 per share (the "Common Stock"), and 25,000,000 shares of Preferred Stock, par value $1.00 per share (the "Preferred Stock"). The shares of authorized Common Stock of the Corporation shall be identical in all respects and shall have equal rights and privileges. The Board of Directors shall have authority by resolution to issue the shares of Preferred Stock from time to time on such terms as it may determine and to divide the Preferred Stock into one or more classes or series and, in connection with the creation of any such class or series, to determine and fix by the resolution or resolutions providing for the issuance of shares thereof the designation, powers and relative participating, optional, or other special rights of such class or series, and the qualifications, limitations or The holders of capital stock of the Corporation shall not have any preemptive rights. ARTICLE IIIA: Series B Junior Participating Preferred Stock: Section 1. Designation and Amount. The shares of such series shall be designated as "Series B Junior Participating Preferred Stock" (the "Series B Preferred Stock") and the number of shares constituting the Series B Preferred Stock shall be 2,000,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series B Preferred Stock. Section 2. Dividends and Distributions. (A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series B Preferred Stock with respect to dividends, the holders of shares of Series B Preferred Stock, in preference to the holders of Common Stock, par value $0.25 per share (the "Common Stock"), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of share of Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series B Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series B Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (B) Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series B Preferred Stock shall have the following voting rights: (B) Subject to the provision for adjustment hereinafter set forth, each share of Series B Preferred Stock Shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein, in any other Certificate of Amendment creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) Except as set forth herein, or as otherwise provided by law, holders of Series B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series B Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series B Preferred Stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series B Preferred Stock, or any shares of stock ranking on a parity with the Series B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series B Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation or in any other Certificate of Amendment creating a series of Preferred Stock or any similar stock or as otherwise required by law. Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment provided that the holders of shares of Series B Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except distributions made ratably on the Series B Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series B Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series B Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series B Preferred Stock shall not be redeemable. Section 9. Rank. The Series B Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation's Preferred Stock. Section 10. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series B Preferred Stock, voting together as a single class. ARTICLE IV: The office of the Corporation is to be located in the City and County of New York, State of New York. ARTICLE V: The number of directors of the Corporation shall be not less than ten (10) nor more than twenty (20). The number of directors to be chosen within said maximum and minimum limits shall be determined in the manner prescribed by the By-Laws. The Board of Directors shall be divided into three classes as nearly equal in number as possible, with each class having at least three members, with the term of office of one class expiring each year. At the annual meeting of shareholders in 1986, directors of the first class were elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class were elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class were elected to hold office for a term expiring at the third succeeding annual meeting. At each annual meeting of shareholders after 1986, successors to the directors whose terms shall then expire shall be elected to hold office for terms expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors, by reason of an increase in the number of directors or otherwise, shall be filled solely by the Board of Directors, by majority vote of the directors then in office, though less than a quorum, but any such director so elected shall hold office only until the next succeeding annual meeting of shareholders. At such annual meeting, such director shall be elected and qualified in the class in which such director is assigned to hold office for the term or remainder of the term of such class. Directors shall continue in office until others are chosen and qualified in their stead. When the number of directors is changed, any newly created directorships or any decrease in directorships shall be so assigned among the classes by a majority of the directors then in office, though less than a quorum, so as to make all classes as nearly equal in number as possible. To the extent of any inequality within the limits of the foregoing, the class or classes caused to have the greatest or greater number of directorships shall be the class or classes then having the last date or the later dates for the expiration of its or their