Statement Of Income Alternative
| Statement Of Income Alternative (USD $) | ||||
| In Millions, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Net sales | $2,527 | 2618.7 | 7130.4 | 7807.6 |
| Other revenue | 24.3 | 26 | 71 | 74.9 |
| Total revenue | 2551.3 | 2644.7 | 7201.4 | 7882.5 |
| Costs, expenses and other: | ||||
| Cost of sales | 954.8 | 975 | 2700.3 | 2892.1 |
| Selling, general and administrative expenses | 1,338 | 1372.6 | 3891.3 | 4023.2 |
| Operating profit | 258.5 | 297.1 | 609.8 | 967.2 |
| Interest expense | 26.1 | 24.6 | 78.8 | 76.8 |
| Interest income | -3.2 | -10.1 | -15.2 | -27.9 |
| Other expense, net | 3.9 | 3.4 | 7.9 | 16.1 |
| Total other expenses | 26.8 | 17.9 | 71.5 | 65 |
| Income before taxes | 231.7 | 279.2 | 538.3 | 902.2 |
| Income taxes | -74.1 | -54.5 | -178.6 | -254.3 |
| Net income | 157.6 | 224.7 | 359.7 | 647.9 |
| Net income attributable to noncontrolling interest | -1.4 | -2.1 | -3.3 | (5) |
| Net income attributable to Avon | 156.2 | 222.6 | 356.4 | 642.9 |
| Earnings per share: | ||||
| Basic | 0.36 | 0.52 | 0.83 | 1.5 |
| Diluted | 0.36 | 0.52 | 0.83 | 1.49 |
| Cash dividends per common share | 0.21 | 0.2 | 0.63 | 0.6 |
Statement Of Financial Position
| Statement Of Financial Position Classified (USD $) | ||
| In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Dec. 31, 2008 |
| Current Assets | ||
| Cash and cash equivalents | 1293.4 | 1104.7 |
| Accounts receivable, net | 736.2 | 687.8 |
| Inventories | 1192.7 | 1007.9 |
| Prepaid expenses and other | 974.5 | 756.5 |
| Total current assets | 4196.8 | 3556.9 |
| Property, plant and equipment, at cost | 2604.2 | 2439.9 |
| Less accumulated depreciation | -1153.3 | (1,096) |
| Property, Plant and Equipment, Net, Total | 1450.9 | 1343.9 |
| Other assets | 1087.8 | 1173.2 |
| Total assets | 6735.5 | 6,074 |
| Current Liabilities | ||
| Debt maturing within one year | 431.2 | 1031.4 |
| Accounts payable | 721.3 | 724.3 |
| Accrued compensation | 273.8 | 234.4 |
| Other accrued liabilities | 642.3 | 581.9 |
| Sales and taxes other than income | 245.1 | 212.2 |
| Income taxes | 70.1 | 128 |
| Total current liabilities | 2383.8 | 2912.2 |
| Long-term debt | 2,328 | 1456.2 |
| Employee benefit plans | 599.5 | 665.4 |
| Long-term income taxes | 166.1 | 168.9 |
| Other liabilities | 163 | 159 |
| Total liabilities | 5640.4 | 5361.7 |
| Contingencies (Note 5) | - | - |
| Shareholders' Equity | ||
| Common stock | 185.9 | 185.6 |
| Additional paid-in capital | 1918.5 | 1874.1 |
| Retained earnings | 4204.9 | 4118.9 |
| Accumulated other comprehensive loss | -711.1 | -965.9 |
| Treasury stock, at cost | -4544.8 | -4537.8 |
| Total Avon shareholders' equity | 1053.4 | 674.9 |
| Noncontrolling interest | 41.7 | 37.4 |
| Total shareholders' equity | 1095.1 | 712.3 |
| Total liabilities and shareholders' equity | 6735.5 | $6,074 |
Statement Of Cash Flows Indirec
| Statement Of Cash Flows Indirect (USD $) | |||||||||||||||||||
| In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |||||||||||||||||
| Cash Flows from Operating Activities | |||||||||||||||||||
| Net income | 359.7 | 647.9 | |||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
| Depreciation and amortization | 131.4 | 143 | |||||||||||||||||
| Provision for doubtful accounts | 159.6 | 149.1 | |||||||||||||||||
| Provision for obsolescence | 72.2 | 54.2 | |||||||||||||||||
| Share-based compensation | 43.1 | 46.5 | |||||||||||||||||
| Deferred income taxes | -36.3 | 8.7 | |||||||||||||||||
| Other | 44.5 | 28.1 | |||||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||||
| Accounts receivable | (157) | -63.8 | |||||||||||||||||
| Inventories | -207.8 | -262.6 | |||||||||||||||||
| Prepaid expenses and other | -92.8 | -183.5 | |||||||||||||||||
| Accounts payable and accrued liabilities | 29.8 | -178.8 | |||||||||||||||||
| Income and other taxes | -82.2 | -49.2 | |||||||||||||||||
| Noncurrent assets and liabilities | -17.1 | -36.9 | |||||||||||||||||
| Net cash provided by operating activities | 247.1 | 302.7 | |||||||||||||||||
| Cash Flows from Investing Activities | |||||||||||||||||||
