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&lt;p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;&lt;b&gt;5.
CONTINGENCIES&lt;/b&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;In 2002, 2003 and 2004, our
Brazilian subsidiary received a series of excise tax assessments
from the Brazilian tax authorities for alleged tax deficiencies
during the years 1997-2001 asserting that the establishment in 1995
of separate manufacturing and distribution companies in that
country was done without a valid business purpose and that Avon
Brazil did not observe transfer pricing rules to define the taxable
basis of excise tax, based on purported market sales data. The
structure adopted in 1995 is comparable to that used by other
companies in Brazil. We believe that our Brazilian corporate
structure is appropriate, both operationally and legally, and that
the assessments are unfounded. This matter is being vigorously
contested and in the opinion of our 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 our consolidated financial position,
results of operations or cash flows is correspondingly remote. As
of September&amp;#xA0;30, 2009, the total assessments related to these
remote contingencies, including penalties and accruing interest,
amounted to approximately $600 at the exchange rate on
September&amp;#xA0;30, 2009. In the event that assessments are upheld
in the earlier stages of review, it may be necessary for us to
provide security to pursue further appeals, which, depending on the
circumstances, may result in a charge to income. We are currently
awaiting decisions at the first administrative level for the 2002
assessment and at the second administrative level for the 2003 and
2004 assessments. It is not possible to make a reasonable 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.&lt;/font&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;We are conducting an
internal investigation under the oversight of the Audit Committee
and with the assistance of outside independent counsel into
compliance with the Foreign Corrupt Practices Act (FCPA) and
related U.S. and foreign laws. The initial focus of the internal
investigation has been on certain expenses incurred in connection
with our China operations. In order to evaluate our compliance
efforts, we are also reviewing our practices relating to FCPA and
related U.S. and foreign laws in additional countries. We have
voluntarily advised the United States Securities and Exchange
Commission and the United States Department of Justice of the
internal investigation. Because the internal investigation is
ongoing, we cannot predict how the results of the investigation may
impact our internal controls, business, and results of operations
or financial condition.&lt;/font&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;Various other lawsuits and
claims, arising in the ordinary course of business or related to
businesses previously sold, are pending or threatened against Avon.
In management&amp;#x2019;s opinion, based on its review of the
information available at this time, the total cost of resolving
such other contingencies at September&amp;#xA0;30, 2009, should not
have a material adverse effect on our consolidated financial
position, results of operations or cash flows.&lt;/font&gt;&lt;/font&gt;&lt;/p&gt;
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          <NonNumericTextHeader>5.
CONTINGENCIES
In 2002, 2003 and 2004, our
Brazilian subsidiary received a series of excise tax assessments
from the Brazilian tax authorities for alleged</NonNumericTextHeader>
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