Avon 2004 Annual Report Download - page 61

The liability balances and employee terminations by business segment were as follows:
North Latin Asia Corporate
America* U.S. America Europe Pacific and Other Total
Total Accrued charges $ 4.7 $ 6.2 $ 4.1 $ 17.5 $ 7.2 $ 3.9 $ 43.6
Less: Foreign exchange .7 — .2 3.4 .2 — 4.5
Less: Expenses charged (6.0) (5.8) (3.5) (18.6) (6.6) (3.6) (44.1)
Less: Adjustment 2003 .3 (1.0) (.8) .4 (.7) — (1.8)
Less: Adjustment 2004 .3 .7 .3 (1.6) (.1) (.3) (.7)
Balance at
December 31, 2004 $ — $ .1 $ .3(a) $ 1.1(b) $— $— $ 1.5
Number of planned
employee terminations 152 179 241 302 119 41 1,034
Number of employee
terminations remaining — — 38———38
*Excludes amounts related to the U.S.
(a) The majority of the remaining liability relates to workforce reduction programs in Venezuela. The Venezuelan government has prohibited
terminating employees until January 2005; therefore, the remaining terminations have been delayed until 2005.
(b) The majority of the remaining liability relates to employee severance costs associated with sales force reductions in certain
Western European markets.
14 Contingencies
Avon has been a defendant in a class action suit com-
menced in 1991 on behalf of certain classes of holders
of Avon’s Preferred Equity-Redemption Cumulative
Stock (“PERCS”). Plaintiffs alleged various contract and
securities law claims related to the PERCS (which were
fully redeemed in 1991) and sought to aggregate dam-
ages of approximately $145.0, plus interest. A trial of
this action took place in the United States District
Court for the Southern District of New York and con-
cluded in November 2001. In March 2004, the court
rendered a decision in favor of Avon and dismissed the
Consolidated Amended Class Action Complaint. The
plaintiffs appealed the court’s decision to the United
States Court of Appeals for the Second Circuit, and in
February 2005, the Court of Appeals affirmed the deci-
sion of the District Court. The plaintiffs have not yet
indicated whether they plan to appeal the decision of
the District Court. While it is not possible to predict the
outcome of litigation, management believes that this
action should not have a material adverse effect on the
Consolidated Financial Statements.
Avon has been defending actions commenced in the
Supreme Court of the State of New York by Sheldon
Solow d/b/a Solow Building Company (“Solow”), the
landlord of the Company’s former headquarters in
New York City. In one action, Plaintiff sought aggregate
damages of approximately $80.0, plus interest, for the
Company’s alleged failure to restore the leasehold
premises at the conclusion of the lease term in 1997.
In May 2004, Avon entered into a settlement with
Solow and paid Solow $6.2 in exchange for a release