-----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, D/D2XccigB4aEKQYM6LBAEvTw2bsVXdx80ohmbZwc+SNP4k/q4G8SoaU1nqoiKbL PxGMrKeLfI2e4FcQAAZqZg== 0000008868-98-000004.txt : 19980515 0000008868-98-000004.hdr.sgml : 19980515 ACCESSION NUMBER: 0000008868-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVON PRODUCTS INC CENTRAL INDEX KEY: 0000008868 STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [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: 98621171 BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105-0196 BUSINESS PHONE: 2122825000 MAIL ADDRESS: STREET 2: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105-0196 10-Q 1 MARCH 31, 1998 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 March 31, 1998 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 April 30, 1998 was 131,740,152. 2 Table of Contents Part I. Financial Information Page Numbers ------- Item 1. Financial Statements Consolidated Statement of Operations Three Months Ended March 31, 1998 and March 31, 1997........................................ 3 Consolidated Balance Sheet March 31, 1998 and December 31, 1997.................... 4 Consolidated Statement of Cash Flows Three Months Ended March 31, 1998 and March 31, 1997........................................ 5 Notes to Consolidated Financial Statements................ 6-11 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition............. 12-20 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders....... 21 Item 6. Exhibits and Reports on Form 8-K.......................... 22 Signatures......................................................... 23 2 3 PART I. FINANCIAL INFORMATION AVON PRODUCTS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (In millions, except per share data) Three months ended March 31 ------------------ 1998 1997 ---- ---- (unaudited) Net sales........................................... $1,183.4 $1,087.6 Costs, expenses and other: Cost of sales....................................... 503.1 441.6 Marketing, distribution and administrative expenses........................... 626.1 572.9 Special charge...................................... 70.5 - Interest expense.................................... 9.5 9.6 Interest income..................................... (2.3) (2.3) Other expense, net.................................. 3.1 2.8 -------- -------- Total costs, expenses and other..................... 1,210.0 1,024.6 -------- -------- (Loss) income before taxes and minority interest.... (26.6) 63.0 Income taxes........................................ 6.1 23.3 -------- -------- (Loss) income before minority interest.............. (32.7) 39.7 Minority interest................................... 1.7 1.6 -------- -------- Net (loss) income................................... $ (31.0) $ 41.3 ======== ======== (Loss) earnings per share: Basic ........................................... $ (.24) $ .31 ======== ======== Diluted.......................................... $ (.24) $ .31 ======== ======== The accompanying notes are an integral part of these statements. 3 4 AVON PRODUCTS, INC. CONSOLIDATED BALANCE SHEET (In millions) March 31 December 31 1998 1997 ---- ---- (unaudited) ASSETS Current assets: Cash and equivalents............................. $ 84.8 $ 141.9 Accounts receivable.............................. 478.0 444.8 Inventories...................................... 598.5 564.8 Prepaid expenses and other....................... 210.4 192.5 -------- -------- Total current assets............................. 1,371.7 1,344.0 -------- -------- Property, plant and equipment, at cost............. 1,298.6 1,281.6 Less accumulated depreciation.................... 694.2 670.6 -------- -------- 604.4 611.0 -------- -------- Other assets..................................... 331.5 317.9 -------- -------- Total assets..................................... $2,307.6 $2,272.9 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Debt maturing within one year.................... $ 201.1 $ 132.1 Accounts payable................................. 382.0 476.0 Accrued compensation............................. 114.6 111.3 Other accrued liabilities........................ 339.5 268.9 Sales and other taxes............................ 94.4 101.0 Income taxes..................................... 252.2 266.6 -------- -------- Total current liabilities........................ 1,383.8 1,355.9 -------- -------- Long-term debt................................... 201.7 102.2 Employee benefit plans........................... 373.2 367.6 Deferred income taxes............................ 28.9 31.2 Other liabilities................................ 129.0 131.0 Shareholders' equity: Common stock..................................... 43.8 43.7 Additional paid-in capital....................... 743.1 733.1 Retained earnings................................ 585.1 660.9 Accumulated comprehensive income................. (274.2) (270.3) Treasury stock, at cost.......................... (906.8) (882.4) -------- -------- Total shareholders' equity....................... 191.0 285.0 -------- -------- Total liabilities and shareholders' equity....... $2,307.6 $2,272.9 ======== ======== The accompanying notes are an integral part of these statements. 