Avon 2011 Annual Report Download

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Avon 2011 Annual Report

Table of contents

  • Page 1
    Av o n 2 011 A n nu a l R e p o r t

  • Page 2

  • Page 3
    ... the new CEO in supporting the company's strategic direction and brand positioning. On a personal note, it has been a true privilege leading Avon as CEO since 1999, as we have grown the company from a decentralized group of local operating entities to a globally managed business with global brands...

  • Page 4
    ... to drive revenue growth. The Avon name is recognized by 90% of consumers in major markets around the world and is consistently listed as one of the world's top 100 consumer brands. We are a world leader in mass fragrance and sell four lipsticks every second somewhere in the world. In 2012, our...

  • Page 5
    ... and concerns remain central to our thinking and plans. Our goal is to get Avon back on track as quickly as we can, and we are moving with urgency for the short, medium and long-terms to restore Avon to sustainable, profitable growth. Andrea Jung Chairman and CEO March 2012 2011 Annual Repor t

  • Page 6

  • Page 7
    ..., 2011 (the last business day of our most recently completed second quarter) was $12.1 billion. The number of shares of Common Stock (par value $.25) outstanding at January 31, 2012, was 430,954,008 Documents Incorporated by Reference Part III - Portions of the registrant's Proxy Statement relating...

  • Page 8
    ... and Corporate Governance 46 15 (a) 1 Consolidated Financial Statements 15 Item 1B Unresolved Staff Comments 42 - 43 Item 7A Quantitative and Qualitative Disclosures About Market Risk 45 Item 11 Executive Compensation 46 15 (a) 2 Financial Statement Schedule 15 - 16 Item 2 Properties 16...

  • Page 9
    ... business review, product mix and pricing strategies, Enterprise Resource Planning, customer service initiatives, sales and operation planning process, outsourcing strategies, Internet platform and technology strategies, information technology and related system enhancements and cash management, tax...

  • Page 10
    ... engagement online, to enhance the Representative and consumer experience and increase Representative productivity through field activation programs, execution of Service Model Transformation and other investments in the direct-selling channel, and to compete with other direct-selling organizations...

  • Page 11
    ...America; Central & Eastern Europe; Western Europe, Middle East & Africa; and Asia Pacific. We have centralized operations for Global Brand Marketing, Global Sales and Supply Chain. Financial information relating to our reportable segments is included in the "Segment Review" section within Management...

  • Page 12
    .... Promotion and Marketing Sales promotion and sales development activities are directed at assisting Representatives, through sales aids such as brochures, product samples and demonstration products. In order to support the efforts of Representatives to reach new customers, specially designed sales...

  • Page 13
    ...mail companies specializing in these products. Our principal competition in the fashion jewelry industry consists of a few large companies and many small companies that sell fashion jewelry through retail establishments and direct-selling. We believe that the personalized customer service offered by...

  • Page 14
    ... To increase our brand competitiveness, we have sustained our focus on new technology and product innovation to deliver first-to-market products that provide visible consumer benefits. Our global research and development facility is located in Suffern, NY. A team of researchers and technicians apply...

  • Page 15
    ... Guidelines and our Code of Business Conduct and Ethics. Copies of these SEC reports and other documents are also available, without charge, from Investor Relations, Avon Products, Inc., 1345 Avenue of the Americas, New York, NY 10105-0196 or by sending an email to [email protected] or by...

  • Page 16
    ... Sales Leadership program globally, recruit Representatives, enhance the Representative experience and increase their productivity through field activation programs, execute Service Model Transformation and other investments in the direct selling channel; • transition our business in North America...

  • Page 17
    ... related products in channels other than in direct selling, such as retail, could reduce our sales, impact our ability to execute our global business strategy or have a material adverse effect on our business, financial condition and results of operations. If our competitors establish greater market...

  • Page 18
    ...and may impact sales of our products. We face continued economic challenges in fiscal 2012 because customers may continue to have less money for discretionary purchases as a result of job losses, foreclosures, bankruptcies, reduced access to credit and sharply falling home prices, among other things...

