Avon 2015 Annual Report Download - page 128

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The liability balance, which primarily consists of employee-related costs, for these various restructuring initiatives as of December 31, 2015 is
as follows:
Total
2015 charges $ 24.9
Adjustments (2.8)
Cash payments (17.8)
Foreign exchange (.3)
Balance at December 31, 2015 $ 4.0
The charges approved to date under these various restructuring initiatives by reportable business segment were as follows:
Latin
America
Europe,
Middle East
& Africa
Asia
Pacific Corporate Total
Charges incurred on approved initiatives $2.9 $4.2 $5.8 $9.2 $22.1
In addition to the charges included in the tables above, we have incurred other costs to implement restructuring initiatives such as
professional services fees.
$400M Cost Savings Initiative
In 2012, we announced a cost savings initiative (the “$400M Cost Savings Initiative”) in an effort to stabilize the business and return Avon
to sustainable growth, which was expected to be achieved through restructuring actions as well as other cost-savings strategies that will not
result in restructuring charges. The $400M Cost Savings Initiative was designed to reduce our operating expenses as a percentage of total
revenue to help us achieve a targeted low double-digit operating margin, which included the North America business which has since been
presented as discontinued operations for all periods presented. The restructuring actions under the $400M Cost Savings Initiative primarily
consist of global headcount reductions and related actions, as well as the closure of certain smaller, under-performing markets, including
South Korea, Vietnam, Republic of Ireland, Bolivia and France. Other costs to implement these restructuring initiatives consist primarily of
professional service fees and accelerated depreciation.
As a result of the restructuring actions associated with the $400M Cost Savings Initiative, we recorded total costs to implement these
restructuring initiatives of $165.7 before taxes. There are no significant remaining costs for restructuring actions approved-to-date as the
actions associated with the $400M Cost Savings Initiative are substantially complete. In connection with the restructuring actions associated
with the $400M Cost Savings Initiative, we have realized substantially all of the annualized savings of approximately $215 to $225 before
taxes. As part of the $400M Cost Savings Initiative we also realized benefits from other cost-savings strategies that were not the result of
restructuring charges (including reductions in legal costs). For market closures, the annualized savings represented the foregone selling,
general and administrative expenses as a result of no longer operating in the respective markets. For actions that did not result in the closure
of a market, the annualized savings represented the net reduction of expenses that will no longer be incurred by Avon. The annualized
savings do not incorporate the impact of the decline in revenue associated with these actions (including market closures), which is not
material.
Restructuring Charges – 2015
During 2015, we recorded a benefit of $3.5 related to the $400M Cost Savings Initiative, in selling, general and administrative expenses, in
the Consolidated Statements of Operations. The costs consisted of the following:
• net benefit of $4.4 primarily for employee-related benefits, associated with severance;
• implementation costs of $.9 primarily related to professional service fees associated with our Europe, Middle East & Africa and Asia Pacific
businesses;
• benefit of $.4 primarily related to the accumulated foreign currency translation adjustments associated with Asia Pacific markets;
• accelerated depreciation of $.3 associated with the closure and rationalization of certain facilities; and
• contract termination and other charge of $.1, primarily related to Asia Pacific.
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