4 5 AVON PRODUCTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (In millions) Three months ended March 31 ------------------ 1998 1997 ---- ---- (unaudited) Cash flows from operating activities: Net (loss) income....................................... $(31.0) $ 41.3 Adjustments to reconcile net (loss) income to net cash used by operating activities: Special and non-recurring charges....................... 100.3 -- Depreciation and amortization........................... 16.5 16.3 Provision for doubtful accounts......................... 24.8 16.8 Translation gains....................................... (.5) -- Deferred income taxes................................... (5.3) (4.5) Other................................................... 1.4 3.3 Changes in assets and liabilities: Accounts receivable................................... (62.2) (18.1) Inventories........................................... (73.9) (51.1) Prepaid expenses and other............................ (14.7) (10.8) Accounts payable and accrued liabilities.............. (66.3) (155.1) Income and other taxes................................ (19.5) (20.1) Noncurrent assets and liabilities..................... (4.5) (4.6) ------ ------ Net cash used by operating activities................... (134.9) (186.6) ------ ------ Cash flows from investing activities: Capital expenditures.................................... (26.5) (24.6) Disposal of assets...................................... 1.1 1.1 Other investing activities.............................. (.2) (10.4) ------ ------ Net cash used by investing activities................... (25.6) (33.9) ------ ------ Cash flows from financing activities: Cash dividends.......................................... (46.3) (41.9) Debt, net (maturities of three months or less).......... 132.7 203.9 Proceeds from short-term debt........................... 39.8 12.9 Retirement of short-term debt........................... (3.8) (1.0) Retirement of long-term debt............................ (.1) (.2) Repurchase of common stock.............................. (24.8) (30.2) Proceeds from exercise of stock options................. 8.2 5.6 ------ ------ Net cash provided by financing activities............... 105.7 149.1 ------ ------ Effect of exchange rate changes on cash and equivalents. (2.3) (7.1) ------ ------ Net decrease in cash and equivalents.................... (57.1) (78.5) Cash and equivalents beginning of period................ 141.9 184.5 ------ ------ Cash and equivalents end of period...................... $ 84.8 $106.0 ====== ====== The accompanying notes are an integral part of these statements. 5 6 AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars 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 1997 Annual Report to Shareholders. The interim statements are unaudited but include all adjustments, which consisted of only 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. Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards ("FAS") No. 130, "Reporting Comprehensive Income." FAS No. 130 requires disclosure of comprehensive income in interim periods and additional disclosures of the components of comprehensive income on an annual basis. Comprehensive income includes all changes in equity during a period except those resulting from investments by and distributions to the Company's stockholders. The components of comprehensive income are included in Note 7. Effective January 1, 1998, the Company adopted AICPA Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." SOP No. 98-1 requires certain costs in connection with developing or obtaining internal-use software to be capitalized that previously would have been expensed as incurred. The adoption of SOP No. 98-1 did not have a material impact on the Company's results of operation, financial position, or cash flows. 2. INFORMATION RELATING TO THE STATEMENT OF CASH FLOWS "Net cash used by operating activities" includes the following cash payments for interest and income taxes: Three months ended March 31 ------------------ 1998 1997 ---- ---- Interest............................................ $ 9.6 $ 3.2 Income taxes, net of refunds received............... 28.9 35.1 6 7 AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except share data) In May 1998, the Company issued $100.0 of long-term debt and the net proceeds will be used to pay down commercial paper borrowings. As a result of the refinancing of commercial paper borrowings with the new long-term debt, $100.0 of commercial paper borrowings as of March 31, 1998 were reclassified to long-term debt. 3. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share ("EPS") are computed by dividing net income (loss) by the weighted-average number of shares outstanding during the year. Diluted earnings (loss) per share are calculated to give effect to all potentially dilutive common shares that were outstanding during the year. For the three months ended March 31, 1998 and 1997, the number of shares used in the computation of basic and diluted earnings (loss) per share are as follows: 1998 1997 ------ ------ Basic EPS 131.78 132.88 Weighted-average shares Incremental shares from conversion of: Stock options (1) - 1.22 ------ ------ Diluted EPS Adjusted weighted- average shares 131.78 134.10 ====== ====== (1) In 1998, the calculation of EPS assuming dilution is antidilutive and accordingly, EPS have not been adjusted for the conversion of stock options into additional common shares. During the first three months of 1998, the Company purchased approximately 396,500 shares of common stock for $24.8 compared to approximately 532,500 shares purchased for $30.2 during the first three months of 1997. As of March 31, 1998, the cumulative number of shares repurchased under the three-year stock repurchase program which ended in February 1997 was approximately 12,664,000 shares for a total cost of approximately $424.4. Under a new repurchase program, which began in February 1997, the Company repurchased 7 8 AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except share data) approximately 2,235,400 shares at a total cost of approximately $134.2 as of March 31, 1998. Under this new program, the Company may buy back up to $500 million of its currently outstanding common stock through open market purchases over a period of up to three to five years. 