  • Page 19
    ... us globally. Unlike most other beauty companies, we compete within a distinct business model where providing a compelling earnings opportunity for our Representatives is as critical as developing and marketing new and innovative products. Therefore, in contrast to a typical consumer packaged goods...

  • Page 20
    ... systems to support our business, including systems to support financial reporting, web-based tools, an ERP system which we are implementing on a worldwide basis, and an internal communication and data transfer network. We also employ information technology systems to support Representatives...

  • Page 21
    ... or incorrect forecasting of market demand, could result in us carrying inventory that cannot be sold at anticipated prices or increased product returns by our Representatives. Failure to maintain proper inventory levels or increased product returns by our Representatives could result in a material...

  • Page 22
    ..., we commenced compliance reviews regarding the FCPA and related U.S. and foreign laws in additional countries in order to evaluate our compliance efforts. We are conducting these compliance reviews in a number of other countries selected to represent each of the Company's international geographic...

  • Page 23
    ... and limitations on a hybrid plan's interest crediting rate to the "market rate of return", may result in a significant increase or decrease in the valuation of pension obligations affecting the reported funded status of our pension plans. The market price of our common stock could be subject to...

  • Page 24
    ... that opened in 2011. We also opened a new distribution center in Colombia in 2011. In July 2009, we announced plans to realign manufacturing operations in North America and Europe. This initiative includes the closing of manufacturing facilities in Springdale, OH in 2012, and the sale and leaseback...

  • Page 25
    ...-Year Cumulative Total Return (1) Among Avon Products, Inc., The S&P 500 Index and 2011 Industry Composite(2) 250 Avon Products, Inc. 200 S&P 500 Industry Composite 150 $ Value 100 50 0 2006 2007 2008 2009 2010 2011 Assumed $100 invested on December 31, 2006, in Avon's common stock, the S&P 500...

  • Page 26
    ... MD&A and our Consolidated Financial Statements and related Notes. 2011 Income Data Total revenue Operating profit(2) Income from continuing operations, net of tax Diluted earnings per share from continuing operations Cash dividends per share Balance Sheet Data Total assets Debt maturing within one...

  • Page 27
    ...this 2011 Annual Report for a description of how Constant dollar ("Constant $") growth rates (a Non-GAAP financial measure) are determined. Overview We are a global manufacturer and marketer of beauty and related products. Our business is conducted worldwide, primarily in the direct selling channel...

  • Page 28
    ... selling opportunities; Service Model Transformation initiatives; Applying the optimal balance of advertising and field investment in our key markets; and Web enablement for Representatives including on-line training enhancements. While the reward and effort will be different within our global...

  • Page 29
    ... relating to new accounting standards is included in Note 2, New Accounting Standards, of our consolidated financial statements contained in this 2011 Annual Report. Performance Metrics Within this MD&A, in addition to our key financial metrics of revenue, operating profit and operating margin...

  • Page 30
    ... Accounts Receivable Representatives contact their customers, selling primarily through the use of brochures for each sales campaign. Sales campaigns are generally for a two-week duration in the U.S. and a two- to four-week duration outside the U.S. The Representative purchases products directly...

  • Page 31
    ... Annual Report for further information on our benefit plans. Pension plan expense and the requirements for funding our major pension plans are determined based on a number of actuarial assumptions. These assumptions include the expected rate of return on pension plan assets, the interest crediting...

  • Page 32
    ...our filing positions are ultimately upheld, it is possible that the 2012 provision for income taxes may reflect adjustments. Share-based Compensation Stock options issued to employees are recognized in the Consolidated Financial Statements based on their fair values using an option-pricing model at...

  • Page 33
    ... of our Silpada reporting unit. Our analysis of the Silpada business indicated an impairment as the carrying value of the business exceeded the estimated fair value. Accordingly, an estimated non-cash before tax impairment charge of $263.0 was recorded in the fourth quarter of 2011 to reduce the...

  • Page 34
    ...2011 Total revenue Cost of sales Selling, general and administrative expenses Impairment of goodwill and intangible asset Operating profit Interest expense Interest income Other expense, net Net income attributable to Avon Diluted earnings per share attributable to Avon Advertising expenses(1) Gross...

