Avon 2015 Annual Report Download - page 43

The Venezuelan special items include the impact on the Consolidated Statements of Operations in 2015, 2014 and 2013 caused by the
devaluations of Venezuelan currency on monetary assets and liabilities, such as cash, receivables and payables; deferred tax assets and
liabilities; and non-monetary assets, such as inventories. For non-monetary assets, the Venezuelan special items include the earnings impact
caused by the difference between the historical U.S. dollar cost of the assets at the previous exchange rate and the revised exchange rate. In
2015 and 2014, the Venezuelan special items also include adjustments of approximately $11 and approximately $116, respectively, to
reflect certain non-monetary assets at their net realizable value. In 2015, the Venezuelan special items also include an impairment charge of
approximately $90 to reflect the write-down of the long-lived assets to their estimated fair value. In 2013, the devaluation was as a result of
the change in the official exchange rate, which moved from 4.30 to 6.30. In 2014, the devaluation was caused as a result of moving from
the official exchange rate of 6.30 to the SICAD II exchange rate of approximately 50. In 2015, the devaluation was caused as a result of
moving from the SICAD II exchange rate of approximately 50 to the SIMADI exchange rate of approximately 170. The Venezuelan special
items also include the impact on the Consolidated Statements of Operations caused by a valuation allowance for deferred tax assets related
to Venezuela recorded in the fourth quarter of 2013.
The Pension settlement charge includes the impact on the Consolidated Statements of Operations in the third and fourth quarters of 2015
and the second, third and fourth quarters of 2014 associated with the payments made to former employees who were vested and
participated in the U.S. defined benefit pension plan. Such payments fully settle our pension plan obligation to those participants who
elected to receive such payment.
The Asset impairment and other charges include the impact on the Consolidated Statements of Operations caused by the goodwill
impairment charge related to the Egypt business in the fourth quarter of 2015. The Asset impairment and other charges also include the
impact on the Consolidated Statements of Operations caused by the goodwill and intangible asset impairment charges and a valuation
allowance for deferred tax assets related to the China business in 2013.
The Other items include the impact during 2015 on the Consolidated Statements of Operations due to the gain on the sale of Liz Earle. The
Other items also includes the impact on the Consolidated Statements of Operations in the fourth quarter of 2015 caused by transaction-
related costs of $3.1 associated with the planned separation of the North America business that were included in continuing operations. In
addition, Other items includes the impact on the Consolidated Statements of Operations of the loss on extinguishment of debt caused by
the make-whole premium and the write-off of debt issuance costs and discounts associated with the prepayment of our 2.375% Notes (as
defined below in “Liquidity and Capital Resources”). The Other items also include the impact on other expense, net in the Consolidated
Statements of Operations of $2.5 associated with the write-off of issuance costs related to our previous $1 billion revolving credit facility.
The Other items, in 2013, also include the impact on the Consolidated Statements of Operations caused by the make-whole premium and
the write-off of debt issuance costs associated with the prepayment of our private notes issued in 2010, as well as the write-off of debt
issuance costs associated with the early repayment of $380 of the outstanding principal amount of a term loan agreement. The Other items
also include the impact on the Consolidated Statements of Operations in 2013 caused by the make-whole premium and the write-off of
debt issuance costs and discounts, partially offset by a deferred gain associated with the January 2013 interest-rate swap agreement
termination, associated with the prepayment of the notes due in 2014.
In addition, the effective tax rate discussion includes Special tax items which include the impact during 2015 on income taxes in the
Consolidated Statements of Operations due to a non-cash income tax charge in the first quarter of 2015 and a non-cash income tax benefit
in the second quarter of 2015, each associated with valuation allowances, to adjust our U.S. deferred tax assets to an amount that was
“more likely than not” to be realized. These adjustments were primarily caused by fluctuations of the U.S. dollar against currencies of some
of our key markets. The Special tax items also include the impact during the third quarter of 2015 on income taxes in the Consolidated
Statements of Operations due to a non-cash income tax charge as a result of establishing a valuation allowance for the full amount of our
U.S. deferred tax assets due to the impact of the continued strengthening of the U.S. dollar against currencies of some of our key markets
and its associated effect on our tax planning strategies. Additionally, the Special tax items includes the impact on income taxes in the
Consolidated Statements of Operations due to a non-cash income tax charge associated with valuation allowances, to adjust certain non-
U.S. deferred tax assets to an amount that is “more likely than not” to be realized. The non-U.S. valuation allowance included an adjustment
associated with Russia, which was primarily the result of lower earnings, which were significantly impacted by foreign exchange losses on
working capital balances. The Special tax items also include the impact during the fourth quarter of 2014 on the income taxes in the
Consolidated Statements of Operations due to a non-cash income tax charge primarily associated with a valuation allowance to reduce our
U.S. deferred tax assets to an amount that is “more likely than not” to be realized, and was primarily due to the strengthening of the U.S.
dollar against currencies of some of our key markets and, to a lesser extent, the finalization of the FCPA settlements. The Special tax items
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