Avon 2014 Annual Report Download - page 96

Download and view the complete annual report

Please find page 96 of the 2014 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets (liabilities) resulting from temporary differences in the recognition of income and expense for tax and financial reporting
purposes at December 31 consisted of the following:
2014 2013
Deferred tax assets:
Accrued expenses and reserves $ 217.4 $ 274.2
Pension and postretirement benefits 161.5 132.0
Asset revaluations 12.1 37.4
Capitalized expenses 161.4 156.4
Depreciation and amortization 15.4 15.0
Deferred loss on foreign currency 37.2 13.3
Share-based compensation 57.7 63.7
Restructuring initiatives 22.7 23.9
Postemployment benefits 6.8 8.1
Tax loss carryforwards 726.2 756.1
Foreign tax credit carryforwards 617.7 585.4
Minimum tax and business credit carryforwards 57.1 53.2
All other 55.7 39.3
Valuation allowance (1,208.6) (783.4)
Total deferred tax assets 940.3 1,374.6
Deferred tax liabilities:
Depreciation and amortization (24.6) (27.9)
Unremitted foreign earnings (14.3) (142.8)
Prepaid expenses (8.7) (16.6)
Capitalized interest (8.7) (9.4)
All other (26.5) (33.7)
Total deferred tax liabilities (82.8) (230.4)
Net deferred tax assets $ 857.5 $1,144.2
Deferred tax assets (liabilities) at December 31 were classified as follows:
2014 2013
Deferred tax assets:
Prepaid expenses and other $204.7 $ 233.6
Other assets 685.8 944.7
Total deferred tax assets 890.5 1,178.3
Deferred tax liabilities:
Income taxes (.3) (1.1)
Long-term income taxes (32.7) (33.0)
Total deferred tax liabilities (33.0) (34.1)
Net deferred tax assets $857.5 $1,144.2
The valuation allowance primarily represents amounts for U.S. deferred tax assets and foreign tax loss carryforwards. The basis used for
recognition of deferred tax assets included tax planning strategies, the current and future profitability of the operations, related deferred tax
liabilities and the likelihood of utilizing tax credit and/or loss carryforwards during the carryover periods. The net increase in the valuation
allowance of $425.2 during 2014 was mainly due to the recording of the valuation allowance of $441 to reduce our U.S. deferred tax assets
(as discussed below). In addition, the net increase in the valuation allowance was attributable to several of our foreign entities continuing to
incur losses during 2014, thereby increasing the tax loss carryforwards for which a valuation allowance was also provided, as well as the
favorable impact of foreign currency translation, as the strengthening of the U.S. dollar against many of our foreign currencies resulted in
lower reported valuation allowances.