Avon 2015 Annual Report Download - page 124

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
employees. The DCP is an unfunded, unsecured plan for which obligations are paid to participants out of our general assets. The DCP allows
for the deferral of up to 50% of a participant’s base salary, the deferral of up to 100% of incentive compensation bonuses, the deferral of
performance restricted stock units for certain employees (through the end of 2012 only), and the deferral of contributions that would
normally have been made to the PSA but are not deferred because the amount was in excess of U.S. Internal Revenue Code limits on
contributions to the PSA. Participants may elect to have their deferred compensation invested in one or more of three permitted investment
alternatives. Expense associated with the DCP was $.5 in 2015, $1.3 in 2014 and $1.2 in 2013. The benefit obligation under the DCP was
$34.5 at December 31, 2015 and $45.5 at December 31, 2014 and was included in other liabilities and accrued compensation in the
Consolidated Balance Sheets.
We maintain supplemental retirement programs consisting of the Supplemental Executive Retirement Plan of Avon Products, Inc. (“SERP”)
and the Benefit Restoration Pension Plan of Avon Products, Inc. under which non-qualified supplemental pension benefits are paid to higher
paid key employees in addition to amounts received under our qualified defined benefit retirement plan, which is subject to IRS limitations
on covered compensation. The SERP has not been offered to new employees in the last six years. The annual cost of these programs has
been included in the determination of the net periodic benefit cost shown previously and amounted to $6.3 in 2015, $7.1 in 2014 and $7.6
in 2013. The benefit obligation under these programs was $28.4 at December 31, 2015 and $32.1 at December 31, 2014 and was included
in employee benefit plans and accrued compensation in the Consolidated Balance Sheets.
We also maintain a Supplemental Life Plan (“SLIP”) under which additional death benefits ranging from $.4 to $2.0 are provided to certain
active and retired officers. The SLIP has not been offered to new officers in the last five years.
We established a grantor trust to provide assets that may be used for the benefits payable under the SERP and SLIP. The trust is irrevocable
and, although subject to creditors’ claims, assets contributed to the trust can only be used to pay such benefits with certain exceptions. The
assets held in the trust are included in other assets and at December 31 consisted of the following:
2015 2014
Corporate-owned life insurance policies $32.7 $32.2
Cash and cash equivalents .7 1.4
Total $33.4 $33.6
The assets are recorded at fair market value, except for investments in corporate-owned life insurance policies which are recorded at their
cash surrender values as of each balance sheet date, which is a proxy of fair value. Changes in the cash surrender value during the period are
recorded as a gain or loss within selling, general and administrative expenses in the Consolidated Statements of Operations.
NOTE 12. Segment Information
Our reportable segments are based on geographic operations and include commercial business units in Latin America; Europe, Middle East &
Africa; and Asia Pacific. The segments have similar business characteristics and each offers similar products through similar customer access
methods.
Global and other expenses include, among other things, costs related to our executive and administrative offices, information technology,
research and development, and marketing, costs in connection with the ongoing compliance with the deferred prosecution agreement (the
“DPA”) and the consent to settlement (the “Consent”), prior professional and related fees associated with the Foreign Corrupt Practices Act
(“FCPA”) investigations and compliance reviews, the prior accrual for the settlements related to the FCPA investigations, and settlement
charges associated with the U.S. pension plan. We allocate certain planned global expenses to our business segments primarily based on
planned revenue. The unallocated costs remain as Global and other expenses. We do not allocate to our segments costs of implementing
restructuring initiatives related to our global functions, costs in connection with the ongoing compliance with the DPA and the Consent,
prior professional and related fees associated with the FCPA investigations and compliance reviews, the prior accrual for the settlements
related to the FCPA investigations, and settlement charges associated with the U.S. pension plan. Costs of implementing restructuring
initiatives related to a specific segment are recorded within that segment.
The accounting policies of the segments are the same as those described in Note 1, Description of the Business and Summary of Significant
Accounting Policies. We evaluate the performance of our segments based on revenues and operating profits or losses. Segment revenues
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