  • Page 35
    ... special items, gross margin improved .9 points, reflecting benefits from manufacturing productivity gains, which include benefits from the Strategic Sourcing Initiative ("SSI"), and the favorable impact of foreign exchange transactions. SSI was an initiative that shifted our purchasing strategy...

  • Page 36
    ... costs and bad debt expense. We invested approximately $121.0 incrementally in our RVP during 2011, by continued implementation of our Sales Leadership program and higher incentives. Selling, general and administrative expenses during 2011, benefited from lower expenses associated with employee...

  • Page 37
    ... among other things, costs related to our executive and administrative offices, information technology, research and development, and marketing. Certain planned global expenses are allocated to our business segments primarily based on planned revenue. The unallocated costs remain as global and other...

  • Page 38
    ... the implementation of the ERP system and transformation of the related processes may negatively impact service levels in the short-term, we expect the ERP system to help improve our service reliability over the long-term. Constant $ revenue growth in Mexico during 2011, was driven by an increase...

  • Page 39
    ... income taxes. Additionally, during 2011 Avon Venezuela's revenue and operating profit represented approximately 4% of Avon's consolidated revenue, 7% of Avon's consolidated operating profit, and 5% of Avon's Non-GAAP operating profit. During 2011, the exchange rate in the SITME market ranged...

  • Page 40
    ... parent company in the U.S. These outstanding requests had been periodically submitted between 2005 and 2011. Latin America - 2010 Compared to 2009 %/Point Change 2010 Total revenue Operating profit CTI restructuring Venezuelan special items Adjusted Non-GAAP operating profit Operating margin CTI...

  • Page 41
    ...market. Sales of non-Beauty products declined 7% during 2011. The inclusion of Silpada in our 2011 results during the unmatched period through July contributed 10 points to non-Beauty growth rates during 2011. In 2011, operating margin in North America was negatively impacted by an impairment charge...

  • Page 42
    ... market. The increase in North America operating margin and Adjusted Non-GAAP operating margin during 2010 was primarily driven by improvements in gross margin caused by favorable pricing and mix and manufacturing productivity gains and the inclusion of Silpada results, which benefited operating...

  • Page 43
    ... growth in the second half of 2010. During the first quarter of 2011, we launched a new sales leadership compensation plan to help offset the tax burden on these Representatives. During 2010, operating margin benefited by 1.7 points due to lower CTI restructuring compared to the prior year. On...

  • Page 44
    PART II Western Europe, Middle East & Africa - 2011 Compared to 2010 %/Point Change 2011 Total revenue Operating profit CTI restructuring Adjusted Non-GAAP operating profit Operating margin CTI restructuring Adjusted Non-GAAP operating margin Units sold Active Representatives Amounts in the table ...

  • Page 45
    .... Revenue declined 20% in China during 2011, or 24% in Constant $. In 2011, we continued the rollout of service centers to support direct selling. As we continue to transition towards direct selling, we are focused on improving the productivity of Representatives. Adjusted Non-GAAP operating margin...

  • Page 46
    ... hybrid business model in China to one which focuses on direct selling and updating our service center model includes a realigned field compensation structure and recalibrated merchandising and campaign management strategies to support direct-selling. During 2010, operating margin benefited by...

  • Page 47
    ... Brazil and lower-than-expected sales. We maintain defined benefit pension plans and unfunded supplemental pension benefit plans (see Note 12, Employee Benefit Plans to our 2011 Annual Report). Our funding policy for these plans is based on legal requirements and cash flows. The amounts necessary to...

  • Page 48
    ... benefit plans. We are not able to estimate our contributions to our funded pension plans beyond 2012. The amount of debt and contractual financial obligations and commitments excludes amounts due under derivative transactions. The table also excludes information on recurring purchases of inventory...

  • Page 49
    ...-year credit facility. At December 31, 2011, there was $709.0 outstanding under this program. For more information regarding risks associated with our ability to access certain debt markets, including the commercial paper market, see "Risk Factors - A general economic downturn, a recession globally...

