Avon 2014 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 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
The effective tax rate for the years ended December 31 was as follows:
2014 2013 2012
Statutory federal rate 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit 8.8 (2.1) (.5)
Taxes on foreign income, including translation (4.8) (22.0) (2.0)
Audit settlements, statute expirations and amended
returns (3.2) (6.9) (2.1)
Additional tax on unremitted prior year foreign earnings – – 39.3
Venezuela devaluation and highly inflationary
accounting 33.5 28.2 –
FCPA accrual (8.7) 19.2 –
China goodwill impairment – 8.4 3.6
Reserves for uncertain tax positions 24.4 4.5 3.0
Net change in valuation allowances 244.1 31.4 1.5
Blocked income 4.3 3.9 1.1
Other 1.0 1.0 (.7)
Effective tax rate 334.4% 100.6% 78.2%
In the fourth quarter of 2014, as a result of the finalization of the FCPA settlements, we recorded a net tax benefit of $18.5. See Note 15,
Contingencies for further discussion of the FCPA settlements.
At December 31, 2014, we had tax loss carryforwards of $2,486.2. The loss carryforwards expiring between 2015 and 2029 are $177.0 and
the loss carryforwards which do not expire are $2,309.2. We also had minimum tax credit carryforwards of $39.0 which do not expire,
business credit carryforwards of $18.0 that will expire between 2021 and 2034, and foreign tax credit carryforwards of $617.7 that will
expire between 2018 and 2024.
Uncertain Tax Positions
At December 31, 2014, we had $58.7 of total gross unrecognized tax benefits of which approximately $33.6 would impact the effective tax
rate, if recognized.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at December 31, 2011 $36.0
Additions based on tax positions related to the current year 7.4
Additions for tax positions of prior years 9.3
Reductions for tax positions of prior years (3.7)
Reductions due to lapse of statute of limitations (6.4)
Reductions due to settlements with tax authorities (6.6)
Balance at December 31, 2012 36.0
Additions based on tax positions related to the current year 5.3
Additions for tax positions of prior years 1.9
Reductions for tax positions of prior years (7.8)
Reductions due to lapse of statute of limitations (3.1)
Reductions due to settlements with tax authorities (4.3)
Balance at December 31, 2013 28.0
Additions based on tax positions related to the current year 1.5
Additions for tax positions of prior years 37.7
Reductions for tax positions of prior years (4.8)
Reductions due to lapse of statute of limitations (1.7)
Reductions due to settlements with tax authorities (2.0)
Balance at December 31, 2014 $58.7