Avon Products Foundation, Inc.

Financial Statements

Table of Contents Page Independent Auditors' Report FINANCIAL STATEMENTS Statements of Financial Position 2 Statements of Activities 3-4 Statements of Functional Expenses 5-6 Statements of Cash Flows 7 Notes to Financial Statements 8-13

The Board of Directors Avon Products Foundation, Inc. Independent Auditors' Report We have audited the accompanying financial statements of Avon Products Foundation, Inc. (the Foundation ) which comprise the statements of financial position as of December 31, 2016 and 2015 and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Avon Products Foundation, Inc. as of and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Harrison, New York September 15, 2017 PKF O CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Harrison, NY 10528 I Tel: 914.381.8900 I Fax: 914.381.8910 I www.pkfod.com PKF O Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Statements of Financial Position December 31, 2016 2015 ASSETS Cash and cash equivalents $ 8,291,143 $ 9,166,500 Investments 1,720,000 3,206,000 Pledges receivable, net - 61,215 Other receivables 3,000 1,179,128 Due from related parties 2,744,785 2,979,037 $ 12,758,928 $ 16,591,880 LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 19,359 $ 277,851 Due to related parties 3,212,647 2,243,951 Grants payable, net 1,669,634 2,725,000 Total Liabilities 4,901,640 5,246,802 Net Assets Unrestricted 6,125,665 9,910,973 Temporarily restricted 1,731,623 1,434,105 Total Net Assets 7,857,288 11,345,078 $ 12,758,928 $ 16,591,880 See notes to financial statements 2

Statement of Activities Year Ended December 31, 2016 Temporarily Unrestricted Restricted Total PUBLIC SUPPORT AND REVENUE Contributions from related parties Scholarship / Other Programs $ - $ 1,241,000 $ 1,241,000 Domestic Violence - 1,650,000 1,650,000 General Support - In-Kind 637,509-637,509 Royalty fees 1,990,880 1,990,880 Contributions from others 169,179 69,639 238,818 Investment income 79,988-79,988 Net Assets Released from Restrictions: Satisfaction of purpose restriction 4,654,001 (4,654,001) - Total Public Support and Revenue 5,540,677 297,518 5,838,195 EXPENSES Program Services Breast Cancer 5,074,351-5,074,351 Scholarship / Other Programs 1,324,365-1,324,365 Domestic Violence 2,144,384-2,144,384 Reforestation 100,000-100,000 Emergency Relief Fund 77,000-77,000 Total Program Expenses 8,720,100-8,720,100 Supporting Services Management and general 538,508-538,508 Fundraising 67,377-67,377 Total Supporting Services 605,885-605,885 Total Expenses 9,325,985-9,325,985 Change in Net Assets (3,785,308) 297,518 (3,487,790) NET ASSETS Beginning of year 9,910,973 1,434,105 11,345,078 End of year $ 6,125,665 $ 1,731,623 $ 7,857,288 See notes to financial statements 3

Statement of Activities Year Ended December 31, 2015 Temporarily Unrestricted Restricted Total PUBLIC SUPPORT AND REVENUE Special events income $ 376,550 $ 35,715,570 $ 36,092,120 Special event in-kind donations - 210,000 210,000 Contributions from Avon: Special Events 3,784,000-3,784,000 Breast Cancer - 2,161,702 2,161,702 Scholarship / Other Programs - 1,221,000 1,221,000 Domestic Violence - 2,069,599 2,069,599 General Support - Donation 300,000-300,000 General Support - In-Kind 2,410,602-2,410,602 Contributions from others 304,994 1,558,021 1,863,015 Investment income 142,095-142,095 Net Assets Released from Restrictions: Satisfaction of purpose restriction 42,557,704 (42,557,704) - Satisfaction of time restriction 1,622,984 (1,622,984) - Total Public Support and Revenue 51,498,929 (1,244,796) 50,254,133 EXPENSES Program Services Breast Cancer 40,546,767-40,546,767 Scholarship / Other Programs 1,142,588-1,142,588 Domestic Violence 3,154,269-3,154,269 Reforestation 1,324-1,324 Emergency Relief Fund (68,746) - (68,746) Total Program Expenses 44,776,202-44,776,202 Supporting Services Management and general 2,118,381-2,118,381 Fundraising 12,795,506-12,795,506 Total Supporting Services 14,913,887-14,913,887 Total Expenses 59,690,089-59,690,089 Change in Net Assets (8,191,160) (1,244,796) (9,435,956) NET ASSETS Beginning of year 18,102,133 2,678,901 20,781,034 End of year $ 9,910,973 $ 1,434,105 $ 11,345,078 See notes to financial statements 4