4. INVENTORIES March 31 December 31 1998 1997 ---- ---- Raw materials................ $165.9 $147.4 Finished goods............... 432.6 417.4 ------ ------ $598.5 $564.8 ====== ====== 5. DIVIDENDS Cash dividends paid per share of common stock were $.34 for the three months ended March 31, 1998 and $.315 for the corresponding 1997 period. On February 17, 1998, the Company increased the annual dividend rate to $1.36 from $1.26. 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. 8 9 AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except share data) 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 difference, if any, between the total cost of resolving such contingencies and reserves recorded by Avon at March 31, 1998 should not have a material adverse impact on Avon's consolidated financial position, results of operations, or cash flows. 7. COMPREHENSIVE (LOSS) INCOME For the three-months ended March 31, 1998 and 1997, the components of comprehensive (loss) income are, as follows: 1998 1997 ----- ----- Net (loss) income $(31.0) $41.3 Other comprehensive (loss) income: Change in equity due to foreign currency translation and transaction adjustments (3.9) (9.8) ----- ----- Comprehensive (loss) income $(34.9) $31.5 ===== ===== 9 10 AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except share data) 8. SPECIAL AND NON-RECURRING CHARGES In October 1997, the Company announced a worldwide re-engineering program in order to streamline operations and improve profitability, through gross margin improvement and expense reductions. The one-time charges resulted in a pretax charge of $108.4 ($84.2 net of tax, or $.64 per share on a basic and diluted basis) for the three months ended March 31, 1998. Special and non-recurring charges by category of expenditures are, as follows: Special Cost of Sales Charge Charge Total ------- ------------- ----- Employee severance costs $51.0 $51.0 Inventories $37.9 37.9 Write-down of assets to net realizable value 10.9 10.9 Other 8.6 8.6 ----- ----- ----- $70.5 $37.9 $108.4 ===== ===== ===== The write-down of assets relates to the closure of a Far East buying office and manufacturing facilities in Puerto Rico and the Dominican Republic. Additionally, as a result of on-going government restrictions, the Company has decided to close certain branches and a regional office in China. Inventory-related charges represent losses to write-down the carrying value of non-strategic inventory, prior to disposal. The charge relates to the closure of facilities, discontinuation of certain product lines, size-of-line reductions and a change in strategy for product dispositions. Employee severance costs are expenses, both domestic and international, associated with the realignment of the Company's global operations. The workforce will be reduced by approximately 2,200 employees, or 6% of the total. Approximately one-half of the employees to be terminated relate to the facility closures. The liability balance at March 31, 1998 is as follows: Special Cost of Charge Sales Charge Total Provision $ 70.5 $37.9 $108.4 Cash Expenditures (8.1) (8.1) Non-cash write-offs (12.4) (37.9) (50.3) ---- ---- ---- Balance at March 31, 1998 $ 50.0 $(50.0) ==== ==== ==== 10 11 AVON PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except share data) The remaining balance at March 31, 1998 relates primarily to employee severance costs that will be paid during 1998 and 1999. The Company expects to record additional charges in 1998 and early 1999 as additional plans are finalized. 11 12 AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Dollars in millions, except share data) ITEM 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition Results of Operations--Three Months Ended March 31, 1998 and 1997. Consolidated Avon's net loss for the three months ended March 31, 1998 was $31.0, or $.24 per share on a basic and diluted basis, compared with net income of $41.3, or $.31 per share on a basic and diluted basis in 1997. Pretax loss was $26.6 in 1998 compared with pretax income of $63.0 in 1997. Special and non-recurring charges were recorded in the first quarter of 1998 for the Company's previously announced business process redesign program. These charges totaled $108.4 pretax, which reduced net income by $84.2 after tax, or $.64 per share on a basic and diluted basis. The special charge of $70.5 is primarily related to employee severance benefits as well as facility rationalizations in Puerto Rico, Dominican Republic and China. In addition, $37.9 was charged to cost of sales for inventory write-downs. The one-time charges represent the first part of an estimated $200.0 total charge that will help the Company deliver the higher sales and profit targets previously