Avon Reports Record First Quarter E.P.S. Up 13%, Exceeding Expectations

Beauty Growth Drives Sales and Earnings Gains



$218 Million Increase in Cash Flow Reported



Apr 27, 2001, 01:00 ET from Avon Products, Inc.

    NEW YORK, April 27 /PRNewswire/ -- Avon Products, Inc. (NYSE:   AVP) today
 reported earnings per share in the first quarter exceeded the consensus
 estimate among Wall Street analysts and operating cash flow increased
 significantly from the prior year.
     Avon announced that basic and diluted earnings per share in the first
 quarter of 2001 rose 13% to $.34, versus $.30 per share in the first quarter
 of 2000 before a $.03 per share charge for the cumulative effect of an
 accounting change.
     Sales in the quarter increased 3% to $1.35 billion, compared with
 $1.31 billion in the year-ago period.  Excluding the effects of foreign
 currency exchange, sales increased 8%.
     Net income in the first quarter of 2001 rose 16% to $82.0 million, versus
 $70.4 million a year ago, before charges of $.3 million and $6.7 million in
 2001 and 2000, respectively, for the cumulative effect of accounting changes.
     Avon said sales growth in the first quarter 2001 was driven by a very
 healthy 5% increase in sales of cosmetics, fragrance and toiletry (CFT)
 products, including a 6% increase in the U.S., reflecting Avon's continued
 focus on strengthening its beauty business.  Key business indicators also were
 positive in the quarter.  Units were up 6% and the number of active
 Representatives rose 13%, with the U.S. and all international regions
 delivering gains.
     Gross margin in the quarter improved by 40 basis points to 63.1%.
 Operating margin advanced by 20 basis points to 10.7%, making the first
 quarter of 2001 the 13th consecutive quarter of year-over-year operating
 margin improvement.
     Avon also reported that operating cash flow in the quarter increased by
 $218 million, including a $95 million one-time cash benefit from a recent tax
 settlement in the U.S.  Even excluding the tax benefit, this was the best
 first quarter cash flow performance in over a decade, the company said.
     Commenting on the results, Andrea Jung, Avon's chief executive officer,
 said, "We are very pleased with our performance in the first quarter,
 particularly given the difficult economic environment this year and tough
 comparisons against last year's robust results.  Our core beauty and direct
 selling business continues to perform exceptionally well, demonstrating that
 our strategies for generating profitable growth are working."
     "The year is off to a great start and, with the momentum we're seeing in
 the U.S. and around the world, we expect 2001 to be another strong year,
 following an excellent performance in 2000.  We continue to fund additional
 investments to enhance Avon's brand image and contemporize our direct selling
 channel, on top of the $100 million increase in strategic spending last year.
 Additionally, we are looking forward to continued momentum into the second
 half, with the 15-market launch of Avon Wellness, our new global line of
 women's health and well-being products, and beComing, our new beauty and
 lifestyle brand that will launch at retail in the U.S. this fall," Ms. Jung
 said.
 
