Avon 2007 Annual Report Download - page 83

The following table presents the restructuring charges incurred to date, net of adjustments, under our multi-year restructuring plan that
began in the fourth quarter of 2005, along with the charges expected to be incurred under the plan:
Employee-
Related
Costs
Asset
Write-offs
Inventory
Write-offs
Currency
Translation
Adjustment
Write-offs
Contract
Terminations/
Other Total
Charges incurred to date $327.1 $10.8 $7.4 $11.6 $6.9 $363.8
Charges to be incurred on approved initiatives 49.4 – – – .2 49.6
Total expected charges $376.5 $10.8 $7.4 $11.6 $7.1 $413.4
The charges, net of adjustments, of initiatives approved to date by reportable business segment were as follows:
North
America
Latin
America
Western
Europe,
Middle East
& Africa
Central
& Eastern
Europe
Asia
Pacific China Corporate Total
2005 $ 6.9 $ 3.5 $ 11.7 $ 1.0 $18.2 $4.2 $ 6.1 $ 51.6
2006 61.8 34.6 45.1 6.9 22.2 2.1 29.5 202.2
2007 7.0 14.9 65.1 4.7 4.3 1.3 12.7 110.0
Charges recorded to date $75.7 $53.0 $121.9 $12.6 $44.7 $7.6 $48.3 $363.8
Charges to be incurred on approved
initiatives 4.4 6.1 23.8 .8 10.2 – 4.3 49.6
Total expected charges $80.1 $59.1 $145.7 $13.4 $54.9 $7.6 $52.6 $413.4
As noted previously, we expect to record total costs to imple-
ment of approximately $530 before taxes for all restructuring
initiatives, including restructuring charges and other costs to
implement. The amounts shown in the tables above as charges
recorded to date relate to initiatives that have been approved
and recorded in the financial statements as the costs are prob-
able and estimable. The amounts shown in the tables above as
total expected charges represent charges recorded to date plus
charges yet to be recorded for approved initiatives as the rele-
vant accounting criteria for recording have not yet been met. In
addition to the charges included in the tables above, we will
incur other costs to implement such as consulting other pro-
fessional services, and accelerated depreciation.
NOTE 14. Contingencies
We are a defendant in an action commenced in 1975 in the
Supreme Court of the State of New York by Sheldon Solow d/b/a
Solow Building Company (“Solow”), the landlord of our former
headquarters in New York City. Solow alleges that we mis-
appropriated the name of our former headquarters building and
seeks damages based on a purported value of one dollar per
square foot of leased space per year over the term of the lease. A
trial of this action took place in May 2005 and, in January 2006,
the judge issued a decision in our favor. Solow appealed that
decision to the Appellate Division of the Supreme Court of the
State of New York and, in June 2007, the Appellate Division
affirmed the trial court’s decision. In July 2007, Solow filed a
notice of motion before the Appellate Division for reargument or,
alternatively, for leave to appeal to the New York Court of
Appeals, and in September 2007, the Appellate Division denied
Solow’s motion. In October 2007, Solow filed a motion before the
Court of Appeals for leave to appeal to the Court of Appeals and
in December 2007, the Court of Appeals denied Solow’s motion.
While it is not possible to predict the outcome of litigation, man-
agement believes that there are meritorious defenses to the claims
asserted and that this action should not have a material adverse
effect on our consolidated financial position, results of operations
or cash flows. This action is being vigorously contested.
Blakemore, et al. v. Avon Products, Inc., et al. is a purported class
action pending in the Superior Court of the State of California
on behalf of Avon Sales Representatives who “since March 24,
1999, received products from Avon they did not order, there-
after returned the unordered products to Avon, and did not
receive credit for those returned products.” The complaint seeks
unspecified compensatory and punitive damages, restitution and
injunctive relief for alleged unjust enrichment and violation of
the California Business and Professions Code. This action was
commenced in March 2003. In January 2006, we filed a motion
to strike the plaintiffs’ asserted nationwide class. In February
2006, the trial court declined to grant our motion but instead
A V O N 2007 F-31