  • Page 50
    ... potential change in fair value, earnings or cash flows. This potential change was calculated based on discounted cash flow analyses using interest rates comparable to our current cost of debt. Foreign Currency Risk We conduct business globally, with operations in various locations around the world...

  • Page 51
    ... be exposed to market risk on the underlying items being hedged as a result of changes in foreign exchange and interest rates. See Note 8, Financial Instruments and Risk Management, to our 2011 Annual Report for further information. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Reference is...

  • Page 52
    ... in certain significant markets and will continue to roll-out the ERP system over the next several years. As with any new information technology application we implement, this application, along with the internal controls over financial reporting included in this process, were tested for...

  • Page 53
    ..., free of charge, on our investor website, www.avoninvestor.com. Our Code of Business Conduct and Ethics is also available, without charge, from Investor Relations, Avon Products, Inc., 1345 Avenue of the Americas, New York, NY 10105-0196 or by sending an email to [email protected] or...

  • Page 54
    ... 4.2 to Avon's Current Report on Form 8-K filed on March 2, 2009). Avon Products, Inc. Year 2000 Stock Incentive Plan (incorporated by reference to Appendix A to Avon's Proxy Statement as filed on March 27, 2000). Amendment of the Avon Products, Inc. Year 2000 Stock Incentive Plan, effective January...

  • Page 55
    ... 2010 Stock Incentive Plan. Form of Retention Restricted Stock Unit Award Agreement under the Avon Products, Inc. 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Avon's Current Report on Form 8-K filed on March 8, 2011). Supplemental Executive Retirement Plan of Avon Products...

  • Page 56
    ... filed on March 11, 2008). First Amendment, dated March 2, 2011, to the Avon Products, Inc. 2008-2012 Executive Incentive Plan (incorporated by reference to Exhibit 10.3 to Avon's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011). Benefit Restoration Pension Plan of Avon Products...

  • Page 57
    ... Policy (incorporated by reference to Exhibit 10.2 to Avon's Current Report on Form 8-K filed on March 17, 2010). 10.43* 10.44* 10.45* 10.46* 10.47* Avon Products, Inc. Long Term Incentive Cash Plan, effective as of January 1, 2011 (incorporated by reference to Exhibit 10.5 to Avon's Quarterly...

  • Page 58
    ...Financial Statements and (vi) Schedule of Valuation and Qualifying Accounts. 32.2 101 * The Exhibits identified above with an asterisk (*) are management contracts or compensatory plans or arrangements. Avon's Annual Report on Form 10-K for the year ended December 31, 2011, at the time of filing...

  • Page 59
    ... registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 29th day of February 2012. Avon Products, Inc. /s/ Stephen Ibbotson Stephen Ibbotson Group Vice President and Corporate Controller - Principal Accounting Officer AVON 2011 51

  • Page 60
    ... Kimberly Ross Kimberly Ross Executive Vice President, Chief Financial Officer - Principal Financial Officer February 29, 2012 /s/ Stephen Ibbotson Stephen Ibbotson Group Vice President and Corporate Controller - Principal Accounting Officer February 29, 2012 /s/ W. Don Cornwell W. Don Cornwell...

  • Page 61
    ...Statements: Financial Statement Schedule: F-2 Report of Independent Registered Public Accounting Firm F-3 Consolidated Statements of Income for each of the years in the three-year period ended December 31, 2011 F-46 Schedule II - Valuation and Qualifying Accounts F-4 Consolidated Balance Sheets...

  • Page 62
    ... preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately...

  • Page 63
    CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data) Years ended December 31 Net sales Other revenue Total revenue Costs, expenses and other: Cost of sales Selling, general and administrative expenses Impairment of goodwill and intangible asset Operating profit Interest expense ...

  • Page 64
    ... Accrued compensation Other accrued liabilities Sales and taxes other than income Income taxes Total current liabilities Long-term debt Employee benefit plans Long-term income taxes Other liabilities Total liabilities Contingencies (Notes 14 and 16) Shareholders' Equity Common stock, par value $.25...

