Avon 2003 Annual Report Download - page 56

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Debt maturing within one year and Long-term debt — The fair values of all
debt and other financing were estimated based on quoted market prices.
Foreign exchange forward and option contracts — The fair values of forward and
option contracts were estimated based on quoted market prices from banks.
Interest rate swap, forward rate, treasury lock and cap agreements — The fair
values of interest rate swap, forward rate, treasury lock and cap agreements
were estimated based on quotes from market makers of these instruments
and represent the estimated amounts that Avon would expect to receive or
pay to terminate the agreements.
The asset (liability) amounts recorded in the balance sheet (carrying amount)
and the estimated fair values of financial instruments at December 31 con-
sisted of the following:
2003 2002
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash and cash equivalents $ 694.0 $ 694.0 $ 606.8 $ 606.8
Grantor trust 55.8 55.8 49.6 49.6
Debt maturing within one year (244.1) (253.4) (605.2) (647.1)
Long-term debt, net of related
discount or premium (877.0) (898.0) (769.2) (760.5)
Foreign exchange forward and
option contracts 2.6 2.6 7.2 7.2
Interest rate swap, forward rate,
treasury lock and cap agreements 31.1 31.1 82.1 82.1
8. Long-Term Incentive Plans
The 2000 Stock Incentive Plan (the “2000 Plan”) provides for several types of
equity-based incentive compensation awards including stock options, stock
appreciation rights, restricted stock, restricted stock units and performance unit
awards. Under the 2000 Plan, the maximum number of shares that may be
awarded is 18,250,000 shares, of which no more than 6,000,000 shares may be
used for restricted stock awards.
Stock Options
Under the 2000 Plan, stock options are awarded annually and generally vest
in thirds over the three-year period following each option grant date. Stock
options are granted at a price no less than fair market value on the date the
option is granted and have a term of 10 years from the date of grant.
75