Avon 2009 Annual Report Download - page 96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The charges, net of adjustments, of initiatives approved to date under the 2005 Restructuring Program by reportable business segment were
as follows:
Latin
America
North
America
Central &
Eastern
Europe
Western
Europe,
Middle East
&Africa
Asia
Pacific China CorporateTotal
2005 $3.5 $6.9 $1.0 $11.7 $18.2 $4.2 $6.1 $51.6
2006 34.6 61.8 6.9 45.1 22.2 2.1 29.5 202.2
2007 14.9 7.0 4.7 65.1 4.3 1.3 12.7 110.0
2008 1.9 (1.1) 1.7 19.0 .6 –(3.0) 19.1
2009 1.4 (.1) (.7) (4.4) 11.6 (.2) (2.9) 4.7
Charges recorded to date $56.3 $74.5 $13.6 $136.5 $56.9 $7.4 $42.4 $387.6
Charges to be incurred on approved initiatives 4.8 .6 –––– –5.4
Total expected charges on approved initiatives $61.1 $75.1 $13.6 $136.5 $56.9 $7.4 $42.4 $393.0
As noted previously, we expect to record total costs to implement
of approximately $530 before taxes forall restructuring initiatives
under the2005 Restructuring Program, including restructuring
charges and other costs to implement. The amounts shown in the
tables above as charges recorded to date relate to initiatives that
have been approved and recorded in thefinancial statements as
the costs are probable and estimable. The amounts shown in the
tables above as total expected charges on approved initiatives
represent charges recorded to date plus charges yettoberecorded
for approved initiatives as therelevant accounting criteria for
recording an expense have not yet been met. In addition to the
charges includedinthe tables above, we will incur other costs to
implement restructuring initiatives such as consulting, other
professional services, and accelerated depreciation.
2009 Restructuring Program
In February 2009, we announced anew restructuring program
(the “2009 Restructuring Program”) which targets increasing
levels of efficiency and organizational effectiveness across our
global operations. The 2009 Restructuring Program initiatives are
expected to include:
•restructuring our global supply chain operations;
•realigning certain local business support functions to amore
regional basis to drive increased efficiencies; and
•streamlining transaction-related services, including selective
outsourcing.
We expect to record total restructuring charges and other costs
to implement restructuring initiatives in the range of $300 to
$400 before taxes under the 2009 Restructuring Program, with
actions to be completed by 2012-2013.
Restructuring Charges –2009
During 2009, we recorded total costs to implement of $151.3
associated with approved initiatives that are part of our 2009
Restructuring Program, and the costs consisted of the following:
•net charges of $126.0 primarily for employee-related costs,
including severance and pension benefits;
•implementation costs of $18.9 for professional service fees,
primarily associated with our initiatives to realign certain
support functions to amore regional basis and realignment of
certain manufacturing facilities; and
•accelerated depreciation of $6.4 associated with our initiatives
to realign some distribution operations and close some manu-
facturing operations.
Of the total costs to implement, $144.9 was recorded in selling,
general and administrative expenses and $6.4 was recorded in
cost of sales for 2009. Most of these costs to implement are
expected to result in future cash expenditure, with amajority of
the cash payments to be made in 2010 and 2011.
The liability balances forthe initiatives under the2009 Restructuring
Programare shown below.
Employee-
Related
Costs
2009 Charges $126.6
Adjustments (.6)
Cash payments (16.3)
Non-cash write-offs (4.0)
Foreign exchange .6
Balance December 31, 2009 $106.3