Avon 2014 Annual Report Download - page 94

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Letters of Credit
At December 31, 2014 and December 31, 2013, we also had letters of credit outstanding totaling $12.9 and $19.9, respectively, which
primarily guarantee various insurance activities. In addition, we had outstanding letters of credit for trade activities and commercial
commitments executed in the ordinary course of business, such as purchase orders for normal replenishment of inventory levels.
Additional Information
Our long-term credit ratings are Ba1 (Stable Outlook) with Moody’s, BB+ (Stable Outlook) with S&P, and BB (Negative Outlook) with Fitch,
which are below investment grade. In November 2014, S&P lowered their long-term credit rating from BBB- (Negative Outlook) to BB+
(Stable Outlook). In October 2014, Moody’s lowered their long-term credit rating from Baa3 (Negative Outlook) to Ba1 (Stable Outlook). We
do not believe these long-term credit rating downgrades will have a material impact on our near-term liquidity. However, additional rating
agency reviews could result in a change in outlook or downgrade, which could further limit our access to new financing, particularly short-
term financing, reduce our flexibility with respect to working capital needs, affect the market price of some or all of our outstanding debt
securities, as well as most likely result in an increase in financing costs, including interest expense under certain of our debt instruments, and
less favorable covenants and financial terms of our financing arrangements.
NOTE 6. Accumulated Other Comprehensive Loss
The tables below present the changes in AOCI by component and the reclassifications out of AOCI during 2014 and 2013:
Foreign
Currency
Translation
Adjustments
Cash Flow
Hedges
Net
Investment
Hedges
Pension and
Postretirement
Benefits Total
Balance at December 31, 2013 $(429.3) $(5.1) $(4.3) $(431.7) $ (870.4)
Other comprehensive loss other than reclassifications (247.7) – – (187.2) (434.9)
Reclassifications into earnings:
Derivative losses on cash flow hedges, net of tax of
$0.0(1) – 1.9 – – 1.9
Amortization of net actuarial loss and prior service
cost, net of tax of $2.5(2) – – – 85.8 85.8
Total reclassifications into earnings – 1.9 – 85.8 87.7
Balance at December 31, 2014 $(677.0) $(3.2) $(4.3) $(533.1) $(1,217.6)
Foreign
Currency
Translation
Adjustments
Cash Flow
Hedges
Net
Investment
Hedges
Pension and
Postretirement
Benefits Total
Balance at December 31, 2012 $(317.6) $(6.8) $(4.3) $(548.0) $(876.7)
Other comprehensive loss other than reclassifications (111.7) – – 80.6 (31.1)
Reclassifications into earnings:
Derivative losses on cash flow hedges, net of tax of $.9(1) – 1.7 – – 1.7
Amortization of net actuarial loss and prior service cost,
net of tax of $16.5(2) – – – 35.7 35.7
Total reclassifications into earnings – 1.7 – 35.7 37.4
Balance at December 31, 2013 $(429.3) $(5.1) $(4.3) $(431.7) $(870.4)
(1) Gross amount reclassified to interest expense, and related taxes reclassified to income taxes.
(2) Gross amount reclassified to pension and postretirement expense, within selling, general and administrative expenses, and related taxes reclassified to income
taxes.