     Regional Highlights
     In the North America region, despite a weak economic environment, Avon
 U.S. increased sales in the first quarter 2001 by 2%, with accelerating
 improvement throughout the quarter.  Operating profit in the U.S. increased
 2%, as expected, after higher strategic spending versus last year. U.S. sales
 of beauty products rose 6%, on top of 7% growth in the prior-year first
 quarter.  The U.S. also posted a 3% increase in the number of active
 representatives -- the highest growth rate in recent years.
     The Europe region increased sales in the quarter by 9%.  Excluding the
 impact of foreign currency translation, sales rose 17%.  Sales of CFT products
 rose 11%, and all key business indicators across the region grew by strong
 double-digits, including units (up 18%) and the number of active
 representatives (up 23%).  Strong double-digit sales gains in the developing
 markets of Central and Eastern Europe, and a more than doubling of sales in
 Russia, drove sales growth in the region.  Operating profit in Europe rose
 31%, also due to outstanding performance in the developing markets in the
 region.
     Sales in Latin America in the first quarter of 2001 grew 6% versus the
 prior-year period.  Excluding foreign currency exchange, sales rose 12%.
 Sales of CFT products increased 8%.  Unit sales and the number of active
 representatives increased 6% and 12%, respectively.  Mexico, Brazil, Venezuela
 and the countries of Central America all delivered double-digit local currency
 sales growth.  As expected, Argentina and Chile continued to post weak results
 due to overall economic conditions.  Operating profit in the Latin America
 region grew 12% in the quarter, reflecting strong increases in Mexico, Brazil
 and Venezuela.
     In the Pacific region, sales declined 4%, but rose 7% excluding the impact
 of foreign currency exchange, driven by unit growth of 8% and a 13% increase
 in active representatives.  The sales results for the region were affected by
 Taiwan, where economic indicators are at the lowest level since 1995. China,
 however, grew sales by 40% versus prior-year, continuing its rapid retail
 expansion after a government ban on direct selling was imposed in 1998.
 Nearly all countries in the region posted gains in local currency sales, units
 and active representatives.  Operating profit declined 7%, due mainly to
 foreign currency weakness in the region and difficult economic conditions in
 Taiwan.  Excluding the effects of currency translation, operating profit in
 the region increased 7% in the quarter.
     Avon will conduct a conference call today at 10:00 a.m. New York time to
 discuss the results for the quarter and the outlook for the rest of the year.
 The conference call will be webcast live and can be accessed through the
 Investor section of the company's web site, http://www.avon.com.
     Avon is the world's leading direct seller of beauty and related products,
 with $5.7 billion in annual revenues.  Avon markets to women in 139 countries
 through 3.4 million independent sales representatives.  Avon product lines
 include such recognizable brands as Anew, Skin-So-Soft, Avon Color, Far Away,
 Rare Gold, Perceive, and Avon Skin Care.  Avon also markets an extensive line
 of fashion jewelry, apparel, gifts and collectibles.  More information about
 Avon and its products can be found on the company's award-winning web site
 http://www.avon.com.
 
     Cautionary Statement under the Private Securities Litigation Reform Act of
 1995
 
     Statements in this release, which are not historical facts or information,
 are "forward-looking statements" within the meaning of the Private Securities
 Litigation Reform Act of 1995.  Such forward-looking statements are based on
 management's reasonable current assumptions and expectations.  Such
 forward-looking statements involve risks, uncertainties and other important
 factors which may cause the actual results of the Company to be materially
 different from any future results expressed or implied by such forward-looking
 statements, and there can be no assurance that actual results will not differ
 materially from management's expectations.  Such important factors include,
 among others, the following:  general economic and business conditions in the
 Company's markets; the Company's ability to implement its business strategy;
 the Company's ability to achieve anticipated cost savings and profitability
 targets; the impact of substantial currency exchange fluctuations in the
 Company's principal foreign markets; and the effect of legal and regulatory
 proceedings and restrictions imposed on the Company or its operations by
 foreign governments.  Additional information identifying such important
 factors is contained in the Company's Form 10-K report for the year ended
 December 31, 2000, filed with the S.E.C.  The Company undertakes no obligation
 to update any such forward-looking statements.
 
 
                           AVON PRODUCTS, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
                  (In millions, except per share data)
 
 
                                              Three months ended     Percent
                                                   March 31          Change
                                              2001         2000
 
 
     Net sales                                $1,347.2     $1,306.7       3%
     Other revenue                                10.6         10.4
     Total revenue                             1,357.8      1,317.1       3%
 
     Cost of sales                               501.1        490.8
     Marketing, distribution and
          administrative expenses                710.9        688.5
          Operating profit                       145.8        137.8       6%
 
     Interest expense                             19.7         19.9
     Interest income                              (2.0)        (1.8)
     Other expense, net *                          1.6         10.2
          Total other expenses                    19.3         28.3
     Income from continuing operations
      before taxes, minority interest and
      cumulative effect of accounting
       changes                                   126.5        109.5      16%
     Income taxes                                 44.5         39.1
 
     Income from continuing operations
      before minority
      interest and cumulative effect of
       accounting changes                         82.0         70.4      16%
     Minority interest                              --           --
     Income from continuing operations
      before
       cumulative effect of accounting
        changes                                   82.0         70.4      16%
     Cumulative effect of accounting
      changes, net of tax                          (.3)        (6.7)
     Net income                                  $81.7        $63.7      28%
 