communicated. Before the charges, net income for the three months ended March 31, 1998 of $53.2, or $.40 per share on a basic and diluted basis, increased 29% from the comparable period in 1997. Pretax income, before the charges, of $81.8 increased 30% over 1997 due to higher sales, an improved gross margin and favorable foreign exchange partially offset by a slightly higher operating expense ratio. Consolidated net sales for the three months ended March 31, 1998 of $1,183.4 increased $95.8, or 9%, over the comparable period of the prior year. The increase in sales was due to an 11% increase in international and a 5% increase in U.S sales. The international sales improvement resulted from strong growth in all major markets in the Americas, most significantly in Mexico, Brazil and Argentina, as well as the United Kingdom. These improvements were partially offset by sales declines in the Philippines, Thailand and Malaysia. Excluding the impact of foreign currency exchange, consolidated net sales rose 16% over the comparable period of the prior year. Cost of sales as a percentage of net sales was 42.5% in the first quarter of 1998 compared to 40.6% in the first quarter of 1997. Excluding the one- time charge of $37.9, cost of sales as a percentage of sales was 39.3%. The increase in the gross margin of 1.3 points, resulted from higher margins in all major markets in the Americas, most significantly in Brazil, the latter due to actions taken to reduce inventory levels which had an unfavorable impact on margins in 1997 and to a lesser extent in Mexico and Argentina due to increased cosmetics, fragrance and toiletries ("CFT") sales with higher margins. In Europe, the United Kingdom and Germany reported strong margin 12 13 AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Dollars in millions, except share data) improvements primarily as a result of a shift in mix to selling higher margin products. The U.S. also reported a favorable gross margin as compared to 1997 which was attributable to pricing strategies and cost improvements. These improvements were partially offset by margin declines in most major markets in the Pacific, as a result of unfavorable foreign currency impacts. Marketing, distribution and administrative expenses of $626.1 increased $53.2, or 9%, over the comparable period of 1997 and increased as a percentage of net sales to 52.9% from 52.7%. The increase in operating expenses was primarily in markets which have experienced strong sales growth, including all major markets in the Americas, the United Kingdom and the U.S. These increases were partially offset by lower expenses in the Pacific primarily due to lower sales and the impact of currency devaluations. The overall increase in the expense ratio was primarily due to higher expense ratios in Mexico due to increased marketing and promotional expenses associated with new product launches and in Venezuela due to increased administrative expenses as a result of the implementation of a new labor law. This increase was partially offset by improvements throughout Europe and in Japan due to continued active focus on reducing operating expenses. Interest income and interest expense remained level with the comparable period of 1997. Other expense, net, of $3.1 was $.3 unfavorable to the comparable period of last year, primarily due to non-recurring corporate expenses partially offset by favorable foreign currency exchange. Excluding the charges, the effective tax rate was 37.0% in the first quarter of 1998 and 1997. The tax benefit on the one-time charges was 22.3% due to the mix of countries and tax jurisdictions incurring the charges. U.S. Net sales increased 5% and pretax income decreased 74% compared with the first quarter of 1997. A 2% increase in the average order size along with a 3% increase in the number of active Representatives contributed to the sales increase. The sales increase resulted from increases in CFT, fashion jewelry and accessories, style and home entertainment categories partially offset by a decline in the gift and decorative category. The increase in the CFT category was mainly due to the successful launch of the Diane Von Furstenburg fragrance, Forest Lily, and the Far Away and Rare Gold gift with purchase event, coupled with the successful launch of Avon's transfer-resistant technology lipstick and Avon Color's Spring Shade Collection with eye shadow samples in the brochure. Accessories showed strong performance with the introduction of licensed Winnie the Pooh carryalls and watches. Higher sales 13 14 AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Dollars in millions, except share data) in the style and home entertainment categories were primarily driven by an increase in the sales of demonstration products purchased by Representatives, as well as the launch of a collection of inspirational and religious products. These increases were partially offset by a decline in the gift and decorative category primarily attributable to softer Easter and Barbie sales. Excluding the one-time charges, pretax income increased 11% due to the improved sales and a favorable gross margin primarily driven by revised pricing strategies, cost improvements and reduced clearance activity. International Net sales increased 11%, or 21% excluding the effect of foreign currency exchange, over the comparable period of 1997 and pretax income decreased 49%. Excluding the one-time charges, pretax income