Avon 2010 Annual Report Download - page 90

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We provide health care and life insurance benefits for the majority of employees who retire under our retirement plans in the U.S. and
certain foreign countries. In the U.S., the cost of such health care benefits is shared by us and our retirees for employees hired on or before
January 1, 2005. Employees hired after January 1, 2005, will pay the full cost of the health care benefits upon retirement. In August 2009,
we announced changes to our postretirement medical and life insurance benefits offered to U.S. retirees. The changes to the retiree medical
benefits reduced the plan’s obligations by $36.3. This amount is being amortized as a negative prior service cost over the average future
service of active participants which is approximately 12 years. The changes to the retiree life insurance benefits reduced the plan’s
obligations by $27.7. This amount is being amortized as a negative prior service cost over 3.3 years, which is the remaining term of the plan.
We are required, among other things, to recognize the funded status of pension and other postretirement benefit plans on the balance
sheet. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. The recognition of prior service
costs or credits and net actuarial gains or losses, as well as subsequent changes in the funded status, were recognized as components of
accumulated other comprehensive income in shareholders’ equity.