Statement of Functional Expense Year Ended December 31, 2016 Program Services Supporting Services Scholarship/ Emergency Management Breast Other Domestic Relief and Cancer Programs Violence Reforestation Fund Total General Fundraising Total Total EXPENSES Grants $ 4,985,047 $ 1,066,985 $ 1,885,826 $ 100,000 $ 77,000 $ 8,114,858 $ - $ - $ - $ 8,114,858 Equipment 11,855 - - - - 11,855 - - - 11,855 Communications - - - - - - 473-473 473 Travel and meals - - - - - - 184-184 184 Supplies - - - - - - 2,935 3,814 6,749 6,749 Facilities - - - - - - 24,106 52,024 76,130 76,130 Printing 23,562 - - - - 23,562-8,539 8,539 32,101 Professional services 30,652-1,177 - - 31,829 257,682-257,682 289,511 Insurance - - - - - - 12,805-12,805 12,805 Taxes and licenses - - - - - - 15,000 3,000 18,000 18,000 Bank fees - - - - - - 87,013-87,013 87,013 Bad debt expense - - - - - - 38,797-38,797 38,797 Total Direct Expenses 5,051,116 1,066,985 1,887,003 100,000 77,000 8,182,104 438,995 67,377 506,372 8,688,476 Staffing 20,269 235,433 235,434 - - 491,136 87,057-87,057 578,193 Facilities 2,966 21,947 21,947 - - 46,860 12,456-12,456 59,316 Total In-Kind Expenses 23,235 257,380 257,381 - - 537,996 99,513-99,513 637,509 Total Expenses $ 5,074,351 $ 1,324,365 $ 2,144,384 $ 100,000 $ 77,000 $ 8,720,100 $ 538,508 $ 67,377 $ 605,885 $ 9,325,985 See notes to financial statements 5

Statement of Functional Expense Year Ended December 31, 2015 Program Services Supporting Services Scholarship/ Emergency Management Breast Other Domestic Relief and Cancer Programs Violence Reforestation Fund Total General Fundraising Total Total EXPENSES Grants $ 33,534,797 $ 1,024,804 $ 2,717,447 $ - $ (68,971) $ 37,208,077 $ - $ - $ - $ 37,208,077 Equipment 10,000 - - - - 10,000 2,976 1,257,564 1,260,540 1,270,540 Communications 3,780 - - - - 3,780 38,581 907,829 946,410 950,190 Travel and meals 128,978 - - - - 128,978 4,193 328,924 333,117 462,095 Supplies 233,940 - - - - 233,940-50,147 50,147 284,087 Facilities - - - - - - - 218,170 218,170 218,170 Public awareness 3,836,585 - - - - 3,836,585 4,300 4,031,959 4,036,259 7,872,844 Public relations 145,800 - - - - 145,800-25,798 25,798 171,598 Printing 1,405,415 - - - - 1,405,415-76,422 76,422 1,481,837 Professional services 125,272-7,750 - - 133,022 558,272 3,580,272 4,138,544 4,271,566 Other services 242,752 - - - - 242,752-1,580,998 1,580,998 1,823,750 Insurance - - - - - - 35,446 34,097 69,543 69,543 Taxes and licenses - - - - - - 26,225 268,521 294,746 294,746 Bank fees - - - - - - 643,315-643,315 643,315 Bad debt expense - - - - - - 39,492-39,492 39,492 Depreciation expense - - - - - - - 7,637 7,637 7,637 Total Direct Expenses 39,667,319 1,024,804 2,725,197 - (68,971) 43,348,349 1,352,800 12,368,338 13,721,138 57,069,487 Staffing 745,685 92,016 344,824 1,324-1,183,849 711,581 179,078 890,659 2,074,508 Communications 5,717 1,101 3,601-10 10,429 2,308 1,628 3,936 14,365 Travel and meals 35,029 6,748 22,063-59 63,899 14,141 9,975 24,116 88,015 Supplies 8,260 1,591 5,202-14 15,067 3,334 212,352 215,686 230,753 Facilities 32,910 6,340 20,728-55 60,033 13,286 9,371 22,657 82,690 Public relations 13,628 2,625 8,583-23 24,859 5,502 3,881 9,383 34,242 Other services 1,358 262 855-2 2,477 548 387 935 3,412 Depreciation expense 1,907 367 1,201-3 3,478 770 543 1,313 4,791 Agency labor 34,954 6,734 22,015-59 63,762 14,111 9,953 24,064 87,826 Total In-Kind Expenses 879,448 117,784 429,072 1,324 225 1,427,853 765,581 427,168 1,192,749 2,620,602 Total Expenses $ 40,546,767 $ 1,142,588 $ 3,154,269 $ 1,324 $ (68,746) $ 44,776,202 $ 2,118,381 $ 12,795,506 $ 14,913,887 $ 59,690,089 See notes to financial statements 6

