Avon 2009 Annual Report Download - page 74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We did not include stock options to purchase 16.8 million shares
for the year ended December 31, 2009, 21.3 million shares for
2008, and 7.4 million shares for 2007 of Avon common stock in
the calculations of diluted EPS because the exercise prices of
those options were greater than the average market price and
their inclusion would be anti-dilutive.
NOTE 2. New Accounting Standards
In June 2009, the Financial Accounting Standards Board
(“FASB”) issued the FASB Accounting Standards Codification
(the “Codification”), which established the Codification as the
authoritative source of nongovernmental accounting principles
to be applied to the financial statements prepared in accordance
with GAAP.
Standards Implemented
Effective January 1, 2009, we adopted the fair value measure-
ment provisions as required by the Fair Value Measurements and
Disclosures Topic of the Codification, as it relates to the meas-
urement of nonfinancial assets and liabilities on anon-recurring
basis. The adoption of these provisions did not have an impact
on our Consolidated Financial Statements.
Effective January 1, 2009, we adopted enhanced disclosures
about how and why we use derivative instruments, how they are
accounted for, and how they affect our financial performance as
required by the Derivatives and Hedging Topic of the Codifica-
tion. See Note 7, Financial Instruments and Risk Management.
Effective January 1, 2009, we adopted the provisions required by
the EPS Topic of the Codification. The specific provisions address
whether instruments granted in share-based payment awards
are participating securities prior to vesting and, therefore, need
to be included in the earnings allocation in computing EPS under
the two-class method. Prior periods EPS was adjusted retro-
spectively which caused the December 31, 2008 basic EPS to be
adjusted from $2.05 to $2.04 and diluted EPS to be adjusted
from $2.04 to $2.03. There was no impact to EPS for the year
ended December 31, 2007. See Note 1, Description of the Busi-
ness and Summary of Significant Accounting Policies.
Effective January 1, 2009, we adopted the provisions relating
to the accounting for business combinations as required by
the Business Combinations Topic of the Codification. These
provisions will impact our financial statements both on the
acquisition date and in subsequent periods and will be applied
prospectively. The impact of adopting these provisions will
depend on the nature and terms of future acquisitions.
Effective January 1, 2009, we adopted the provisions for the
accounting and reporting of noncontrolling interests in a
subsidiary in consolidated financial statements as required by
the Consolidations Topic of theCodification. These provisions
recharacterize minority interests as noncontrolling interests and
require noncontrolling interests to be classified as acomponent
of shareholders’ equity. These provisions require retroactive
adoption of thepresentation and disclosure requirements for
existing minority interests. As aresult of the adoption of these
provisions, we reclassified minority interest of $37.4 from other
liabilitiestoshareholders’ equity on the Consolidated Balance
Sheet at December 31, 2008.
Effective June 30, 2009, we adopted the subsequent event provi-
sions of the Codification. These provisions provide guidance on
management’s assessment of subsequent events. The adoption
of these provisions did not have an impact on our Consolidated
Financial Statements.
Effective December 31, 2009, we adopted the provisions of the
Compensation –Retirement Benefits Topic of the Codification,
which relate to employer’s disclosures about postretirement ben-
efit plan assets. These provisions required additional disclosures
about the major categories of plan assets and concentrations of
risk, as well as disclosure of fair value levels. See Note 11,
Employee Benefit Plans.
Standards to be Implemented
In January 2010, the FASB issued Accounting Standards Update
(“ASU”) 2010-06, Improving Disclosures about Fair Value Meas-
urements.The ASU amends FASB Codification Topic 820, Fair
Value Measurements and Disclosures, to require additional dis-
closures regarding fair value measurements. ASU 2010-06 is
effective December 31, 2010, for Avon.
NOTE 3. Inventories
Inventories at December 31 consisted of the following:
2009 2008
Raw materials $335.9 $292.7
Finished goods 731.6 715.2
Total $1,067.5 $1,007.9