increased 44% over the comparable period of 1997. The sales increase reflects double-digit growth in the Americas and Europe regions partially offset by declines in the Pacific region. Sales increases in the Americas were highlighted by significant growth in Brazil, Argentina and Mexico with these countries showing strong growth in units, active Representatives and orders. Mexico's sales increases resulted from the success of new product launches such as Anew Night Force, as well as apparel and home line extensions with superior design and promotions. Brazil's growth in sales was also driven by attractive pricing and successful new product launches. In Europe, sales rose significantly in the United Kingdom due to increases in units and orders; however, other major European markets reported flat sales growth. Total sales for Central Europe and Russia grew 50% versus 1997 with all countries showing strong double-digit growth in the number of active Representatives, units and orders. These higher sales were partially offset by sales declines in most major markets in the Pacific caused by unfavorable foreign currency translation. After years of strong economic growth throughout the Pacific, the aftermath of the currency crisis is causing subdued economic growth as markets struggle to enact economic reform programs. However, most markets, especially the Philippines, Australia, Taiwan, and to a lesser extent Japan, showed growth in local currency sales driven by improvements in the number of active Representatives, orders and customers served. Excluding the effect of foreign currency exchange, sales in the Pacific grew 10%. 14 15 AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Dollars in millions, except share data) The 44% increase in pretax income reflects increases in all major markets in Europe and the Americas, most significantly in Germany, the United Kingdom and Brazil and, to a lesser extent, in Argentina and Mexico. The increase in pretax income over the prior year is due to the sales increases discussed above and strong margin improvements in the United Kingdom, Germany and Brazil as compared to 1997. An improved gross margin due to a change in category mix towards higher margin products and lower operating expenses due to ongoing expense reduction programs contributed to the pretax income increases in Germany and the United Kingdom. Margins improved significantly in Brazil due to declines in 1997 resulting from actions taken to reduce inventory. Despite the weak economic conditions in the Pacific, pretax income for the quarter was slightly favorable as compared to the prior year, due to an improved operating expense ratio in Japan as a result of cost reduction strategies and business redesign efforts. Liquidity and Capital Resources Cash Flows Excluding changes in debt, there was a net decrease in cash of $225.7 in the first quarter of 1998 compared with a decrease of $294.1 in the comparable period of 1997. The $68.4 variance primarily reflects lower net cash used by operations and investing activities and a more positive effect of foreign currency exchange. The decrease in cash used by operations reflects the conclusion of the three-year long-term incentive plan which resulted in a cash payment in the first quarter of 1997 and a higher net income in 1998 (adjusted for the non-cash portion of the one-time charges). Cash used for investing activities is lower in 1998 due to the acquisition of Discovery Toys, Inc. in the first quarter of 1997. 15 16 AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Dollars in millions, except share data) During the first quarter of 1998, the Company purchased approximately 396,500 shares of common stock for $24.8 compared with $30.2 spent for the repurchase of approximately 532,500 shares during the comparable period in 1997. Capital Resources Total debt increased $168.5 to $402.8 from $234.3 at December 31, 1997, principally due to normal seasonal working capital requirements during the first three months of 1998. Total debt of $402.8 at March 31, 1998 remained relatively level with total debt of $416.7 at March 31, 1997. In addition, at March 31, 1998, and December 31, 1997, other non-current liabilities include approximately $58.0 and $58.6, respectively, related to securities lending activities. At March 31, 1998, there were borrowings of $35.0 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 $114.5 was outstanding at March 31, 1998. At March 31, 1998, there were $10.0 of borrowings outstanding under uncommitted lines of credit and there were no borrowings under the Company's bankers' acceptance facilities. In May 1998, the Company issued $100.0 of long-term debt and the net proceeds will be used to pay down commercial paper borrowings. As a result of the refinancing of commercial paper borrowings with the new long-term debt, $100.0 of commercial paper borrowings as of March 31, 1998 were reclassified to long-term debt. 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 March 31, 1998 and December 31, 1997, current liabilities exceeded current assets by $12.1 and $11.9, respectively. The increase of current liabilities over current assets of $.2 was mainly due to an increase in net debt (debt less cash and equivalents), as discussed in the Debt section, an increase in other accrued liabilities primarily due to the accrual for one- time charges offset by a decrease in accounts payable. 