Statements of Cash Flows Year Ended December 31, 2016 2015 CASH FLOW FROM OPERATING ACTIVITIES Change in net assets $ (3,487,790) $ (9,435,956) Adjustments to reconcile change in net assets to net cash from operating activities Bad debt expense 38,797 39,492 Depreciation expense - 7,637 Net changes in operating assets and liabilities Pledges receivable, net 22,418 (34,111) Other receivable 1,176,128 (549,980) Prepaid expense - 241,900 Due from related parties 234,252 (2,280,111) Deferred program costs - 175,522 Accounts payable and accrued expenses (258,492) (146,955) Due to related parties 968,696 2,227,762 Grants payable, net (1,055,366) (8,902,831) Net Cash from Operating Activities (2,361,357) (18,657,631) CASH FLOW FROM INVESTING ACTIVITIES Proceeds from sale of investments 1,486,000 2,743,000 Net Cash from Investing Activities 1,486,000 2,743,000 Net Change in Cash and Cash Equivalents (875,357) (15,914,631) CASH AND CASH EQUIVALENTS Beginning of year 9,166,500 25,081,131 End of year $ 8,291,143 $ 9,166,500 See notes to financial statements 7

Notes to Financial Statements 1. Organization The Avon Products Foundation, Inc. (the Foundation ) was incorporated in the State of New York in 1955 by Avon Products, Inc. ( Avon ). The fundamental mission of the Foundation since its inception is to promote or aid charitable, scientific, educational, and humanitarian activities, with a special emphasis on those activities that improve the lives of women and their families. In its work to realize those aspirations, its current mission focus is on ending domestic and gender violence. It works toward achieving this goal through four complementary strategies: Funding, Convening, Initiating and Educating. The Foundation receives generous financial support to fund its mission initiatives from Avon and New Avon, LLC through special product sales and direct donations. On December 17, 2015, Avon entered into a separation and investment agreement providing for the separation of Avon s North-America business, which represented Avon s operations in the United States, Canada and Puerto Rico, from Avon into New Avon LLC ( New Avon ), a privately-held company that is majority-owned and managed by Cerberus NA Investor LLC. These transactions closed on March 1, 2016. The Foundation also operates small additional programs that advance the Foundation s fundamental mission to improve the lives of women. Those programs include Avon and New Avon Representative and employee-eligible scholarships and Avon and New Avon employee matching gifts, which are all fully funded by Avon. It also raises funds and receives donations from Avon periodically for emergency relief and rehabilitation efforts in times of disasters, with a grant prioritization on organizations providing assistance for women and families who are affected. In 2013 the Foundation began to operate the Avon global reforestation grant program, Healthy Forests, Beautiful World, which is focused on mobilizing women to nurture nature and help reverse deforestation. In 2015, the Foundation concluded that it would result in efficiency and further the educational and charitable mission of the Breast Cancer Program to transfer the Breast Cancer Program to New Venture Fund ( NVF ), a 501 (c) (3) public charity with extensive experience in fiscal sponsorships and in managing complex programs. On September 2, 2015, NVF formed Avon Breast Cancer Crusade, LLC ( Crusade ) to support breast cancer research education, outreach, awareness and access to care. On September 11, 2015, the Foundation, NVF and the Crusade entered into a transfer and grant agreement whereby NVF and the Crusade assumed and accepted the role and responsibilities of the Foundation with respect to the Breast Cancer Program and its related activities as of November 1, 2015. The Crusade is managed by a Board of Managers which includes directors/and or officers of the Board of Directors of the Foundation. 8

Notes to Financial Statements 2. Summary of Significant Accounting Policies Basis of Presentation The financial statement presentation is in conformity with accounting principles generally accepted in the United States of America ( U.S. GAAP ) for nonprofit organizations, which requires the Foundation to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted net assets. There are no permanently restricted net assets. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents The Foundation considers all highly liquid debt instruments with a maturity of three months or less at the time of purchase, including certificates of deposit, to be cash equivalents. Allowance for Uncollectable Receivables An allowance for uncollectable receivables is estimated based on a combination of write-off history, aging analysis and any specific known troubled accounts. Management has established an allowance for uncollectible pledges of $- and $56,951 at December 31, 2016 and 2015. Fair Value of Financial Instruments The Foundation follows U.S. GAAP on Fair Value Measurements and Disclosures which defines fair value and establishes a fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets. Level 1 inputs have the highest reliability and are related to assets with unadjusted quoted prices in active markets. Level 2 inputs relate to assets with other than quoted prices in active markets which may include quoted prices for similar assets or liabilities or other inputs which can be corroborated by observable market data. Level 3 inputs are unobservable inputs and are used to the extent that observable inputs do not exist. Money market mutual funds included in cash equivalents are valued using level 1 inputs. Investments and Investment Income Investments consist of certificates of deposit valued at cost plus accrued interest which approximates fair value and have maturity dates ranging from greater than three months to seven years from the statement of financial position date. Income or losses from investments, including both realized and unrealized gains and losses, are treated as an increase or decrease in unrestricted net assets unless otherwise specified by the donor. 9

Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) Public Support and Revenue Unconditional promises to give are recorded as received. Unconditional promises to give due in the next year are reflected as current promises to give and are recorded at their net realizable value. Grants and other contributions of cash and other assets are reported as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or a purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction. Royalty Fees The Foundation earns royalty fees from certain campaigns in which intellectual property of the Foundation is licensed. Royalty fees are recognized when earned. In-Kind Contributions Contributions of donated noncash assets are recorded at their fair values in the period received. Contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchases if not provided by donation, are recorded at the fair value in the period received. Avon provided the Foundation with in-kind support of $637,509 and $2,410,602 for the years ending. These amounts are reflected in the financial statements as contributions and expenses. Grants Grants are recorded when a commitment is made and approved by the Board of Directors. Functional Allocation of Expenses The costs of providing the various programs and supporting services have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services in reasonable ratios determined by management. 10

Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) Tax Status The Foundation is a public charity and is exempt from Federal income taxes pursuant to Section 501 (c) (3) of the Internal Revenue Code. The Foundation recognizes the effects of income tax positions only when they are more likely than not to be sustained. Management has determined that the Foundation has no uncertain tax positions that would require financial statement recognition or disclosure. The Foundation is no longer subject to examinations by the applicable taxing jurisdictions for periods prior to 2013. Subsequent Events Evaluation by Management Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued, which date is September 15, 2017. 3. Concentration Risk Financial instruments that potentially subject the Foundation to concentration of credit risk consist principally of cash and cash equivalents and investments. The Foundation maintains its cash in bank deposit accounts which, at times, may exceed Federally insured limits. Cash equivalents consist of investments in money market mutual funds held with two money managers the balance of which was $7,964,989 and $6,209,818 at December 31, 2016 and 2015. The Foundation monitors this risk on a regular basis. Investments consist of brokered certificates of deposit, all of which were less than federally insured limits. The Foundation has not experienced any losses in such accounts. 4. Related Party Transactions (Not Disclosed Elsewhere) The following amounts were due from and to related parties as of December 31, Due From Related Parties 2016 2015 New Avon, LLC $ 1,990,880 $ - Avon Products, Inc. 599,438 1,959,743 Avon Breast Cancer Crusade, LLC 154,467 1,019,294 Total $ 2,744,785 $ 2,979,037 Due To Related Parties Avon Breast Cancer Crusade, LLC $ 3,211,828 $ 2,236,000 Avon Products, Inc. 819 7,951 Total $ 3,212,647 $ 2,243,951 11

Notes to Financial Statements 4. Related Party Transactions (Not Disclosed Elsewhere) (continued) Avon Products, Inc. In 2016, Avon made a pledge of $2,891,000 to the Foundation (exclusive of in-kind donations). In 2015, Avon made a pledge of $9,536,301 to the Foundation (exclusive of in-kind donations). New Avon, LLC During 2016, the Foundation entered into a charitable sales promotion and licensing agreement with New Avon which granted New Avon limited non-exclusive license to use the Foundation s name, trademark and logo in conjunction with charitable sales promotions. The royalty fee received by the Foundation is a portion of the purchase price on selected merchandise sold by New Avon. During 2016 the total amount of royalty fees earned were $1,990,880. Avon Breast Cancer Crusade, LLC On September 11, 2015, the Foundation entered into a Transfer and Grant Agreement with the Crusade to support the latter s mission. The Foundation gave a one-time grant of $16,100,000 in 2015 that was added to the Crusade s working capital. Pursuant to the grant agreement, the Foundation gave the Crusade $1,700,000 in 2016. In addition, a contribution of $502,000 was given by the Foundation to the Crusade to help defray the transition expenses and a grant of $2,071,247 was given in support of the Avon 39 Walks. On March 7, 2016, the Foundation entered into an Administrative Services Agreement with the Crusade whereby the Crusade would provide managerial and administrative services. The agreement expires on December 31, 2017. For the year ended December 31, 2016, the Foundation incurred $169,155 of expense. 5. Leases In 2015, the Foundation had various lease agreements with unrelated parties for certain administrative office space. Rent expense for the year ended December 31, 2015 was $145,664. In 2016, there were no lease commitments. 12

Notes to Financial Statements 6. Temporarily Restricted Net Assets Temporarily restricted net assets are available as follows at December 31: 2016 2015 Purpose Restriction Scholarships/Other Programs $ 1,479,759 $ 1,357,105 Domestic Violence 251,864 - Emergency Relief - 77,000 $ 1,731,623 $ 1,434,105 * * * * * 13