  • Page 65
    ... tax benefit realized from share-based compensation Repurchase of common stock Net cash (used) provided by financing activities of continuing operations Cash Flows from Discontinued Operations Net cash provided by operating activities of discontinued operations Net cash (used) provided by investing...

  • Page 66
    ...and sales of noncontrolling interests, net of dividends paid of $5.1 Income tax benefits - stock transactions Balances at December 31, 2011 Common Stock Shares Amount 739.4 $185.6 Accumulated Additional Other NonPaid-In Retained Comprehensive Treasury Stock controlling Capital Earnings Loss Shares...

  • Page 67
    ... of beauty and related products. Our business is conducted worldwide, primarily in one channel, direct selling. Our reportable segments are based on geographic operations in five regions: Latin America; North America; Central & Eastern Europe; Western Europe, Middle East & Africa; and Asia Pacific...

  • Page 68
    ... includes shipping and handling and order processing fees billed to Representatives. Cash and Cash Equivalents Cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash equivalents are high-quality, short-term money market instruments with an original maturity...

  • Page 69
    ...position. Selling, General and Administrative Expenses Selling, general and administrative expenses include costs associated with selling; marketing; and distribution activities, including shipping and handling costs; advertising; net brochure costs; research and development; information technology...

  • Page 70
    ... costs related to the design and development of new products such as salaries and benefits, supplies and materials and facilities costs. Share-based Compensation All share-based payments to employees are recognized in the financial statements based on their fair values using an option-pricing model...

  • Page 71
    ... of stock options Diluted EPS adjusted weighted-average shares outstanding Earnings per Common Share from continuing operations: Basic Diluted (Loss) Earnings per Common Share from discontinued operations: Basic Diluted Earnings per Common Share attributable to Avon: Basic Diluted 2011 2010...

  • Page 72
    ... closed on December 29, 2010. Of the total cash consideration received, $81 was recognized in December 2010, resulting in a net after tax gain of $10. The remaining $9 of the consideration received related to the use of Avon's global brands, formulas and products, and the use of the Avon name...

  • Page 73
    ... relates to the sale and leaseback of equipment and software in one of our distribution facilities in North America. Adjustments for debt with fair value hedges include adjustments to reflect net unrealized gains of $147.6 and $94.4 at December 31, 2011, and 2010, respectively. See Note 8, Financial...

  • Page 74
    ...coupon rate of 5.75%, payable semi-annually, and mature on March 1, 2018 (the "2018 Notes"). The net proceeds from the offering of $496.3 were used to repay outstanding indebtedness under our commercial paper program and for general corporate purposes. The carrying value of the 2013 Notes represents...

  • Page 75
    ... the life of the new 4.625% Notes. The carrying value of the 4.625% Notes represents the $125.0 principal amount, net of the unamortized discount to face value and the premium related to the call option associated with the original notes totaling $3.7 at December 31, 2011, and $6.3 at December 31...

  • Page 76
    ... expenses Intangible assets Share-based compensation Restructuring initiatives Postemployment benefits Tax loss carryforwards Foreign tax credit carryforwards Minimum tax and business credit carryforwards All other Valuation allowance Total deferred tax assets Deferred tax liabilities: Depreciation...

  • Page 77
    ...The valuation allowance primarily represents amounts for foreign tax loss carryforwards. The basis used for recognition of deferred tax assets included the profitability of the operations, related deferred tax liabilities and the likelihood of utilizing tax credit carryforwards during the carryover...

  • Page 78
    ...of total gross unrecognized tax benefits of which approximately $33 would impact the effective tax rate, if recognized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Balance at December 31, 2008 Additions based on tax positions related to the current...

  • Page 79
    ...fair value of derivative instruments outstanding at December 31, 2011: Asset Balance Sheet Classification Derivatives designated as hedges: Interest-rate swap agreements Foreign exchange forward contracts Total derivatives designated as hedges Derivatives not designated as hedges: Interest-rate swap...