16 17 AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Dollars in millions, except share data) Although current liabilities exceeded current assets at March 31, 1998, management believes this is due to the Company's direct selling business format which results in lower receivable and working capital levels as well as the Company's practice of repurchasing shares with available cash. Avon's liquidity results from its ability to generate significant cash flows from operations and its ample unused borrowing capacity. Actions that would eliminate the working capital deficit are not anticipated at this time. 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 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 March 31, 1998, the Company had three interest rate swap agreements on its 170 million 6-1/8% Deutsche Mark Notes ("Notes"), due May 1998. Each agreement has a notional principal amount of $100.0. During 1995, the Company entered into an interest rate swap agreement, which effectively converted the interest payable on the Notes from a floating to a fixed interest rate basis of approximately 7.2% through maturity. On May 7, 1998, the Notes were repaid and the related contracts expired. The Company has one interest rate cap contract with a notional principal amount of $100.0, used to economically hedge the Company's short-term variable interest rate working capital debt. This cap contract expires in May 1998 and has been marked-to-market yielding an insignificant income statement adjustment. 17 18 AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Dollars in millions, except share data) 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 transactions. The Company regularly monitors its foreign currency exposures and ensures that hedge contract amounts do not exceed the amounts of the underlying exposures. At March 31, 1998, the Company held foreign currency forward contracts with notional amounts totaling $234.8 and option contracts with notional amounts totaling $65.3 to hedge foreign currency items. These contracts have maturities in 1999. The Company also entered into certain foreign currency forward contracts with notional amounts totaling $20.0 and option contracts with notional amounts of $4.2 to economically hedge certain foreign currency exposures, which do not qualify as hedging transactions under the current accounting definitions and, accordingly, have been marked-to-market. The mark-to-market adjustment on these contracts at March 31, 1998 was insignificant. The Company's risk of loss on the options in the future is limited to premiums paid, which are insignificant. The Company has entered into two forward contracts and two put option contracts to purchase shares of Avon common stock. The notional amount of the forward contracts total $10.0 ($5.0 per contract), with forward rates at $57.572 and $58.111 for the purchase of 86,848 and 86,042 shares, respectively. The put option contracts give the purchaser the right to sell 86,000 and 87,335 shares of Company stock to Avon at strike prices of $56.852 and $57.080, respectively. The contracts mature in 1998 and give the Company the choice of either net cash or share settlement. Accordingly, no adjustment for subsequent changes in fair value have 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 & Poor's Corporation. The Company's foreign currency and interest rate derivatives are comprised of over-the-counter forward contracts or options with major international financial institutions. Although the Company's theoretical credit risk is the replacement cost at 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. 18 19 AVON PRODUCTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Dollars in millions, except share data) Other Information On October 23, 1997, the Company announced that it had raised its long- term growth targets for sales and earnings and that it expected to record special charges in connection with a major re-engineering program. Commencing in 1998, the long-term target for sales growth has been raised to 8-10% compounded annually, and its target for earnings-per-share growth has been raised to 16-18% annually. Previously, the Company targeted long-term sales growth of 6-8% and long-term earnings-per-share growth of 13-15%. The higher targets come largely as a result of initiatives currently underway and others under review intended to reduce costs by up to $400.0 per year by 2000, with $200.0 of the savings being reinvested concurrently in advertising and marketing programs to boost sales. The Company expects to record special charges of approximately $200.0 pretax to cover one-time costs associated with the re-engineering program. In the first quarter of 1998, the Company recorded $108.4 pretax of such one-time charges ($84.2 after tax, or $.64 per share on a basic and diluted basis) in connection with the re-engineering program. Slightly more than half of the total pretax charges in the quarter were cash related and will be paid in 1998 and 1999. The Company expects to record the balance of such one-time charges in 1998 and early 1999. On April 21, 1998, the Chinese government issued a directive banning all direct selling in China. As of May 13, 1998, there is considerable uncertainty as to how this directive would be interpreted and applied going forward. In the meantime, the Company is complying with this directive by suspending its selling activities in China and is considering alternative