 
     Earnings per share:
 
     Basic earnings per share:
          Continuing operations                   $.34         $.30      13%
          Cumulative effect of accounting
           changes                                  --         (.03)
                                                  $.34         $.27      26%
 
     Diluted earnings per share:
          Continuing operations**                 $.34         $.30      13%
          Cumulative effect of accounting
           changes                                  --         (.03)
                                                  $.34         $.27      26%
 
     Average shares outstanding:
     Basic                                      237.91       237.64
     Diluted                                    246.77       239.15
 
 
 
     * Other expense, net includes foreign exchange (gains)/losses of $(0.2)
       and $7.1 in 2001 and 2000, respectively.
 
 
     ** For purposes of calculating diluted earnings per share for the three
        months ended March 31, 2001, after tax interest expense of
        $2.5 applicable to convertible debt has been added back to net income.
 
     Notes:
     For the three months ended March 31, 2001, the Company recorded a charge
     of $0.3, after tax, to reflect the adoption of FASB Statement No. 133,
     "Accounting For Derivative Instruments and Hedging Activities".  This
     charge is reflected as a cumulative effect of an accounting change in the
     Consolidated Statements of Income.
 
     For the three months ended March 31, 2000, the Company recorded a charge
     of $6.7, after tax, to reflect the adoption of Staff Accounting Bulletin
     ("SAB") No. 101, "Revenue Recognition in Financial Statements". This
     charge is reflected as a cumulative effect of an accounting change in the
     Consolidated Statements of Income.  Restatements were made to previously
     reported 2000 quarterly information to reflect the adoption of SAB 101.
 
     For the year ended December 31, 2000, the Company adopted the provisions
     of Emerging Issues Task Force ("EITF") 00-10, "Accounting for Shipping and
     Handling Fees and Costs" which requires that amounts billed to customers
     for shipping and handling fees be classified as revenues. All prior
     periods have been restated to reflect shipping and handling fees,
     previously reported in Marketing, distribution & administrative expenses,
     in Other revenue in the Consolidated Statements of Income.
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X74317266
 
 

SOURCE Avon Products, Inc.
    NEW YORK, April 27 /PRNewswire/ -- Avon Products, Inc. (NYSE:   AVP) today
 reported earnings per share in the first quarter exceeded the consensus
 estimate among Wall Street analysts and operating cash flow increased
 significantly from the prior year.
     Avon announced that basic and diluted earnings per share in the first
 quarter of 2001 rose 13% to $.34, versus $.30 per share in the first quarter
 of 2000 before a $.03 per share charge for the cumulative effect of an
 accounting change.
     Sales in the quarter increased 3% to $1.35 billion, compared with
 $1.31 billion in the year-ago period.  Excluding the effects of foreign
 currency exchange, sales increased 8%.
     Net income in the first quarter of 2001 rose 16% to $82.0 million, versus
 $70.4 million a year ago, before charges of $.3 million and $6.7 million in
 2001 and 2000, respectively, for the cumulative effect of accounting changes.
     Avon said sales growth in the first quarter 2001 was driven by a very
 healthy 5% increase in sales of cosmetics, fragrance and toiletry (CFT)
 products, including a 6% increase in the U.S., reflecting Avon's continued
 focus on strengthening its beauty business.  Key business indicators also were
 positive in the quarter.  Units were up 6% and the number of active
 Representatives rose 13%, with the U.S. and all international regions
 delivering gains.
     Gross margin in the quarter improved by 40 basis points to 63.1%.
 Operating margin advanced by 20 basis points to 10.7%, making the first
 quarter of 2001 the 13th consecutive quarter of year-over-year operating
 margin improvement.
     Avon also reported that operating cash flow in the quarter increased by
 $218 million, including a $95 million one-time cash benefit from a recent tax
 settlement in the U.S.  Even excluding the tax benefit, this was the best
 first quarter cash flow performance in over a decade, the company said.
     Commenting on the results, Andrea Jung, Avon's chief executive officer,
 said, "We are very pleased with our performance in the first quarter,
 particularly given the difficult economic environment this year and tough
 comparisons against last year's robust results.  Our core beauty and direct
 selling business continues to perform exceptionally well, demonstrating that
 our strategies for generating profitable growth are working."
     "The year is off to a great start and, with the momentum we're seeing in
 the U.S. and around the world, we expect 2001 to be another strong year,
 following an excellent performance in 2000.  We continue to fund additional
 investments to enhance Avon's brand image and contemporize our direct selling
 channel, on top of the $100 million increase in strategic spending last year.
 Additionally, we are looking forward to continued momentum into the second
 half, with the 15-market launch of Avon Wellness, our new global line of
 women's health and well-being products, and beComing, our new beauty and
 lifestyle brand that will launch at retail in the U.S. this fall," Ms. Jung
 said.
 
