Avon 2010 Annual Report Download - page 101

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Restructuring Charges – 2009
During 2009, we recorded total costs to implement of $20.1 associated with previously approved initiatives that are part of our 2005
Restructuring Program, and the costs consisted of the following:
• net charges of $4.7 primarily for employee-related costs, including severance and pension benefits;
• implementation costs of $9.6 for professional service fees, primarily associated with our initiatives to outsource certain finance processes
and realign certain distribution operations; and
• accelerated depreciation of $5.8 associated with our initiatives to realign some distribution operations.
Of the total costs to implement, $19.8 was recorded in selling, general and administrative expenses and $.3 was recorded in cost of sales for
2009.
Restructuring Charges – 2010
During 2010, we recorded total costs to implement of $3.2 associated with previously approved initiatives that are part of our 2005
Restructuring Program, and the costs consisted of the following:
• net benefit of $4.8 primarily for employee-related costs, including severance and pension benefits;
• implementation costs of $6.5 for professional service fees, primarily associated with our initiatives to outsource certain finance processes
and realign certain distribution operations; and
• accelerated depreciation of $1.5 associated with our initiatives to realign some distribution operations.
Of the total costs to implement, $3.1 was recorded in selling, general and administrative expenses and $.1 was recorded in cost of sales for
2010.
The liability balances for the initiatives under the 2005 Restructuring Program are shown below.
Employee-
Related
Costs
Inventory
Write-offs
Contract
Terminations/
Other Total
Balance December 31, 2007 $142.3 $ – $ .7 $143.0
2008 Charges 19.2 – .8 20.0
Adjustments (3.1) – .9 (2.2)
Cash payments (57.2) – (2.1) (59.3)
Non-cash write-offs (.3) – – (.3)
Foreign exchange (7.3) – – (7.3)
Balance December 31, 2008 $ 93.6 $ – $ .3 $ 93.9
2009 Charges 16.8 – – 16.8
Adjustments (11.9) (.2) – (12.1)
Cash payments (43.4) – (.2) (43.6)
Non-cash write-offs (13.9) – – (13.9)
Foreign exchange 1.8 – – 1.8
Balance December 31, 2009 $ 43.0 $(.2) $ .1 $ 42.9
2010 Charges 2.1 – – 2.1
Adjustments (6.9) – – (6.9)
Cash payments (17.3) – – (17.3)
Foreign exchange (.3) – – (.3)
Balance December 31, 2010 $ 20.6 $(.2) $ .1 $ 20.5
Non-cash write-offs associated with employee-related costs are the result of settlement, curtailment and special termination benefit charges
for pension plans and postretirement due to the initiatives implemented. Inventory write-offs relate to exited businesses.
A V O N 2010 F-37