| Capital expenditures | -171.8 | -238.3 | |||||||||||||||||
| Disposal of assets | 10.2 | 8.5 | |||||||||||||||||
| Purchases of investments | -0.7 | -60.5 | |||||||||||||||||
| Proceeds from sale of investments | 61.8 | 26.6 | |||||||||||||||||
| Other investing activities | 5.7 | 0.1 | |||||||||||||||||
| Net cash used by investing activities | -94.8 | -263.6 | |||||||||||||||||
| Cash Flows from Financing Activities | |||||||||||||||||||
| Cash dividends | -273.1 | -262.3 | |||||||||||||||||
| Debt, net (maturities of three months or less) | -499.1 | -189.8 | |||||||||||||||||
| Proceeds from debt | 948.9 | 547.1 | |||||||||||||||||
| Repayment of debt | -155.2 | -62.4 | |||||||||||||||||
| Proceeds from exercise of stock options | 3.8 | 80.8 | |||||||||||||||||
| Excess tax benefit realized from share-based compensation | -2.1 | 12.3 | |||||||||||||||||
| Repurchase of common stock | -7.6 | -171.4 | |||||||||||||||||
| Net cash provided (used) by financing activities | 15.6 | [1] | -45.7 | [1] | |||||||||||||||
| Effect of exchange rate changes on cash and equivalents | 20.8 | 10.2 | |||||||||||||||||
| Net increase in cash and equivalents | 188.7 | 3.6 | |||||||||||||||||
| Cash and equivalents at beginning of year | 1104.7 | 963.4 | |||||||||||||||||
| Cash and equivalents at end of period | 1293.4 | $967 | |||||||||||||||||
| [1]Non-cash financing activities in 2009 and 2008 included the change in fair market value of interest-rate swap agreements of $(32.8) and $4.9, respectively. | |||||||||||||||||||
1. ACCOUNTING POLICIES
| 1. ACCOUNTING POLICIES | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 1. ACCOUNTING POLICIES | 1. ACCOUNTING POLICIES Basis of Presentation We prepare our unaudited interim consolidated financial statements in conformity with accounting principles generally accepted in the United States (US GAAP). We consistently applied the accounting policies described in our 2008 Annual Report on Form 10-K (2008 Form 10-K) in preparing these unaudited financial statements. In our opinion, we made all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods. Results for interim periods are not necessarily indicative of results for a full year. You should read these unaudited interim consolidated financial statements in conjunction with our consolidated financial statements contained in our 2008 Form 10-K. When used in these notes, the terms Avon, Company, we or us mean Avon Products, Inc. For interim consolidated financial statement purposes, we compute our tax provision on the basis of our estimated annual effective income tax rate, and provide for accruals under our various employee benefit plans for each quarter based on one quarter of the estimated annual expense. New Accounting Standards Implemented Effective January1, 2009, we adopted the fair value measurement provisions as required by the Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Codification (Codification), as it relates to non-recurring, nonfinancial assets and liabilities. The adoption of these provisions did not have an impact on our Consolidated Financial Statements. Effective January1, 2009, we adopted enhanced disclosures about how and why we use derivative instruments, how they are accounted for, and how they affect our financial performance as required by the Derivatives and Hedging Topic of the Codification. See Note 12, Derivative Instruments and Hedging Activities. Effective January1, 2009, we adopted the provisions required by the Earnings Per Share (EPS) Topic of the Codification. The specific provisions address whether instruments granted in share-based payment awards are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing EPS under the two-class method. Prior periods EPS was adjusted retrospectively which caused the nine month ended September30, 2008 basic EPS to be adjusted from $1.51 to $1.50. See Note 2, Earnings Per Share and Share Repurchases. Effective January1, 2009, we adopted the provisions relating to the accounting for business combinations as required by the Business Combinations Topic of the Codification. These provisions will impact our financial statements both on the acquisition date and in subsequent periods and will be applied prospectively. The impact of adopting these provisions will depend on the nature and terms of future acquisitions. Effective January1, 2009, we adopted the provisions for the accounting and reporting of noncontrolling interests in a subsidiary in consolidated financial statements as required by the Consolidations Topic of the Codification. These provisions recharacterize minority interests as noncontrolling interests and require noncontrolling int |