  • Page 80
    ... the fair value of derivative instruments outstanding at December 31, 2010: Asset Balance Sheet Classification Derivatives designated as hedges: Interest-rate swap agreements Derivatives not designated as hedges: Interest-rate swap agreements Foreign exchange forward contracts Total derivatives not...

  • Page 81
    ... Philippine peso, Polish zloty, Russian ruble, South Africa rand, Turkish lira, Ukrainian hryvnia, and Venezuelan bolívar. We use foreign exchange forward contracts to manage a portion of our foreign currency exchange rate exposures. At December 31, 2011, we had outstanding foreign exchange forward...

  • Page 82
    ... to the sale of Avon Japan. During 2011, we identified an out-of-period adjustment relating to balances included in AOCI relating to Avon Japan. See Note 1, Description of the Business and Summary of Significant Accounting Policies, for further information. Credit Risk of Financial Instruments We...

  • Page 83
    ...: 2011 Carrying Amount Cash and cash equivalents Available-for-sale securities Grantor trust cash and cash equivalents Short term investments Debt maturing within one year Long-term debt, net of related discount or premium Foreign exchange forward contracts Interest-rate swap agreements The...

  • Page 84
    ... restricted stock units Total income tax benefit recognized for share-based arrangements $36.6 11.7 2010 2009 $57.6 18.7 $54.9 18.5 All of the compensation cost for stock options, stock appreciation rights, and restricted stock units for 2011, 2010, and 2009 was recorded in selling, general and...

  • Page 85
    ... dates. Cash proceeds, tax benefits, and intrinsic value related to total stock options and stock appreciation rights exercised during 2011, 2010 and 2009, were as follows: 2011 Cash proceeds from stock options and stock appreciation rights exercised Tax benefit realized for stock options and stock...

  • Page 86
    ...December 31, 2011. NOTE 12. Employee Benefit Plans Savings Plan We offer a qualified defined contribution plan for U.S.-based employees, the Avon Personal Savings Account Plan (the "PSA"), which allows eligible participants to contribute up to 25% of eligible compensation through payroll deductions...

  • Page 87
    ... Sheet: Other assets Accrued compensation Employee benefit plans liability Net amount recognized Pretax Amounts Recognized in Accumulated Other Comprehensive Loss: Net actuarial loss Prior service credit Transition obligation Total pretax amount recognized Supplemental Information: Accumulated...

  • Page 88
    ... Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Loss Pension Benefits U.S. Plans Non-U.S. Plans 2009 Postretirement Benefits 2009 2011 Net Periodic Benefit Cost: Service cost Interest cost Expected return on plan assets Amortization of prior service credit Amortization...

  • Page 89
    ... to determine net benefit cost recorded in the Consolidated Statements of Income for the years ended December 31 were as follows: Pension Benefits U.S. Plans Non-U.S. Plans 2009 Postretirement Benefits 2009 6.42% 3.69% 7.38% 2011 Discount rate Rate of compensation increase Rate of return on assets...

  • Page 90
    ... equity Emerging markets Level 1 Level 2 Total $ - - - - $193.3 64.4 42.7 300.4 180.7 53.3 234.0 - $534.4 $193.3 64.4 42.7 300.4 180.7 53.3 234.0 1.6 $536.0 Fixed Income Securities: Corporate bonds Government securities - - - 1.6 $ 1.6 Cash Total Non-U.S. Pension Plans Asset Category...

  • Page 91
    ... measured at fair value on a recurring basis as of December 31, 2010: U.S. Pension and Postretirement Plans Asset Category Equity Securities: Domestic equity International equity Emerging markets Fixed Income Securities: Corporate bonds Government securities Cash Total $ Level 1 7 .7 Level 2 $148...

  • Page 92
    ..., company contributions, and cash flow. These characteristics of the plan place certain demands upon the level, risk, and required growth of trust assets. We regularly conduct analyses of the plan's current and likely future financial status by forecasting assets, liabilities, benefits and company...

  • Page 93
    ... on geographic operations and include commercial business units in Latin America; North America; Central & Eastern Europe; Western Europe, Middle East & Africa; and Asia Pacific. Beginning in the first quarter of 2011, the results of Asia Pacific and China were managed as a single operating segment...

