Avon 2012 Annual Report Download - page 111

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The charges, net of adjustments, of initiatives under the $400M Cost Savings Initiative by reportable business segment were as follows:
Latin
America
Europe,
Middle East
& Africa
North
America
Asia
Pacific Corporate Total
Charges incurred to date $12.9 $1.1 $18.0 $12.9 $3.6 $48.5
Charges to be incurred on approved initiatives 8.6 1.0 (2.4) (2.1) .2 5.3
Total expected charges on approved initiatives $21.5 $2.1 $15.6 $10.8 $3.8 $53.8
As noted previously, for the initiatives approved to date, we expect to record total costs to implement in the range of $70 to $80 before taxes
under the $400M Cost Savings Initiative. 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 have incurred and
will incur other costs to implement restructuring initiatives such as other professional services and accelerated depreciation.
NOTE 16. Contingencies
FCPA Investigations
As previously reported, we have engaged outside counsel to conduct an internal investigation and compliance reviews focused on
compliance with the Foreign Corrupt Practices Act (“FCPA”) and related U.S. and foreign laws in China and additional countries. The
internal investigation, which is being conducted under the oversight of our Audit Committee, began in June 2008.
As previously reported in July 2009, in connection with the internal investigation, 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 countries selected to represent each of the Company’s international geographic segments. The internal investigation
and compliance reviews are focused on reviewing certain expenses and books and records processes, including, but not limited to, travel,
entertainment, gifts, use of third-party vendors and consultants and related due diligence, joint ventures and acquisitions, and payments to
third-party agents and others, in connection with our business dealings, directly or indirectly, with foreign governments and their employees.
The internal investigation and compliance reviews of these matters are ongoing. In connection with the internal investigation and
compliance reviews, certain personnel actions, including termination of employment of certain senior members of management, have been
taken, and additional personnel actions may be taken in the future. In connection with the internal investigation and compliance reviews,
we continue to enhance our ethics and compliance program, including our policies and procedures, FCPA compliance-related training, FCPA
third-party due diligence program and other compliance-related resources.
As previously reported in October 2008, we voluntarily contacted the United States Securities and Exchange Commission (“SEC”) and the
United States Department of Justice (“DOJ”) to advise both agencies of our internal investigation. We have cooperated and continue to
cooperate with investigations of these matters by the SEC and the DOJ. We have, among other things, signed tolling agreements, responded
to inquiries, translated and produced documents, assisted with interviews, and provided information on our internal investigation and
compliance reviews, personnel actions taken and steps taken to enhance our ethics and compliance program. As previously reported in
August 2012, we are in discussions with the SEC and the DOJ regarding resolving the government investigations. These discussions are
ongoing. There can be no assurance that a settlement with the SEC and the DOJ will be reached or, if a settlement is reached, the timing of
any such settlement or the terms of any such settlement. We expect any such settlement may include civil and/or criminal fines and penalties
as well as non-monetary remedies, such as oversight requirements and additional remediation and compliance requirements. We may be
required to incur significant future costs to comply with the non-monetary terms of any settlement with the SEC and the DOJ. Under certain
circumstances, we may also be required to advance significant professional fees and expenses to certain current and former Company
employees in connection with these matters. Until any settlement or other resolution of these matters, we expect to continue to incur costs,
primarily professional fees and expenses, which may be significant, in connection with the government investigations.
At this point we are unable to predict the developments in, outcome of, and economic and other consequences of the government
investigations or their impact on our earnings, cash flow, liquidity, financial condition and ongoing business. However, based on our most
recent communications with the DOJ and the SEC, the Company believes that it is probable that the Company will incur a loss related to the
government investigations. We are unable to reasonably estimate the amount or range of such loss; however such loss could be material.