Avon 2010 Annual Report Download - page 87

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The table above excludes our pension and postretirement plan assets. Refer to Note 12, Employee Benefit Plans, for the fair value hierarchy
for our plan assets. The available-for-sale securities include securities held in a trust in order to fund future benefit payments for
non-qualified retirement plans (see Note 12, Employee Benefit Plans). The foreign exchange forward contracts and interest-rate swap
agreements are hedges of either recorded assets or liabilities or anticipated transactions. The underlying hedged assets and liabilities or
anticipated transactions are not reflected in the table above.
Fair Value of Financial Instruments
The net asset (liability) amounts recorded in the balance sheet (carrying amount) and the estimated fair values of financial instruments at
December 31 consisted of the following:
2010 2009
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Cash and cash equivalents $1,179.9 $1,179.9 $1,298.1 $1,298.1
Available-for-sale securities 1.8 1.8 1.9 1.9
Grantor trust cash and cash equivalents 1.1 1.1 7.6 7.6
Short term investments 17.1 17.1 26.8 26.8
Debt maturing within one year 727.6 727.6 137.8 137.8
Long-term debt, net of related discount or premium 2,408.6 2,502.4 2,307.2 2,440.4
Foreign exchange forward contracts 6.8 6.8 (2.9) (2.9)
Interest-rate swap agreements 114.9 114.9 43.9 43.9
The methods and assumptions used to estimate fair value are as follows:
Cash and cash equivalents, Grantor trust cash and cash equivalents and Short term investments – Given the short term nature of these
financial instruments, the stated cost approximates fair value.
Available-for-sale securities – The fair values of these investments were based on the quoted market prices for issues listed on securities exchanges.
Debt maturing within one year and long-term debt – The fair values of all debt and other financing were determined based on quoted
market prices.
Foreign exchange forward contracts – The fair values of forward contracts were based on quoted forward foreign exchange prices at
the reporting date.
Interest-rate swap agreements – The fair values of interest-rate swap agreements were estimated based LIBOR yield curves at
the reporting date.
NOTE 10. Share-Based Compensation Plans
The Avon Products, Inc. 2005 Stock Incentive Plan (the “2005 Plan”) and the Avon Products, Inc. 2010 Stock Incentive Plan (the “2010
Plan”), which are shareholder approved, provide for several types of share-based incentive compensation awards including stock options,
stock appreciation rights, restricted stock, restricted stock units and performance unit awards. Under the 2005 Plan, the maximum number
of shares that may be awarded is 31,000,000 shares, of which no more than 8,000,000 shares may be used for restricted stock awards and
restricted stock unit awards. Under the 2010 Plan, the maximum number of shares that may be awarded is 32,000,000 shares, where the
maximum number of shares are reduced as follows: (i) in the case of the grant of an award of an option or Stock Appreciation Right
(“SAR”), by each share of stock subject to such an award and (ii) in the case of the grant of an award payable in stock other than an option
or SAR by 2.33 multiplied by each share of stock subject to such award. Shares issued under share-based awards will be primarily funded
with issuance of new shares.
A V O N 2010 F-23