Avon 2008 Annual Report Download - page 81

In connection with initiatives that had been approved to date,
we recorded total costs to implement in 2006 of $228.8, and
the costs consisted of the following:
• charges of $218.3 for employee-related costs, including
severance, pension and other termination benefits;
• favorable adjustments of $16.1, primarily relating to a higher
than expected number of employees successfully pursuing
reassignments to other positions and higher than expected
turnover (employees leaving prior to termination); and
• other costs to implement of $24.9 and $1.7 for professional
service fees related to the implementation of these initiatives
and accelerated depreciation, respectively.
Of the total costs to implement, $229.1 was recorded in selling,
general and administrative expenses in 2006, and a favorable
adjustment of $.3 was recorded in cost of sales in 2006.
Approximately 85% of these charges resulted in cash
expenditures, with a majority of the cash payments made
during 2007.
Restructuring Charges –2007
During 2007 and January 2008, exit and disposal activities that
are a part of our multi-year restructuring plan were approved.
Specific actions for this phase of our multi-year restructuring
plan included:
• the reorganization of certain functions, primarily sales-related
organizations;
• the restructure of certain international direct selling
operations;
• the realignment of certain of our distribution and manu-
facturing operations, including the realignment of certain of
our Latin America distribution operations;
• automation of certain distribution processes; and
• outsourcing of certain finance, customer service, and
information technology processes.
The actions described above are expected to be completed by
the end of 2009. The outsourcing of certain information
technology processes and the realignment of certain Latin
America distribution operations are expected to be completed
by the end of 2011.
In connection with initiatives that have been approved to date,
we recorded total costs to implement in 2007 of $158.3, and
the costs consisted of the following:
• charges of $118.0 for employee-related costs, including
severance, pension and other termination benefits;
• favorable adjustments of $8.0, primarily relating to certain
employees pursuing reassignments to other positions and
higher than expected turnover (employees leaving prior to
termination); and
• other costs to implement of $48.3 for professional service fees
associated with our initiatives to outsource certain human
resource, finance, customer service, and information tech-
nology processes and accelerated depreciation associated with
our initiatives to realign certain distribution operations and
close certain manufacturing operations.
Of the total costs to implement, $157.3 was recorded in selling,
general and administrative expenses and $1.0 was recorded in
cost of sales in 2007.
Approximately 95% of these charges are expected to result in
future cash expenditures, with a majority of the cash payments
made during 2008.
Restructuring Charges – 2008
During 2008, we recorded total costs to implement associated
with previously approved initiatives that are part of our multi-
year restructuring plan of $60.6, and the costs consisted of
the following:
• net charges of $19.1 primarily for severance and pension
benefits;
• implementation costs of $30.5 for professional service fees,
primarily associated with our initiatives to outsource certain
finance and human resource processes; and
• accelerated depreciation of $11.0 associated with our
initiatives to realign certain distribution operations and close
certain manufacturing operations.
Of the total costs to implement, $57.5 was recorded in selling,
general and administrative expenses and $3.1 was recorded in
cost of sales for 2008.
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