Avon 2010 Annual Report Download - page 104

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the restructuring charges incurred to date, net of adjustments, under our 2009 Restructuring Program, along
with the charges expected to be incurred under the plan:
Employee-
Related
Costs
Contract
Terminations/
Other Total
Charges incurred to date $170.1 $ 1.6 $171.7
Charges to be incurred on approved initiatives 9.0 14.2 23.2
Total expected charges on approved initiatives $179.1 $15.8 $194.9
The charges, net of adjustments, of initiatives approved to date under the 2009 Restructuring Program by reportable business segment were
as follows:
Latin
America
North
America
Central &
Eastern
Europe
Western
Europe,
Middle East
& Africa
Asia
Pacific China Corporate Total
2009 $17.8 $26.8 $25.8 $31.8 $6.4 $2.1 $14.9 $125.6
2010 11.5 17.9 .4 2.8 1.2 .8 11.5 46.1
Charges recorded to date $29.3 $44.7 $26.2 $34.6 $7.6 $2.9 $26.4 $171.7
Charges to be incurred on approved initiatives 1.2 6.8 3.4 4.3 .7 .4 6.4 23.2
Total expected charges on approved initiatives $30.5 $51.5 $29.6 $38.9 $8.3 $3.3 $32.8 $194.9
As noted previously, we expect to record total costs to implement in the range of $300 to $310 before taxes for all restructuring initiatives
under the 2009 Restructuring Program, 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
probable and estimable. The amounts shown in the tables above as total expected charges on approved initiatives represent charges
recorded to date plus charges yet to be recorded for approved initiatives as the relevant accounting criteria for recording an expense have
not yet been met. In addition to the charges included in the tables above, we will incur other costs to implement restructuring initiatives
such as consulting, other professional services, and accelerated depreciation.
NOTE 16. Contingencies
In 2002, 2003 and 2004, our Brazilian subsidiary received a series of excise tax assessments from the Brazilian tax authorities for alleged tax
deficiencies during the years 1997-2001 asserting that the establishment in 1995 of separate manufacturing and distribution companies in
that country was done without a valid business purpose and that Avon Brazil did not observe minimum pricing rules to define the taxable
basis of excise tax, based on purported market sales data. The structure adopted in 1995 is comparable to that used by other companies in
Brazil. We believe that our Brazilian corporate structure is appropriate, both operationally and legally, and that the assessments are
unfounded. This matter is being vigorously contested and in the opinion of our outside counsel the likelihood that the assessments
ultimately will be upheld is remote. Management believes that the likelihood that the assessments will have a material impact on our
consolidated financial position, results of operations or cash flows is correspondingly remote.
Our appeals of the 2003 and 2004 assessments were granted in our favor in April and May 2010, respectively, at the second administrative
level. These assessments, including penalties and accruing interest, amounted to approximately $567 at the exchange rate on December 31,
2010. In October 2010, the 2003 assessment, which amounted to approximately $173 at the exchange rate on December 31, 2010, was
officially closed in our favor as the Brazilian tax authorities did not pursue an appeal of the decision. In January 2011, a motion was filed by
the tax authorities seeking clarification on a certain point in the decision on the 2004 assessment. This motion does not seek to and cannot
change the decision granted in our favor in May 2010. However, the May 2010 decision may be appealed to a third and last administrative
level after the second administrative level rules on the motion seeking clarification. The 2004 assessment, including penalties and accruing
interest, amounted to approximately $394 at the exchange rate on December 31, 2010.