Avon 2012 Annual Report Download - page 104

Postemployment Benefits
We provide postemployment benefits, which include salary continuation, severance benefits, disability benefits, continuation of health care
benefits and life insurance coverage (through the end of 2012 only) to eligible former employees after employment but before retirement.
The accrued cost for postemployment benefits was $52.2 at December 31, 2012 and $69.5 at December 31, 2011, and was included in
employee benefit plans liability.
Supplemental Retirement Programs
We offer a non-qualified deferred compensation plan, the Avon Products, Inc. Deferred Compensation Plan (the “DCP”), for certain higher
paid key employees. The DCP is an unfunded, unsecured plan for which obligations are paid to participants out of our general assets. The
DCP allows for the deferral of up to 50% of a participant’s base salary, the deferral of up to 100% of incentive compensation bonuses, the
deferral of performance restricted stock units for certain employees, and the deferral of contributions that would normally have been made
to the PSA but are not deferred because the amount was in excess of U.S. Internal Revenue Code limits on contributions to the PSA.
Participants may elect to have their deferred compensation invested in one or more of three investment alternatives. Expense associated with
the DCP was $1.7 for 2012, $1.4 for 2011, and $3.3 for 2010. The accrued liability for the DCP was $69.7 at December 31, 2012 and $75.7
at December 31, 2011 and was included in other liabilities.
We maintain supplemental retirement programs consisting of the Supplemental Executive Retirement Plan of Avon Products, Inc. (“SERP”)
and the Benefit Restoration Pension Plan of Avon Products, Inc. under which non-qualified supplemental pension benefits are paid to higher
paid key employees in addition to amounts received under our qualified retirement plan, which is subject to IRS limitations on covered
compensation. The annual cost of these programs has been included in the determination of the net periodic benefit cost shown previously
and amounted to $8.4 in 2012, $9.8 in 2011 and $10.0 in 2010. The benefit obligation under these programs was $63.9 at December 31,
2012, and $68.4 at December 31, 2011 and was included in employee benefit plans and accrued compensation.
We also maintain a Supplemental Life Plan (“SLIP”) under which additional death benefits ranging from $.4 to $2.0 are provided to certain
active and retired officers. The SLIP has not been offered to new officers since January 1, 2010.
We established a grantor trust to provide assets that may be used for the benefits payable under the SERP and SLIP. The trust is irrevocable
and, although subject to creditors’ claims, assets contributed to the trust can only be used to pay such benefits with certain exceptions. The
assets held in the trust are included in other assets and at December 31 consisted of the following:
2012 2011
Corporate-owned life insurance policies $42.7 $41.9
Cash and cash equivalents (.1) .7
Total $42.6 $42.6
The assets are recorded at fair market value, except for investments in corporate-owned life insurance policies which are recorded at their
cash surrender values as of each balance sheet date, which is a proxy of fair value. Changes in the cash surrender value during the period are
recorded as a gain or loss in the Consolidated Statements of Income.
NOTE 13. Segment Information
Our reportable segments are based on geographic operations and include commercial business units in Latin America; Europe, Middle East &
Africa; North America; and Asia Pacific. The segments have similar business characteristics and each offers similar products through similar
customer access methods.
In conjunction with organizational changes, effective in the second quarter of 2012, the results of Central & Eastern Europe and Western
Europe, Middle East & Africa were managed as a single operating segment. Accordingly, Europe, Middle East & Africa amounts include the
results of Central & Eastern Europe and Western Europe, Middle East & Africa for all periods presented.
In conjunction with organizational changes, effective in the second quarter of 2012, the Dominican Republic was included in Latin America
whereas in prior periods it had been included in North America. The impact was not material to either segment. Accordingly, the Dominican
Republic is included in Latin America and excluded from North America for all periods presented.
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