Avon 2012 Annual Report Download - page 115

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the third quarter of 2011, we considered whether any circumstances existed that would more likely than not reduce the estimated fair
values of the Silpada reporting unit and its trademark below their respective carrying values and concluded another interim impairment
analysis was not considered necessary.
During our year-end 2011 close process, we completed our annual goodwill impairment assessment as of November 30, 2011 and subsequently
determined that the goodwill associated with Silpada was impaired. Specifically, the results of our annual impairment testing during the quarter
ended December 31, 2011, indicated that the estimated fair value of our Silpada reporting unit was less than its respective carrying amount. As a
result of our impairment testing, we recorded a non-cash before tax impairment charge of $198.0 ($125.1 after tax) to reduce the carrying
amount of goodwill for Silpada to its estimated fair value. Following the impairment charge, the carrying value of the Silpada goodwill was $116.7.
Our impairment testing for indefinite-lived intangible assets as of November 30, 2011, also indicated a decline in the fair value of our Silpada
trademark intangible asset below its respective carrying value. This resulted in a non-cash before tax impairment charge of $65.0 ($41.1
after tax) to reduce the carrying amount of this asset to its estimated fair value. Following the impairment charge, the carrying value of the
Silpada trademark was $85.0.
Following weaker than expected performance in the fourth quarter, we lowered our revenue and earnings projections for Silpada largely due
to the rise in silver prices, which nearly doubled since the acquisition, and the negative impact of pricing on revenues and margins. The
decline in the fair values of the Silpada reporting unit and the underlying trademark was driven by the reduction in the forecasted growth
rates and cash flows used to estimate fair value.
Goodwill
Latin
America
Europe,
Middle
East & Africa
North
America
Asia
Pacific Total
Gross balance at December 31, 2011 $111.8 $160.8 $ 314.7 $ 83.8 $ 671.1
Accumulated impairments – – (198.0) – (198.0)
Net balance at December 31, 2011 $111.8 $160.8 $ 116.7 $ 83.8 $ 473.1
Changes during the period ended December 31, 2012:
Impairment $ – $ – $ (72.1) $(44.0) $(116.1)
Other(1) 11.0 6.5 – .4 17.9
Gross balance at December 31, 2012 $122.8 $167.3 $ 314.7 $ 84.2 $ 689.0
Accumulated impairments – – (270.1) (44.0) (314.1)
Net balance at December 31, 2012 $122.8 $167.3 $ 44.6 $ 40.2 $ 374.9
(1) Other is primarily comprised of foreign currency translation.
Other intangible assets
2012 2011
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
Finite-Lived Intangible Assets
Customer relationships $ 93.5 $ (47.1) $221.8 $ (65.2)
Licensing agreements 62.8 (53.6) 58.2 (47.4)
Noncompete agreements 8.6 (8.6) 8.1 (6.6)
Trademarks 6.6 (6.3) 6.6 (4.0)
Indefinite-Lived Trademarks 64.4 – 108.4 –
Total $235.9 $(115.6) $403.1 $(123.2)
Estimated Amortization Expense:
2013 $ 8.5
2014 7.3
2015 6.7
2016 5.9
2017 5.5