Avon 2014 Annual Report Download - page 99

We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. We had $4.9 at
December 31, 2014 and $4.4 at December 31, 2013, accrued for interest and penalties, net of tax benefit. We recorded expense of $1.0,
and benefits of $.1 and $1.1 for interest and penalties, net of taxes during 2014, 2013 and 2012, respectively.
We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. As of December 31, 2014, the tax years
that remained subject to examination by major tax jurisdiction for our most significant subsidiaries were as follows:
Jurisdiction Open Years
Brazil 2009-2014
Mexico 2008-2014
Poland 2009-2014
Russia 2011-2014
United States (Federal) 2014
We anticipate that it is reasonably possible that the total amount of unrecognized tax benefits could decrease in the range of $1 to $18
within the next twelve months due to the closure of tax years by expiration of the statute of limitations and audit settlements.
NOTE 8. Financial Instruments and Risk Management
We operate globally, with manufacturing and distribution facilities in various countries around the world. We may reduce our exposure to
fluctuations in the fair value and cash flows associated with changes in interest rates and foreign exchange rates by creating offsetting
positions, including through the use of derivative financial instruments. If we use foreign currency-rate sensitive and interest-rate sensitive
instruments to hedge a certain portion of our existing and forecasted transactions, we would expect that any gain or loss in value of the
hedge instruments generally would be offset by decreases or increases in the value of the underlying forecasted transactions. As of
December 31, 2014, we do not have any interest-rate swap agreements.
We do not enter into derivative financial instruments for trading or speculative purposes, nor are we a party to leveraged derivatives. The
master agreements governing our derivative contracts generally contain standard provisions that could trigger early termination of the
contracts in certain circumstances, including if we were to merge with another entity and the creditworthiness of the surviving entity were to
be “materially weaker” than that of Avon prior to the merger.
Derivatives are recognized on the Consolidated Balance Sheets at their fair values. The following table presents the fair value of derivative
instruments outstanding at December 31, 2014:
Asset Liability
Balance Sheet
Classification Fair Value
Balance Sheet
Classification Fair Value
Derivatives not designated as hedges:
Foreign exchange forward contracts Prepaid expenses and other $ .6 Accounts payable $ 5.0
Total derivatives not designated as hedges $ .6 $ 5.0
Total derivatives $ .6 $ 5.0
The following table presents the fair value of derivative instruments outstanding at December 31, 2013:
Asset Liability
Balance Sheet
Classification Fair Value
Balance Sheet
Classification Fair Value
Derivatives not designated as hedges:
Foreign exchange forward contracts Prepaid expenses and other $ 3.4 Accounts payable $ .3
Total derivatives not designated as hedges $ 3.4 $ .3
Total derivatives $ 3.4 $ .3
A V O N 2014 F-25