Avon 2007 Annual Report Download - page 15

efforts are significant to developing new products, including
formulating effective beauty treatments relevant to women’s
needs, and redesigning or reformulating existing products. To
increase our brand competitiveness, we have increased our focus
on new technology and product innovation to deliver
first-to-market products that deliver visible consumer benefits.
Our global research and development facility is located in Suffern,
NY. A team of researchers and technicians apply the disciplines of
science to the practical aspects of bringing products to market
around the world. Relationships with dermatologists and other
specialists enhance our ability to deliver new formulas and
ingredients to market. Additionally, we have satellite research
facilities located in Brazil, China, Japan, Mexico and Poland.
In 2007, our most significant product launches included Anew
Ultimate Age Repair Night Cream and Elixir, Christian Lacroix
fragrances, Imari Seduction and Avon Color cosmetics, including
Uplifting Mascara and Ultra Color Rich Lipstick.
The amounts incurred on research activities relating to the devel-
opment of new products and the improvement of existing prod-
ucts were $71.8 in 2007, $65.8 in 2006, and $64.2 in 2005. This
research included the activities of product research and
development and package design and development. Most of
these activities were related to the development of CFT products.
Environmental Matters
In general, compliance with environmental regulations impacting
our global operations has not had, and is not anticipated to
have, any material adverse effect upon the capital expenditures,
financial position or competitive position of Avon.
Employees
At December 31, 2007, we employed approximately 42,000
employees. Of these, approximately 6,100 were employed in the
U.S. and 35,900 in other countries.
Website Access to Reports
Our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and amendments to those
reports, are and have been throughout 2007, available without
charge on our investor website (www.avoninvestor.com) as soon
as reasonably practicable after they are filed with or furnished to
the Securities and Exchange Commission (the “SEC”). We also
make available on our website the charters of our Board
Committees, our Corporate Governance Guidelines and our
Code of Business Conduct and Ethics. Copies of these SEC
reports and other documents are also available, without charge,
from Investor Relations, Avon Products, Inc., 1345 Avenue of the
Americas, New York, NY 10105-0196 or by sending an email to
[email protected] or by calling [phone].
Information on our website does not constitute part of this
report. Additionally, our filings with the SEC may be read and
copied at the SEC Public Reference Room at 100 F Street, N.E.
Room 1580 Washington, DC 20549. Information on the oper-
ation of the Public Reference Room may be obtained by calling
1-800-SEC-0330. These filings are also available on the SEC’s
website at www.sec.gov free of charge as soon as reasonably
practicable after we have filed or furnished the above referenced
reports.
ITEM 1A. RISK FACTORS
You should carefully consider each of the following risks asso-
ciated with an investment in our publicly traded securities and all
of the other information in this 2007 Annual Report on Form
10-K. Our business may also be adversely affected by risks and
uncertainties not presently known to us or that we currently
believe to be immaterial. If any of the events contemplated by the
following discussion of risks should occur, our business, pros-
pects, financial condition and results of operations may suffer.
Our success depends on our ability to
execute fully our global business strategy.
Our ability to implement the key initiatives of our global business
strategy is dependent upon a number of factors, including our
ability to:
• implement our multi-year restructuring plan and achieve
anticipated savings from the initiatives under this plan;
• increase our beauty sales and market share, and strengthen
our brand image;
• realize anticipated cost savings and reinvest such savings effec-
tively in consumer-oriented investments and other aspects of
our business;
• implement appropriate product mix and pricing strategies,
including our PLS program and achieve anticipated benefits
from these strategies;
• implement enterprise resource planning and SSI and realize
efficiencies across our supply chain, marketing processes, sales
model and organizational structure;
• implement our outsourcing strategies;
• implement initiatives to reduce inventory levels;
• maintain appropriate cash flow levels and implement cash
management, tax, foreign currency hedging and risk
management strategies;
• implement our Sales Leadership program globally, recruit
Representatives, enhance the Representative experience and
increase their productivity through investments in the direct
selling channel;
• reach new consumers through a combination of new brands,
new businesses, new channels and pursuit of strategic oppor-
tunities such as acquisitions, joint ventures and strategic alli-
ances with other companies; and
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