Avon 2008 Annual Report Download - page 20

PART I
The loss of or a disruption in our
manufacturing and distribution operations
could adversely affect our business.
Our principal properties consist of worldwide manufacturing
facilities for the production of CFT products, distribution centers
where offices are located and where finished merchandise is
packed and shipped to Representatives in fulfillment of their
orders, and one principal research and development facility.
Therefore, as a company engaged in manufacturing, distribution
and research and development on a global scale, we are subject
to the risks inherent in such activities, including industrial acci-
dents, environmental events, strikes and other labor disputes,
disruptions in logistics or information systems, loss or impairment
of key manufacturing sites, product quality control, safety, licens-
ing requirements and other regulatory issues, as well as natural
disasters, acts of terrorism and other external factors over which
we have no control. The loss of, or damage to, any of our facili-
ties or centers could have a material adverse effect on our busi-
ness, results of operations and financial condition.
Our success depends, in part, on the
quality and safety of our products.
Our success depends, in part, on the quality and safety of our
products. If our products are found to be defective or unsafe, or
if they otherwise fail to meet our Representatives’ or end cus-
tomers’ standards, our relationship with our Representatives or
end customers could suffer, we could need to recall some of our
products, our reputation or the appeal of our brand could be
diminished, and we could lose market share and/or become
subject to liability claims, any of which could result in a material
adverse effect on our business, results of operations and finan-
cial condition.
Any future acquisitions may expose us to
additional risks.
We continuously review acquisition prospects that would comple-
ment our current product offerings, increase the size and geo-
graphic scope of our operations or otherwise offer growth and
operating efficiency opportunities. The financing for any of these
acquisitions could dilute the interests of our stockholders, result
in an increase in our indebtedness or both. Acquisitions may
entail numerous risks, including:
• difficulties in assimilating acquired operations or products,
including the loss of key employees from acquired businesses
and disruption to our direct selling channel;
• diversion of management’s attention from our core business;
• adverse effects on existing business relationships with suppli-
ers and customers; and
• risks of entering markets in which we have limited or no prior
experience.
Our failure to successfully complete the integration of any
acquired business could have a material adverse effect on our
business, financial condition and operating results. In addition,
there can be no assurance that we will be able to identify suit-
able acquisition candidates or consummate acquisitions on
favorable terms.
Our information technology systems may
be susceptible to disruptions.
We employ information technology systems to support our busi-
ness, including systems to support financial reporting, an enter-
prise resource planning system which we are implementing on a
worldwide basis, and an internal communication and data trans-
fer network. We also employ information technology systems to
support Representatives in many of our markets, including elec-
tronic order collection and invoicing systems and on-line train-
ing. We have Internet sites in many of our markets, including
business-to-business sites to support Representatives. We have
undertaken initiatives to increase our reliance on employing
information technology systems to support our Representatives,
as well as initiatives, as part of our multi-year restructuring pro-
gram, to outsource certain services, including the provision of
global human resources information technology systems to our
employees and other information technology processes. Any of
these systems may be susceptible to outages due to fire, floods,
power loss, telecommunications failures, terrorist attacks,
break-ins and similar events. Despite the implementation of
network security measures, our systems may also be vulnerable
to computer viruses, break-ins and similar disruptions from
unauthorized tampering with these systems. The occurrence of
these or other events could disrupt our information technology
systems and adversely affect our operation.
Our success depends, in part, on our key
personnel.
Our success depends, in part, on our ability to retain our key
personnel, including our executive officers and senior manage-
ment team. The unexpected loss of one or more of our key
employees could adversely affect our business. Our success also
depends, in part, on our continuing ability to identify, hire, train
and retain other highly qualified personnel. Competition for
these employees can be intense. We may not be able to attract,
assimilate or retain qualified personnel in the future, and our
failure to do so could adversely affect our business. This risk may
be exacerbated by the uncertainties associated with the imple-
mentation of our multi-year restructuring plan.