terms. No decrease in the number of directors shall shorten the term of any incumbent director. Any director may be removed from office as a director but only for cause by the affirmative vote of the holders of eighty percent (80%) of the combined voting power of the then outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Notwithstanding anything contained in this Restated Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least eighty percent (80%) of the combined voting power of the then outstanding shares of the stock of the Corporation entitled to vote generally on the election of directors, voting together as a single class, shall be required to alter, amend or adopt any provisions inconsistent with or repeal this Article V. The directors need not be shareholders of the Corporation. ARTICLE VI: At all elections of directors of the Corporation each shareholder shall be entitled to as many votes as shall equal the number of votes which (except for the provisions of this Article) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them as he may see fit. ARTICLE VII: (A) In addition to any affirmative vote required by law or this Restated Certificate of Incorporation: 1. any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (a) an Interested Shareholder (as hereinafter defined) or (b) any other corporation (whether or not itself an Interested Shareholder which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Shareholder, or 2. any sale, lease, exchange, mortgage, pledge, grant of a security interest, transfer or other disposition (in one transaction or a series of transactions) to or with (a) an Interested Shareholder or (b) an Affiliate of an Interested Shareholder of assets of the Corporation or any Subsidiary having an aggregate Fair Market Value (as hereinafter defined) of $25,000,000 or more, or 3. the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary, having an aggregate Fair Market Value of $25,000,000 or more to an Interested Shareholder or any Affiliate of an Interested Shareholder in exchange for cash, securities or other property (or combination thereof), or 4. the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Shareholder or any Affiliate of an Interested Shareholder, or 5. any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary directly or indirectly beneficially owned by (a) an Interested Shareholder or (b) an Affiliate of an Interested Shareholder shall require either: (A) the approval of a majority of the Disinterested Directors (as hereinafter defined) or (b) the affirmative vote of the holders of that amount of the voting power of the Voting Stock (as hereinafter defined) equal to the sum of (1) the voting power of the shares of Voting Stock of which their Interested Shareholder is the beneficial owner and (2) a majority of the voting power of the remaining outstanding shares of Voting Stock, voting together as a single class; provided, however, that no such vote shall be required for the purchase by the Corporation of shares of Voting Stock from an Interested Shareholder unless such vote is required by Paragraph (B) of this Article VII. (B) Any purchase by the Corporation of shares of Voting Stock from an Interested Shareholder, other than pursuant to an offer to the holders of all of the outstanding shares of the same class of Voting Stock as those so purchased, at a per share price in excess of the Market Price (as hereinafter defined), at the time of such purchase, of the shares so purchased, shall require the affirmative vote of the holders of that amount of the voting power of the Voting Stock equal to the sum of (i) the voting power of the shares of Voting Stock of which the Interested Shareholder is the beneficial owner (as hereinafter defined) and (ii) a majority of the voting power of the remaining outstanding shares of Voting Stock, voting together as a single class. (C) It shall be the duty of any Interested Shareholder: i. to give or cause to be given written notice to the Corporation, immediately upon becoming an Interested Shareholder, of such person's status as an Interested Shareholder and of such other information as the Corporation may reasonably require with respect to identifying all owners and amount of ownership of the outstanding Voting Stock of which such Interested Shareholder is the beneficial owner, and ii. to notify the Corporation promptly in writing of any change in the information provided in subparagraph (i) of this Paragraph (C), provided, however, that the failure of an Interested Shareholder to comply with the provisions of this Paragraph (C) shall not in any way be construed to prevent the Corporation from enforcing the provisions of Paragraphs (A) and (B) of this Article VII. (D) For the purposes of this Article VII: 1. "Voting Stock" shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors. 2. "Person" shall mean any individual, firm, Corporation or other entity. 3. "Interested Shareholder" shall mean any person (other than the Corporation or any Subsidiary) who or which: a) is the beneficial owner, directly or indirectly of 5% or more of the voting power of the outstanding Voting Stock; or b) is an Affiliate of the Corporation and at any time within the two- year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 5% or more of the voting power of the then outstanding Voting Stock; or c) is an assignee of or has otherwise succeeded to the beneficial ownership of any shares of Voting Stock which were at any time within the two- year period immediately prior to the date in question beneficially owned by an Interested Shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. For the purposes of determining whether a person is an Interested Shareholder, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of subparagraph 4 below but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. 