  • Page 94
    ... records direct expenses related to its employees and its operations. Summarized financial information concerning our reportable segments as of December 31 is shown in the following tables: Total Revenue & Operating Profit 2011 Total Revenue Latin America North America Central & Eastern Europe...

  • Page 95
    ... Brazil's long-lived assets consist primarily of property, plant and equipment related to manufacturing and distribution facilities. Revenue by Product Category 2011 Beauty(1) Fashion(2) Home(3) Net sales Other revenue(4) Total revenue (1) (2) (3) (4) 2010 $ 7,671.3 2,016.5 1,043.5 10,731.3 131...

  • Page 96
    ..., inventory and other services. Purchase Obligations $344.6 154.4 126.1 115.3 120.4 5.7 - $866.5 Year 2012 2013 2014 2015 2016 Later years Sublease rental income Total Leases $109.5 96.5 83.9 72.1 55.7 148.8 (22.2) $544.3 Rent expense was $113.9 in 2011, $113.7 in 2010, and $113.5 in 2009. Plant...

  • Page 97
    ... the total costs to implement, $28.8 was recorded in selling, general and administrative expenses and $11.2 was recorded in cost of sales for 2011. 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 2012. AVON 2011...

  • Page 98
    ...$ 73.9 $ $ $ 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. Inventory write-offs relate to exited businesses. The following table...

  • Page 99
    The charges, net of adjustments, of initiatives approved to date under the 2005 and 2009 Restructuring Programs by reportable business segment were as follows: Western Central & Europe, North Eastern Middle East Asia America Europe & Africa Pacific $ 6.9 61.8 7.0 (1.1) 26.7 17.8 (1.1) $ 1.0 6.9 4.7 ...

  • Page 100
    ..., we commenced compliance reviews regarding the FCPA and related U.S. and foreign laws in additional countries in order to evaluate our compliance efforts. We are conducting these compliance reviews in a number of other countries selected to represent each of the Company's international geographic...

  • Page 101
    ... financial position, results of operations or cash flows. Various other lawsuits and claims, arising in the ordinary course of business or related to businesses previously sold, are pending or threatened against Avon. In management's opinion, based on its review of the information available...

  • Page 102
    ... in the forecasted growth rates and cash flows used to estimate fair value. Goodwill Western Europe, Middle East & Africa $158.5 - (2.8) (2.4) $153.3 North America Balance at December 31, 2010 Impairment Adjustments Foreign exchange Balance at December 31, 2011 $ 314.7 (198.0) - - $ 116.7 Latin...

  • Page 103
    ... (Note 7) Receivables other than trade Prepaid taxes and tax refunds receivable Prepaid brochure costs, paper and other literature Short-term investments Property held for sale Interest-rate swap agreements interest (Notes 8 and 9) Other Prepaid expenses and other 2011 $319.0 142.8 192.0 126.9 18...

  • Page 104
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 19. Results of Operations by Quarter (Unaudited) 2011 Total revenue Gross profit Operating profit(2) Income (loss) from continuing operations, before tax Income from continuing operations, net of tax Discontinued operations, net of tax Net income ...

  • Page 105
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (2) Operating profit by quarter was impacted by the following: 2011 Costs to implement restructuring initiatives: Cost of sales Selling, general and administrative expenses Total costs to implement restructuring initiatives Impairment of Silpada goodwill ...

  • Page 106
    ... at Beginning of Period Charged to Costs and Expenses Charged to Revenue Balance at End of Period (In millions) Description Deductions 2011 Allowance for doubtful accounts receivable Allowance for sales returns Allowance for inventory obsolescence Deferred tax asset valuation allowance $148...

  • Page 107
    ... company's 2011 Annual Report (Form 10-K) can be viewed on the Internet at www.avoninvestor.com For information about becoming an Avon Representative or purchasing Avon products, please call 1-800-FOR-AVON or visit www.avon.com Annual Report design by Avon Corporate Identity Department New York, NY...

  • Page 108
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