Avon 2015 Annual Report Download - page 68

PART II
2014 Compared to 2013
The comparability of total global expenses was impacted by the $89 accrual for the settlements related to the FCPA investigations which was
recorded in 2013, partially offset by the additional $46 accrual for the settlements related to the FCPA investigations and settlement charges
associated with the U.S. defined benefit pension plan (discussed above) which were recorded in 2014 and higher CTI restructuring.
Adjusted total global expenses decreased compared to the prior-year period primarily as a result of cost savings initiatives, including lower
expenses related to our SMT project, and to a lesser extent, lower marketing expenses. In addition, professional and related fees associated
with the FCPA investigations and compliance reviews decreased compared to the prior-year period. Professional and related fees associated
with the FCPA investigations and compliance reviews amounted to approximately $7 in 2014, as compared to approximately $28 in 2013.
These fees were not allocated to the segments. Although the FCPA investigations and compliance reviews are now complete and we have
reached settlements with the government, we incur costs related to the ongoing compliance with the DPA and Consent.
With respect to the global expenses discussion above, for all years presented, please see Risk Factors on pages 11 through 12 of our 2015
Annual Report, and Note 15, Contingencies on pages F-48 through F-51 of our 2015 Annual Report for more information regarding the
FCPA settlements, and other related matters, including our expectations with respect to future costs related to the ongoing compliance with
the DPA and Consent, including the monitor and self-reporting obligations undertaken pursuant to the settlements.
Liquidity and Capital Resources
Our principal sources of funding historically have been cash flows from operations, public offerings of notes, bank financings, borrowings
under lines of credit, issuance of commercial paper and a private placement of notes. At December 31, 2015, we had cash and cash
equivalents totaling approximately $687. We believe that our sources of funding will be sufficient to satisfy our currently anticipated cash
requirements through at least the next twelve months. For more information with respect to foreign currency restrictions, see “Segment
Review – Latin America” in this MD&A above, and for more information regarding risks with respect to these foreign currency restrictions,
see “Risk Factors – We are subject to financial risks related to our international operations, including exposure to foreign currency
fluctuations and the impact of foreign currency restrictions” included in Item 1A on pages 8 through 22 of our 2015 Annual Report.
We may seek to repurchase our equity or to retire our outstanding debt in open market purchases, privately negotiated transactions,
through derivative instruments or otherwise. Repurchases of equity and debt may be funded by the incurrence of additional debt or the
issuance of equity (including shares of preferred stock) or convertible securities and will depend on prevailing market conditions, our liquidity
requirements, contractual restrictions and other factors, and the amounts involved may be material. We may also elect to incur additional
debt or issue equity (including shares of preferred stock) or convertible securities to finance ongoing operations or to meet our other liquidity
needs. Any issuances of equity (including shares of preferred stock) or convertible securities could have a dilutive effect on the ownership
interest of our current shareholders and may adversely impact earnings per share in future periods. Our credit ratings were downgraded in
2014 and 2015, which may impact our access to these transactions on favorable terms, if at all. For more information see “Risk Factors –
Our credit ratings were downgraded in 2015, which could limit our access to financing, affect the market price of our financing and increase
financing costs. A further downgrade in our credit ratings may adversely affect our access to liquidity.” “Risk Factors – Our indebtedness
could adversely affect us by reducing our flexibility to respond to changing business and economic conditions,” and “Risk Factors – A
general economic downturn, a recession globally or in one or more of our geographic regions or markets or sudden disruption in business
conditions or other challenges may adversely affect our business, our access to liquidity and capital, and our credit ratings” included in
Item 1A on pages 8 through 22 of our 2015 Annual Report.
Our liquidity could also be negatively impacted by restructuring initiatives, dividends, capital expenditures, acquisitions, and certain
contingencies, including any legal or regulatory settlements, described more fully in Note 15, Contingencies on pages F-48 through F-51 of
our 2015 Annual Report. See our Cautionary Statement for purposes of the “Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995 on pages 1 through 2 of our 2015 Annual Report.
Balance Sheet Data
2015 2014
Cash and cash equivalents $ 686.9 $ 936.4
Total debt 2,214.8 2,550.4
Working capital 146.0 917.3
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