Avon 2009 Annual Report Download - page 32

PART I
We are investigating Foreign Corrupt
Practices Act (FCPA) and related U.S. and
foreign law matters, and from time to time
we may conduct other internal
investigations and compliance reviews, the
consequences of which could negatively
impact our business.
From time to time, we may conduct internal investigations and
compliance reviews, the consequences of which could negatively
impact our business. Any determination that our operations or
activities are not in compliance with existing United States or
foreign laws or regulations could result in the imposition of sub-
stantial fines, interruptions of business, termination of necessary
licenses and permits, and other legal or equitable sanctions.
Other legal or regulatory proceedings, as well as government
investigations, which often involve complex legal issues and are
subject to uncertainties, may also follow as aconsequence. It is
our policy to cooperate with U.S. and foreign government
agencies and regulators, as appropriate, in connection with our
investigations and compliance reviews.
As previously reported, we have engaged outside counsel to
conduct an internal investigation and compliance reviews focused
on compliance with the FCPA and related U.S. and foreign laws
in China and additional countries. The internal investigation and
compliance reviews, which are being conducted under the
oversight of our Audit Committee, began in June 2008. We
voluntarily contacted the United States Securities and Exchange
Commission and the United States Department of Justice to
advise both agencies of our internal investigation and compliance
reviews and we are, as we have done from the beginning of the
internal investigation, continuing to cooperate with both agencies
and have signed tolling agreements with them.
The internal investigation and compliance reviews, which started
in China, are focused on reviewing certain expenses and books
and records processes, including, but not limited to, travel, enter-
tainment, gifts, and payments to third-party agents and others,
in connection with our business dealings, directly or indirectly,
with foreign governments and their employees. The internal
investigation and compliance reviews of these matters are ongoing.
At this point we are unable to predict the duration, scope or
results of the internal investigation and compliance reviews.
Any determination that our operations or activities are not in
compliance with existing laws or regulations could result in the
imposition of substantial fines, civil and criminal penalties, equi-
table remedies, including disgorgement, injunctive relief and
other sanctions against us or our personnel. In addition, other
countries in which we do business may initiate their own inves-
tigations and impose similar sanctions. Because the internal
investigation and compliance reviews are ongoing, there can be
no assurance as to how the resulting consequences, if any, may
impact our internal controls, business, reputation, results of
operations or financial condition.
ITEM 1B. UNRESOLVED STAFF
COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Our principal properties worldwide consist of manufacturing
facilities for the production of Beauty products, distribution
centers where offices are located and where finished merchan-
dise is packed and shipped to Representatives in fulfillment of
their orders, and one principal research and development facility.
Our domestic manufacturing facilities are located in Morton
Grove, IL and Springdale, OH. Our domestic distribution centers
are located in Atlanta, GA; Glenview, IL; Zanesville, OH; and
Pasadena, CA. Our research and development facility is located
in Suffern, NY. We also lease office space in two locations in
New York City and own property in Rye, NY, for our executive
and administrative offices. In early 2010, we entered into alease
for anew office location in New York City that will eventually
replace one of the existing New York City office locations on
more favorable terms.
Other principal properties outside the U.S. measuring 50,000
square feet or more include the following:
•two distribution centers for primary use in North America
operations (other than in the U.S.);
•four manufacturing facilities, eleven distribution centers and
two administrative offices in Latin America;
•four manufacturing facilities in Europe, primarily servicing
Western Europe, Middle East &Africa and Central &
Eastern Europe;
•seven distribution centers and four administrative offices in
Western Europe, Middle East &Africa;
•four distribution centers and two administrative offices in
Central &Eastern Europe;
•two manufacturing facilities, four distribution centers, and one
administrative offices in Asia Pacific; and
•two manufacturing facilities and six distribution centers in China.