Avon 2010 Annual Report Download - page 97

We also maintain a Supplemental Life Plan (“SLIP”) under which additional death benefits ranging from $.4 to $2.0 are provided to certain
active and retired officers. The SLIP has not been offered to new officers since January 1, 2010.
We established a grantor trust to provide assets that may be used for the benefits payable under the SERP and SLIP. The trust is irrevocable
and, although subject to creditors’ claims, assets contributed to the trust can only be used to pay such benefits with certain exceptions. The
assets held in the trust are included in other assets and at December 31 consisted of the following:
2010 2009
Fixed-income portfolio $ – $ .2
Corporate-owned life insurance policies 44.1 42.3
Cash and cash equivalents 1.1 7.6
Total $45.2 $50.1
The assets are recorded at fair market value, except for investments in corporate-owned life insurance policies which are recorded at their
cash surrender values as of each balance sheet date. Changes in the cash surrender value during the period are recorded as a gain or loss in
the Consolidated Statements of Income.
The fixed-income portfolio held in the grantor trust is classified as available-for-sale securities.
NOTE 13. Segment Information
Our segments are based on geographic operations and include commercial business units in Latin America; North America; Central &
Eastern Europe; Western Europe, Middle East & Africa; Asia Pacific; and China. Global expenses include, among other things, costs related to
our executive and administrative offices, information technology, research and development, marketing and professional and related fees
associated with the FCPA investigation and compliance reviews. We allocate certain planned global expenses to our business segments
primarily based on planned revenue. The unallocated costs remain as global expenses. We do not allocate to our segments income taxes,
foreign exchange gains or losses, costs of implementing restructuring initiatives related to our global functions or professional and related
fees associated with the FCPA investigation and compliance reviews. Costs of implementing restructuring initiatives related to a specific
segment are recorded within that segment. In Europe, our manufacturing facilities primarily support Western Europe, Middle East & Africa
and Central & Eastern Europe. In our disclosures of total assets, capital expenditures and depreciation and amortization, we have allocated
amounts associated with the European manufacturing facilities between Western Europe, Middle East & Africa and Central & Eastern
Europe based upon planned beauty unit volume. A similar allocation is done in Asia where our manufacturing facilities primarily support Asia
Pacific and China.
The segments have similar business characteristics and each offers similar products through similar customer access methods.
The accounting policies of the segments are the same as those described in Note 1, Description of the Business and Summary of Significant
Accounting Policies. We evaluate the performance of our segments based on revenues and operating profits or losses. Segment revenues
reflect direct sales of products to Representatives based on the Representative’s geographic location. Intersegment sales and transfers are
not significant. Each segment records direct expenses related to its employees and its operations.
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