methods of distribution and selling. The Company remains confident that China will have significant long-term potential. In any event, the ban on direct selling would not have a material adverse effect on the Company's overall financial position or results of operations. Year 2000 Management has developed a worldwide program to prepare the Company's computer systems and applications for the Year 2000. Based on a comprehensive assessment of key systems, the Company has commenced a project plan to address all necessary code changes, testing and implementation required to ensure Year 2000 compliance by December 31, 1999. Management does not expect the incremental costs of making the required system modifications to have a material impact on the Company's consolidated financial position, results of operations or cash flows. 19 20 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. 20 21 AVON PRODUCTS, INC. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. (a) At the annual meeting of shareholders of Avon, held on May 7, 1998, the matters described under (c) below were voted upon. (c) Annual meeting votes: Against Abstentions or and Broker For Withheld Non-Votes ----------- -------- ----------- (1) To elect four directors to three- year terms expiring in 2001: Richard S. Barton................ 114,988,370 -0- 1,538,252 Edward T. Fogarty................ 114,988,370 -0- 1,538,252 George V. Grune.................. 114,988,370 -0- 1,538,252 Charles R. Perrin................ 114,988,370 -0- 1,538,252 To elect three directors to two-year terms expiring in 2000 Stanley C. Gault................. 115,017,187 -0- 1,509,435 Andrea Jung ..................... 115,017,187 -0- 1,509,435 Susan J. Kropf................... 115,017,187 -0- 1,509,435 (2) To ratify the appointment of Coopers & Lybrand L.L.P., as Avon's independent accountants for 1998.......................... 116,186,548 166,085 173,989 21 22 AVON PRODUCTS, INC. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description ------ ----------- 3.3 --Certificate of Amendment of the Certificate of Incorporation of Avon Products, Inc. 27 --Financial Data Schedule. (b) Reports on Form 8-K. On March 18, 1998, the Company filed a Form 8-K announcing that on March 5, 1998, the Board of Directors of Avon Products, Inc., adopted a new shareholder rights plan, effective as of the close of business on March 30, 1998, to replace the Company's existing shareholder rights plan, which expires at the close of business on March 30, 1998 22 23 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: May 13, 1998 By /s/ ROBERT J. CORTI ------------------------------- Robert J. Corti Senior Vice President, Chief Financial Officer Principal Financial Officer Signed both on behalf of the registrant and as principal accounting officer. 23 EX-99 2 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 March 31, 1998 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 - ------- ----------- 3.3 --Certificate of Amendment of the Certificate of Incorporation of Avon Products, Inc. 27 --Financial Data Schedule. EX-3.3 3 EXHIBIT 3.3 CERTIFICATE OF AMENDMENT of THE CERTIFICATE OF INCORPORATION of AVON PRODUCTS, INC. (Under Section 805 of the Business Corporation Law) Pursuant to the provisions of Sections 502 and 805 of the Business Corporation Law, the undersigned hereby certify: 1. The name of the corporation is AVON PRODUCTS, INC. (the "Corporation") and the name under which the Corporation was formed is California Perfume Company, Inc. 2. The Certificate of Incorporation of the Corporation was filed by the Department of State of the State of New York on January 27, 1916. 3. The Certificate of Incorporation of the Corporation is hereby amended by the addition of the following provision stating the number, designations, relative rights, preferences and limitations of a series of Series B Participating Preferred Stock, par value $1.00 per share, as fixed by the Board of Directors of the Corporation pursuant to the authority vested in it by the Certificate of Incorporation of the Corporation. ARTICLE IIIB. 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 a 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. (C) 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: (A) 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. Section 11. Board Approval. This Certificate of Amendment of the Certificate of the Incorporation of the Corporation was approved by the Board of Directors on March 5, 1998. IN WITNESS WHEREOF, we have executed and subscribed this Certificate of Amendment, and do affirm the foregoing as true, this 30th day of March, 1998, under penalties of perjury. Name:/s/ James E. Preston Title: Chairman of the Board & Chief Executive Officer Name: Ward M. Miller, Jr. Title: Senior Vice President, General Counsel & Secretary EX-27 4 EXHIBIT 27
5 Exhibit 27 Avon Products, Inc. Financial Data Schedule This schedule contains summary financial information extracted from the Avon Products, Inc. financial statements as of March 31, 1998 and for the three months then ended included in the Form 10-Q as of March 31, 1998 and is qualified in its entirety by reference to such financial statements. 1000000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 85 0 478 (37) 599 1,372 1,299 694 2,308 1,384 101 0 0 44 147 2,308 1,183 1,183 503 1,175 0 25 10 (27) 6 (31) 0 0 0 (31) (.24) (.24)
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