Avon 2013 Annual Report Download - page 45

Download and view the complete annual report

Please find page 45 of the 2013 Avon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

costs remain as Global and other expenses. We do not allocate to our segments costs of implementing restructuring initiatives related to our
global functions, professional and related fees associated with the FCPA investigations and compliance reviews, a non-cash impairment
charge for the capitalized software associated with SMT or the accrual for the potential settlements related to the FCPA investigations. Costs
of implementing restructuring initiatives related to a specific segment are recorded within that segment.
2013 2012 % Change 2012 2011 % Change
Total global expenses $ 824.3 $ 706.3 17% $ 706.3 $ 651.1 8%
CTI restructuring 22.3 44.6 44.6 7.2
FCPA accrual 89.0 – – –
Asset impairment and other charges 117.2 – – –
Adjusted total global expenses $ 595.8 $ 661.7 (10)% $ 661.7 $ 643.9 3%
Allocated to segments (438.4) (474.2) (8)% (474.2) (499.4) (5)%
Adjusted net global expenses $ 157.4 $ 187.5 (16)% $ 187.5 $ 144.5 30%
Net global expenses(1) $ 385.9 $ 232.1 66% $ 232.1 $ 151.7 53%
(1) Net global expenses represents total global expenses less amounts allocated to segments.
Amounts in the table above may not necessarily sum due to rounding.
2013 Compared to 2012
Total global expenses was negatively impacted as compared to the prior-year period from a non-cash impairment charge of $117.2 for
capitalized software related to SMT, the $89 accrual for the potential settlements related to the FCPA investigations and higher CTI
restructuring. In the fourth quarter of 2013, we decided to halt further roll-out of our SMT project beyond the pilot market of Canada, in
light of the potential risk of further business disruption. As a result, a non-cash impairment charge for the capitalized software associated
with SMT was recorded. See Note 1, Description of the Business and Summary of Significant Accounting Policies on pages F-8 through F-14
of our 2013 Annual Report for more information.
Adjusted total global expenses decreased compared to the prior-year period primarily due to lower professional and related fees associated
with the FCPA investigations and compliance reviews as well as lower consulting fees, partially offset by higher expenses related to our SMT
project. Amounts allocated to segments decreased compared to the prior-year period primarily due to the decrease in budgeted marketing
and research and development costs, which are costs that are allocated to segments. Professional and related fees associated with the FCPA
investigations and compliance reviews described in Note 16, Contingencies on pages F-50 through F-52 of our 2013 Annual Report,
amounted to approximately $28 in 2013, as compared to approximately $92 in 2012. While these fees are difficult to predict, we expect
ongoing fees may vary during the course of these investigations and reviews. These fees were not allocated to the segments.
2012 Compared to 2011
Total global expenses was negatively impacted as compared to the prior-year period from higher CTI restructuring. Adjusted total global
expenses increased compared to the prior-year period primarily due to higher expenses associated with employee incentive compensation
plans and higher expenses associated with global initiatives, partially offset by lower marketing costs. Amounts allocated to segments
decreased compared to the prior-year period primarily due to the decrease in budgeted marketing and global sales costs, which are costs
that are allocated to segments. Professional and related fees associated with the FCPA investigations and compliance reviews described in
Note 16, Contingencies on pages F-50 through F-52 of our 2013 Annual Report, amounted to approximately $92 in 2012, as compared to
approximately $93 in 2011. These fees were not allocated to the segments.
With respect to the global expenses discussion above, for all years presented, please see Risk Factors on pages 10 through 11 of our 2013
Annual Report, and Note 16, Contingencies on pages F-50 through F-52 of our 2013 Annual Report for more information regarding the
FCPA investigations, compliance reviews, and other related matters, including our expectations with respect to future professional and
related fees related to the FCPA investigations and compliance reviews.
A V O N 2013 37