     Regional Highlights
     In the North America region, despite a weak economic environment, Avon
 U.S. increased sales in the first quarter 2001 by 2%, with accelerating
 improvement throughout the quarter.  Operating profit in the U.S. increased
 2%, as expected, after higher strategic spending versus last year. U.S. sales
 of beauty products rose 6%, on top of 7% growth in the prior-year first
 quarter.  The U.S. also posted a 3% increase in the number of active
 representatives -- the highest growth rate in recent years.
     The Europe region increased sales in the quarter by 9%.  Excluding the
 impact of foreign currency translation, sales rose 17%.  Sales of CFT products
 rose 11%, and all key business indicators across the region grew by strong
 double-digits, including units (up 18%) and the number of active
 representatives (up 23%).  Strong double-digit sales gains in the developing
 markets of Central and Eastern Europe, and a more than doubling of sales in
 Russia, drove sales growth in the region.  Operating profit in Europe rose
 31%, also due to outstanding performance in the developing markets in the
 region.
     Sales in Latin America in the first quarter of 2001 grew 6% versus the
 prior-year period.  Excluding foreign currency exchange, sales rose 12%.
 Sales of CFT products increased 8%.  Unit sales and the number of active
 representatives increased 6% and 12%, respectively.  Mexico, Brazil, Venezuela
 and the countries of Central America all delivered double-digit local currency
 sales growth.  As expected, Argentina and Chile continued to post weak results
 due to overall economic conditions.  Operating profit in the Latin America
 region grew 12% in the quarter, reflecting strong increases in Mexico, Brazil
 and Venezuela.
     In the Pacific region, sales declined 4%, but rose 7% excluding the impact
 of foreign currency exchange, driven by unit growth of 8% and a 13% increase
 in active representatives.  The sales results for the region were affected by
 Taiwan, where economic indicators are at the lowest level since 1995. China,
 however, grew sales by 40% versus prior-year, continuing its rapid retail
 expansion after a government ban on direct selling was imposed in 1998.
 Nearly all countries in the region posted gains in local currency sales, units
 and active representatives.  Operating profit declined 7%, due mainly to
 foreign currency weakness in the region and difficult economic conditions in
 Taiwan.  Excluding the effects of currency translation, operating profit in
 the region increased 7% in the quarter.
     Avon will conduct a conference call today at 10:00 a.m. New York time to
 discuss the results for the quarter and the outlook for the rest of the year.
 The conference call will be webcast live and can be accessed through the
 Investor section of the company's web site, http://www.avon.com.
     Avon is the world's leading direct seller of beauty and related products,
 with $5.7 billion in annual revenues.  Avon markets to women in 139 countries
 through 3.4 million independent sales representatives.  Avon product lines
 include such recognizable brands as Anew, Skin-So-Soft, Avon Color, Far Away,
 Rare Gold, Perceive, and Avon Skin Care.  Avon also markets an extensive line
 of fashion jewelry, apparel, gifts and collectibles.  More information about
 Avon and its products can be found on the company's award-winning web site
 http://www.avon.com.
 
