Avon 2010 Annual Report Download - page 103

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Restructuring Charges – 2009
During 2009, we recorded total costs to implement of $150.8 associated with approved initiatives that are part of our 2009 Restructuring
Program, and the costs consisted of the following:
• net charges of $125.6 primarily for employee-related costs, including severance and pension benefits;
• implementation costs of $18.8 for professional service fees, primarily associated with our initiatives to realign certain support functions to
a more regional basis and realignment of certain manufacturing facilities; and
• accelerated depreciation of $6.4 associated with our initiatives to realign some distribution operations and close some
manufacturing operations.
Of the total costs to implement, $144.4 was recorded in selling, general and administrative expenses and $6.4 was recorded in cost of
sales for 2009.
Restructuring Charges – 2010
During 2010, we recorded total costs to implement of $77.5 associated with approved initiatives that are part of our 2009 Restructuring
Program, and the costs consisted of the following:
• net charges of $46.1 primarily for employee-related costs, including severance and pension benefits;
• implementation costs of $21.2 for professional service fees, primarily associated with our initiatives to realign certain support functions to
a more regional basis and realignment of certain manufacturing facilities; and
• accelerated depreciation of $10.2 associated with our initiatives to realign some distribution operations and close some
manufacturing operations.
Of the total costs to implement, $68.1 was recorded in selling, general and administrative expenses and $9.4 was recorded in cost of sales
for 2010. Most of these costs to implement are expected to result in future cash expenditure, with a majority of the cash payments to be
made in 2011 and 2012.
The liability balances for the initiatives under the 2009 Restructuring Program are shown below.
Employee-
Related
Costs
Contract
Terminations/
Other Total
2009 Charges $126.2 $ – $126.2
Adjustments (.6) – (.6)
Cash payments (16.1) – (16.1)
Non-cash write-offs (4.0) – (4.0)
Foreign exchange .6 – .6
Balance December 31, 2009 $106.1 $ – $106.1
2010 Charges 60.9 1.6 62.5
Adjustments (16.4) – (16.4)
Cash payments (30.4) (1.5) (31.9)
Non-cash write-offs (1.7) – (1.7)
Foreign exchange (3.2) – (3.2)
Balance December 31, 2010 $115.3 $ 0.1 $115.4
Non-cash write-offs associated with employee-related costs are the result of settlement, curtailment and special termination benefit charges
for pension plans and postretirement due to the initiatives implemented.
A V O N 2010 F-39