4. A person shall be a "beneficial owner" of any Voting Stock: a) which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or b) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise or (ii) the right to vote or to direct the voting thereof pursuant to any agreement, arrangement or understanding; or c) which is beneficially owned, directly or indirectly, by any other person with which such person or its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. 5. "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities and Exchange Act of 1934, as in effect on January 1, 1986. 6. "Subsidiary" shall mean any corporation of which a majority of any class of equity security is owned directly or indirectly, by the Corporation; provided, however, that, for purposes of the definition of Interested Shareholder set forth in subparagraph 3, the term "Subsidiary" shall mean only a corporation of which a majority of the voting power of the capital stock entitled to vote generally in the election of directors is owned, directly or indirectly, by the Corporation. 7. "Disinterested Director" shall mean any member of the Board of Directors of the Corporation who is unaffiliated with an Interested Shareholder and was a member of the Board prior to the time that such Interested Shareholder became an Interested Shareholder, and any successor of a Disinterested Director who is unaffiliated with an Interested Shareholder and is recommended to succeed a Disinterested Director by a majority of Disinterested Directors then on the Board. 8. "Market Price" means the last closing sale price immediately preceding the time in question of a share of the stock in question on the Composite Tape for New York Stock Exchange-Listed Stocks. 9. "Fair Market Value" means: (i) in the case of stock, the Market Price, and (ii) in the case of property other than cash or stock, the Fair Market Value of such property on the date in question as determined by the Board in good faith. (E) A majority of the Disinterested Directors shall have the power to determine for the purpose of this Article VII on the basis of information known to them after reasonable inquiry (1) whether a person is an Interested Shareholder, (2) the number of shares of Voting Stock beneficially owned by any person, (3) whether a person is an Affiliate or Associate of another and (4) whether a transaction or series of transactions constitutes one of the transactions specified in Paragraph (A) hereof. The good faith determination of a majority of the Disinterested Directors shall be conclusive and binding for all purposes of this Article VII. (F) Notwithstanding any other provision of this Restated Certificate of Incorporation or the By-Laws of the Corporation or the fact that a lesser percentage may be specified by law, this Restated Certificate of Incorporation or the By-Laws of the Corporation, the affirmative vote of the holders of at least eighty percent (80%) of the combined voting power of the then outstanding Voting Stock, voting together as a single class, shall be required to amend, alter, repeal or adopt any provision inconsistent with this Article VII. The Secretary of State is designed as the agent of the Corporation upon whom process in any action or proceeding against it may be served; and the address to which the Secretary of State shall mail a copy of any process against the Corporation which may be served upon him pursuant to law is: 1345 Avenue of the Americas New York, NY 10105-0196 ARTICLE VIII: No person who is or was a director of the Corporation shall have personal liability to the Corporation or its shareholders for damages for any breach of duty in such capacity, provided that the foregoing shall not limit the liability of any such person (i) if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he personally gained, in fact, a financial profit or other advantage to which he was not legally entitled or that his acts violated Section 719 of the Business Corporation Law of New York or, (ii) for any act or omission occurring prior to the adoption of this Article VIII. No amendment to or repeal of this Article VIII shall apply to or have any effect on the liability or alleged liability of any such person to the Corporation for or with respect to any acts or omissions of such person occurring prior to such amendment or repeal. If the Business Corporation Law of New York is amended hereafter to expand or limit the liability of a director, then the liability of a person who is or was a director of the Corporation shall be deemed to be expanded to the extent required or limited to the extent permitted by the Business Corporation Law of New York, as so amended. This restatement of the Certificate of Incorporation was authorized by the Board of Directors of the Corporation and the holders of a majority of all the outstanding shares of stock of the Corporation. EX-27 4 0004.txt EXHIBIT 27
5 EXHIBIT 27 Exhibit 27 Avon Products, Inc. Financial Data Schedule This schedule contains summary financial information extracted from the Avon Products, Inc. financial statements as of June 30, 2000 and is qualified in its entirety by reference to such financial statements. 1000000 6-MOS DEC-31-1999 JAN-01-2000 JUN-30-2000 76 0 536 (39) 645 1,420 1,472 (741) 2,618 1,347 1,093 0 0 88 (434) 2,618 2,703 2,703 994 1,345 0 48 43 311 110 199 0 0 0 199 .84 .83
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