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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(D) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) December 20, 2002
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AVON PRODUCTS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
New York
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(State or Other Jurisdiction of Incorporation)
1-4881 13-0544597
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(Commission File Number) (IRS Employer Identification No.)
1345 Avenue of the Americas
New York, New York 10105-0196
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(Address of Principal Executive Offices) (Zip Code)
(212) 282-5000
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
1. On January 30, 2003 the Company issued a press release announcing that it
had agreed with J.C. Penney to end the business relationship pursuant to
which the Company's beComing line of products has been carried in
approximately 90 J.C. Penney stores. A copy of the press release is
attached hereto as Exhibit 99.1 and is hereby incorporated by reference.
2. Polish subsidiaries of the Company have been responding to Protocols of
Inspection served by the Polish tax authorities in respect of 1999 and
2000 tax audits. The Protocols asserted tax deficiencies, penalties and
accruing interest totaling approximately $24 million at current exchange
rates: $11 million primarily relating to the documentation of certain
sales, and $13 million relating to excise taxes. The procedural rules for
conducting audits in Poland changed effective January 1, 2003, and the
Company was informed on January 14, 2003 and January 17, 2003,
respectively, that the tax authorities had rejected the Company's factual
assertions regarding the alleged tax deficiencies. Under the new
procedures, the matters now await the commencement of a second stage of
proceeding at which the applicable legal conclusions will be determined.
In the event that assessments are finally established at the second stage
of the proceedings, it may be necessary to pay the assessments in order to
pursue further appeals, which may result in a charge to income. Management
believes that there are meritorious defenses to these proceedings and they
are being vigorously contested. It is not possible to make a meaningful
estimate of the amount or range of expense that could result from an
unfavorable outcome in these proceedings but management does not believe
that the proceedings ultimately will have a material impact on the
Consolidated Financial Statements.
3. On December 20, 2002 a Brazilian subsidiary of the Company received a
series of tax assessments from the Brazilian tax authorities asserting
that the establishment in 1995 of separate manufacturing and distribution
companies in that country was done without a valid business purpose. The
assessments assert tax deficiencies during portions of the years 1997 and
1998 of approximately $50 million at the current exchange rate, plus
penalties and accruing interest totaling approximately $84 million at the
current exchange rate. In the event that the assessments are upheld in the
earlier stages of review, it may be necessary for the Company to provide
security to pursue further appeals, which, depending on the circumstances,
may result in a charge to income. It is not possible to make a meaningful
estimate of the amount or range of expense that could result from an
unfavorable outcome in respect of these or any additional assessments that
may be issued for subsequent periods. The structure adopted in 1995 is
comparable to that used by many companies in Brazil, and the Company
believes it is appropriate, both operationally and legally, and that the
assessments are unfounded. This matter is being vigorously contested and
in the opinion of the Company's outside counsel the likelihood that the
assessments ultimately will be upheld is remote. Management believes that
the likelihood that the assessments will have a material impact on the
Consolidated Financial Statements is also remote.
SIGNATURE
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 hereunto duly authorized.
AVON PRODUCTS, INC.
Dated: January 31, 2003 By: /s/ Gilbert L. Klemann, II
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Name: Gilbert L. Klemann, II
Title: Senior Vice President,
General Counsel and Secretary
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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99.1 Press Release of Avon Products, Inc., dated January 30, 2003.