Avon 2013 Annual Report Download - page 115

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Revenue by Product Category
2013 2012 2011
Beauty(1) $ 7,103.2 $ 7,642.7 $ 8,067.8
Fashion(2) 1,623.5 1,750.9 1,818.9
Home(3) 1,037.7 1,011.7 1,048.7
Net sales 9,764.4 10,405.3 10,935.4
Other revenue(4) 190.6 156.1 164.1
Total revenue $ 9,955.0 $10,561.4 $11,099.5
(1) Beauty includes color, fragrance, skincare and personal care.
(2) Fashion includes jewelry, watches, apparel, footwear, accessories and children’s products.
(3) Home includes gift and decorative products, housewares, entertainment and leisure products, children’s products and nutritional products.
(4) Other revenue primarily includes shipping and handling and order processing fees billed to Representatives.
NOTE 14. Leases and Commitments
Minimum rental commitments under noncancellable operating leases, primarily for equipment and office facilities at December 31, 2013,
are included in the following table under leases. Purchase obligations include commitments to purchase paper, inventory and other services.
Year Leases
Purchase
Obligations
2014 $ 106.3 $ 169.1
2015 87.1 62.2
2016 74.9 15.4
2017 61.0 8.2
2018 40.4 3.6
Later years 146.3 4.6
Sublease rental income (9.3) N/A
Total $ 506.7 $ 263.1
Rent expense was $125.1 in 2013, $133.1 in 2012 and $126.1 in 2011. Plant construction, expansion and modernization projects with an
estimated cost to complete of approximately $91.8 were in progress at December 31, 2013.
NOTE 15. Restructuring Initiatives
$400M Cost Savings Initiative
In 2012, we announced a cost savings initiative (the “$400M Cost Savings Initiative”) in an effort to stabilize the business and return Avon
to sustainable growth, which is expected to be achieved through restructuring actions as well as other cost-savings strategies that will not
result in restructuring charges. The $400M Cost Savings Initiative is designed to reduce our operating expenses as a percentage of total
revenue to help us achieve a targeted low double-digit operating margin by 2016. The restructuring actions under the $400M Cost Savings
Initiative primarily consist of global headcount reductions and related actions, as well as the restructuring or closure of certain smaller,
under-performing markets, including our exit from the South Korea, Vietnam and Republic of Ireland markets.
As a result of the actions approved to-date, we have recorded total costs to implement these restructuring initiatives of $119.1 before taxes,
of which $68.4 before taxes was recorded in 2013. For the actions approved to-date, we expect our total costs to implement restructuring
to be in the range of $140 to $150 before taxes. The additional charges not yet incurred associated with the actions approved to-date of
approximately $20 to $30 before taxes are expected to be recorded primarily in 2014. At this time we are unable to quantify the total costs
to implement these restructuring initiatives that will be incurred through the time the initiative is fully implemented. In connection with the
restructuring actions approved to-date associated with the $400M Cost Savings Initiative, we expect to realize annualized savings of
A V O N 2013 F-45