Avon 2014 Annual Report Download - page 15

$400M Cost Savings Initiative
In 2012, we outlined initial steps toward achieving a cost-savings target of $400 before taxes by the end of 2015. In connection with this
cost-savings target, in 2012, we announced a cost savings initiative (the “$400M Cost Savings Initiative”), in an effort to stabilize the
business and return Avon to sustainable growth. As part of the $400M Cost Savings Initiative, we have identified areas for cost efficiency
that required restructuring charges for reductions in our global workforce and related actions across many of our businesses and functions,
as well as the closure of certain smaller, under-performing markets, including South Korea, Vietnam, Republic of Ireland, Bolivia and France.
We also expected to achieve savings through other cost-savings strategies that would not result in restructuring charges (including
reductions in legal and brochure costs). Since we announced the $400M Cost Savings Initiative, we have reduced our global headcount by
approximately 15% and achieved the cost-savings target of $400 before taxes. While we have achieved the targeted cost savings, we have
not yet achieved our targeted low double-digit operating margin primarily due to the unfavorable impact of foreign exchange, inflationary
pressures and continued revenue decline in North America. We continue to analyze our cost structure and may incur additional restructuring
charges in an effort to achieve additional cost savings. Additional information regarding our initiatives is included in “Overview” within
MD&A on pages 23 through 25, and in Note 14, Restructuring Initiatives on pages F-43 through F-47 of our 2014 Annual Report.
Acquisitions and Dispositions
In March 2010, we acquired Liz Earle Beauty Co. Limited (“Liz Earle”) and in July 2010, we acquired Silpada Designs, Inc. (“Silpada”). In
December 2010, we completed the sale of Avon Products Company Limited (“Avon Japan”) and in July 2013, we completed the sale of
Silpada.
Website Access to Reports
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are, and
have been throughout 2014, available without charge on our investor website (www.avoninvestor.com) as soon as reasonably practicable
after they are filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”). We also make available on our website
the charters of our Board Committees, our Corporate Governance Guidelines and our Code of Conduct. Copies of these SEC reports and
other documents are also available, without charge, by sending a letter to Investor Relations, Avon Products, Inc., 777 Third Avenue, New
York, N.Y. 10017-1307, by sending an email to [email protected] or by calling [phone]. Information on our website does
not constitute part of this report. Additionally, our filings with the SEC may be read and copied at the SEC Public Reference Room at 100 F
Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330. These filings, including reports, proxy and information statements, and other information regarding the Company are also
available on the SEC’s website at www.sec.gov free of charge as soon as reasonably practicable after we have filed or furnished the above-
referenced reports.
ITEM 1A. RISK FACTORS
You should carefully consider each of the following risks associated with an investment in our publicly traded securities and all of the other
information in our 2014 Annual Report. Our business may also be adversely affected by risks and uncertainties not presently known to us or
that we currently believe to be immaterial. If any of the events contemplated by the following discussion of risks should occur, our business,
prospects, financial condition, liquidity, results of operations and cash flows may be materially adversely affected.
Our success depends on our ability to improve our financial and operational performance and
execute fully our global business strategy.
Our ability to improve our financial and operational performance and implement the key initiatives of our global business strategy is
dependent upon a number of factors, including our ability to:
• implement our stabilization strategies, cost savings initiatives, restructuring and other initiatives, and achieve anticipated savings and
benefits from such programs and initiatives;
• reverse declines in our revenue performance and market share, and strengthen our brand image;
• implement appropriate pricing strategies and product mix that are more aligned with the preferences of local markets and achieve
anticipated benefits from these strategies;
• reduce costs and effectively manage our cost base, particularly selling, general and administrative (“SG&A”) expenses;
• improve our business in North America, including through improving field health, improving our brochure and creating a sustainable cost
base;
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