Avon 2014 Annual Report Download - page 63

See Note 5, Debt and Other Financing, and Note 13, Leases and Commitments, on pages F-17 through F-20, and on page F-43, respectively,
of our 2014 Annual Report for more information on our debt and contractual financial obligations and commitments. Additionally, as
disclosed in Note 14, Restructuring Initiatives on pages F-43 through F-47 of our 2014 Annual Report, we have a remaining liability of $50.6
associated with our $400M Cost Savings Initiative, at December 31, 2014. We also have a remaining liability of $8.9 associated with other
restructuring initiatives approved during 2012 at December 31, 2014. The majority of future cash payments associated with these
restructuring liabilities are expected to be made during 2015.
Off Balance Sheet Arrangements
At December 31, 2014, we had no material off-balance-sheet arrangements.
Capital Resources
Revolving Credit Facility
In March 2013, we entered into a four-year $1 billion revolving credit facility (the “revolving credit facility”), which expires in March 2017.
The revolving credit facility replaced the previous $1 billion revolving credit facility (the “2010 revolving credit facility”), which was
terminated in March 2013 prior to its scheduled expiration in November 2013. There were no amounts drawn under the 2010 revolving
credit facility on the date of termination and no early termination penalties were incurred. In the first quarter of 2013, $1.2 was recorded for
the write-off of issuance costs related to the 2010 revolving credit facility. Borrowings under the revolving credit facility bear interest, at our
option, at a rate per annum equal to LIBOR plus an applicable margin or a floating base rate plus an applicable margin, in each case subject
to adjustment based on our credit ratings. The revolving credit facility has an annual fee of approximately $3.0, payable quarterly, based on
our current credit ratings. The revolving credit facility may be used for general corporate purposes. As of December 31, 2014, there were no
amounts outstanding under the revolving credit facility.
The revolving credit facility contains covenants limiting our ability to incur liens and enter into mergers and consolidations or sales of
substantially all our assets. The revolving credit facility also contains a covenant that limits our subsidiary debt to existing subsidiary debt at
February 28, 2013 plus $500.0, with certain other exceptions. In addition, the revolving credit facility contains financial covenants which
require our interest coverage ratio at the end of each fiscal quarter to equal or exceed 4:1 and our leverage ratio to not be greater than
3.5:1 at the end of the fiscal quarter ended December 31, 2014 and each fiscal quarter thereafter. In addition, the revolving credit facility
contains customary events of default and cross-default provisions. The interest coverage ratio is determined by dividing our consolidated EBIT
(as defined in the revolving credit facility) by our consolidated interest expense, in each case for the period of four fiscal quarters ending on
the date of determination. The leverage ratio is determined by dividing the amount of our consolidated funded debt on the date of
determination by our consolidated EBITDA (as defined in the revolving credit facility) for the period of four fiscal quarters ending on the date
of determination. When calculating the interest coverage and leverage ratios, the revolving credit facility allows us, subject to certain
conditions and limitations, to add back to our consolidated net income, among other items: (i) extraordinary and other non-cash losses and
expenses, (ii) one-time fees, cash charges and other cash expenses, premiums or penalties incurred in connection with any asset sale, equity
issuance or incurrence or repayment of debt or refinancing or modification or amendment of any debt instrument and (iii) cash charges and
other cash expenses, premiums or penalties incurred in connection with any restructuring or relating to any legal or regulatory action,
settlement, judgment or ruling, in an aggregate amount not to exceed $400.0 for the period from October 1, 2012 until the termination of
commitments under the revolving credit facility (which expires in March 2017); provided, that cash restructuring charges incurred after
December 31, 2014 shall not be added back to our consolidated net income. Beginning January 1, 2015, charges taken for cash
restructuring cannot be added back to our consolidated net income. As of December 31, 2014, we have less than $10 remaining for the
other items (cash charges and other cash expenses, premiums or penalties incurred relating to any legal or regulatory action, settlement,
judgment or ruling). We were in compliance with our interest coverage and leverage ratios under the revolving credit facility for the four
fiscal quarters ended December 31, 2014. As of December 31, 2014, and based on then applicable interest rates, approximately $825 of the
$1 billion revolving credit facility could have been drawn down without violating any covenant. A continued decline in our business results
(including the impact of any adverse foreign exchange movements, significant restructuring charges and significant legal or regulatory
settlements) may further reduce our borrowing capacity under the revolving credit facility or cause us to be non-compliant with our interest
coverage and leverage ratios. If we were to be non-compliant with our interest coverage or leverage ratio, we would no longer have access
to our revolving credit facility. As of December 31, 2014, there were no amounts outstanding under the revolving credit facility.
Public Notes
On April 15, 2013, we prepaid our 5.625% Notes, due March 1, 2014 (the “2014 Notes”) at a prepayment price equal to 100% of the
principal amount of $500.0, plus accrued interest of $3.4 and a make-whole premium of $21.7. In connection with the prepayment of our
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