     Cautionary Statement under the Private Securities Litigation Reform Act of
 1995
 
     Statements in this release, which are not historical facts or information,
 are "forward-looking statements" within the meaning of the Private Securities
 Litigation Reform Act of 1995.  Such forward-looking statements are based on
 management's reasonable current assumptions and expectations.  Such
 forward-looking statements involve risks, uncertainties and other important
 factors which may cause the actual results of the Company to be materially
 different from any future results expressed or implied by such forward-looking
 statements, and there can be no assurance that actual results will not differ
 materially from management's expectations.  Such important factors include,
 among others, the following:  general economic and business conditions in the
 Company's markets; the Company's ability to implement its business strategy;
 the Company's ability to achieve anticipated cost savings and profitability
 targets; the impact of substantial currency exchange fluctuations in the
 Company's principal foreign markets; and the effect of legal and regulatory
 proceedings and restrictions imposed on the Company or its operations by
 foreign governments.  Additional information identifying such important
 factors is contained in the Company's Form 10-K report for the year ended
 December 31, 2000, filed with the S.E.C.  The Company undertakes no obligation
 to update any such forward-looking statements.
 
 
                           AVON PRODUCTS, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
                  (In millions, except per share data)
 
 
                                              Three months ended     Percent
                                                   March 31          Change
                                              2001         2000
 
 
     Net sales                                $1,347.2     $1,306.7       3%
     Other revenue                                10.6         10.4
     Total revenue                             1,357.8      1,317.1       3%
 
     Cost of sales                               501.1        490.8
     Marketing, distribution and
          administrative expenses                710.9        688.5
          Operating profit                       145.8        137.8       6%
 
     Interest expense                             19.7         19.9
     Interest income                              (2.0)        (1.8)
     Other expense, net *                          1.6         10.2
          Total other expenses                    19.3         28.3
     Income from continuing operations
      before taxes, minority interest and
      cumulative effect of accounting
       changes                                   126.5        109.5      16%
     Income taxes                                 44.5         39.1
 
     Income from continuing operations
      before minority
      interest and cumulative effect of
       accounting changes                         82.0         70.4      16%
     Minority interest                              --           --
     Income from continuing operations
      before
       cumulative effect of accounting
        changes                                   82.0         70.4      16%
     Cumulative effect of accounting
      changes, net of tax                          (.3)        (6.7)
     Net income                                  $81.7        $63.7      28%
 
 
     Earnings per share:
 
     Basic earnings per share:
          Continuing operations                   $.34         $.30      13%
          Cumulative effect of accounting
           changes                                  --         (.03)
                                                  $.34         $.27      26%
 
     Diluted earnings per share:
          Continuing operations**                 $.34         $.30      13%
          Cumulative effect of accounting
           changes                                  --         (.03)
                                                  $.34         $.27      26%
 
     Average shares outstanding:
     Basic                                      237.91       237.64
     Diluted                                    246.77       239.15
 
 
 
     * Other expense, net includes foreign exchange (gains)/losses of $(0.2)
       and $7.1 in 2001 and 2000, respectively.
 
 
     ** For purposes of calculating diluted earnings per share for the three
        months ended March 31, 2001, after tax interest expense of
        $2.5 applicable to convertible debt has been added back to net income.
 
     Notes:
     For the three months ended March 31, 2001, the Company recorded a charge
     of $0.3, after tax, to reflect the adoption of FASB Statement No. 133,
     "Accounting For Derivative Instruments and Hedging Activities".  This
     charge is reflected as a cumulative effect of an accounting change in the
     Consolidated Statements of Income.
 
     For the three months ended March 31, 2000, the Company recorded a charge
     of $6.7, after tax, to reflect the adoption of Staff Accounting Bulletin
     ("SAB") No. 101, "Revenue Recognition in Financial Statements". This
     charge is reflected as a cumulative effect of an accounting change in the
     Consolidated Statements of Income.  Restatements were made to previously
     reported 2000 quarterly information to reflect the adoption of SAB 101.
 
     For the year ended December 31, 2000, the Company adopted the provisions
     of Emerging Issues Task Force ("EITF") 00-10, "Accounting for Shipping and
     Handling Fees and Costs" which requires that amounts billed to customers
     for shipping and handling fees be classified as revenues. All prior
     periods have been restated to reflect shipping and handling fees,
     previously reported in Marketing, distribution & administrative expenses,
     in Other revenue in the Consolidated Statements of Income.
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X74317266
 
 SOURCE  Avon Products, Inc.