2. EARNINGS PER SHARE AND SHARE
| 2. EARNINGS PER SHARE AND SHARE REPURCHASES | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 2. EARNINGS PER SHARE AND SHARE REPURCHASES | 2. EARNINGS PER SHARE AND SHARE REPURCHASES We compute earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and participating securities. Our participating securities are our grants of restricted stock and restricted stock units, which contain non-forfeitable rights to dividend equivalents. (shares in millions) Three Months Ended September30, Nine Months Ended September 30, Components of Basic and Diluted Earnings per Share 2009 2008 2009 2008 Numerator: Net income attributable to Avon $ 156.2 $ 222.6 $ 356.4 $ 642.9 Less: Earnings allocated to participating securities (1.2 ) (1.4 ) (2.9 ) (4.1 ) Net income allocated to common shareholders 155.0 221.2 353.5 638.8 Denominator: Basic EPS weighted-average shares outstanding 426.99 425.74 426.76 426.36 Dilutive effect of assumed conversion of stock options 2.62 2.54 1.17 2.46 Diluted EPS adjusted weighted-average shares outstanding 429.61 428.28 427.93 428.82 Earnings per Common Share: Basic EPS $ .36 $ .52 $ .83 $ 1.50 Diluted EPS $ .36 $ .52 $ .83 $ 1.49 At September30, 2009 and 2008, we did not include stock options to purchase 20.8million shares and 8.8million shares of Avon common stock, respectively, in the calculations of diluted earnings per share because their inclusion would be anti-dilutive. We purchased approximately 0.4million shares of Avon common stock for $7.6 during the first nine months of 2009, as compared to approximately 4.6million shares of Avon common stock for $171.4 during the first nine months of 2008 under our previously announced share repurchase program and through acquisition of stock from employees in connection with tax payments upon the vesting of restricted stock units. |
3. INVENTORIES
| 3. INVENTORIES | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 3. INVENTORIES | 3. INVENTORIES Components of Inventories September30, 2009 December31, 2008 Raw materials $ 363.9 $ 292.7 Finished goods 828.8 715.2 Total $ 1,192.7 $ 1,007.9 |
4. EMPLOYEE BENEFIT PLANS
| 4. EMPLOYEE BENEFIT PLANS | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 4. EMPLOYEE BENEFIT PLANS | 4. EMPLOYEE BENEFIT PLANS Three Months Ended September30, Pension Benefits Net Periodic Benefit Costs U.S. Plans Non-U.S. Plans PostretirementBenefits 2009 2008 2009 2008 2009 2008 Service cost $ 3.0 $ 4.2 $ 3.7 $ 4.3 $ .8 $ .8 Interest cost 9.4 11.3 10.4 10.7 2.5 2.6 Expected return on plan assets (10.5 ) (13.1 ) (9.5 ) (11.9 ) (.6 ) (.9 ) Amortization of prior service credit (.2 ) (.2 ) (.3 ) (.4 ) (2.4 ) (1.5 ) Amortization of actuarial losses 7.4 6.5 3.2 2.8 .8 .2 Settlements/curtailments (0.3 ) (2.2 ) (.4 ) Special termination benefits 2.0 Net periodic benefit costs $ 10.8 $ 8.7 $ 7.5 $ 3.3 $ 0.7 $ 1.2 Nine Months Ended September30, Pension Benefits Net Periodic Benefit Costs U.S. Plans Non-U.S. Plans PostretirementBenefits 2009 2008 2009 2008 2009 2008 Service cost $ 8.6 $ 13.3 $ 11.0 $ 13.0 $ 2.6 $ 2.5 Interest cost 31.0 34.2 30.0 32.1 8.1 8.0 Expected return on plan assets (33.1 ) (38.7 ) (27.1 ) (35.6 ) (1.8 ) (2.4 ) Amortization of prior service credit (.4 ) (.8 ) (.7 ) (1.2 ) (5.4 ) (4.5 ) Amortization of actuarial losses 23.6 21.8 9.2 8.3 2.2 .8 Settlements/curtailments 1.2 12.3 (2.2 ) (.4 ) Special termination benefits 4.8 Net periodic benefit costs $ 35.7 $ 29.8 $ 34.7 $ 14.4 $ 5.3 $ 4.4 We previously disclosed in our Consolidated Financial Statements for the year ended December31, 2008, that we expected to contribute approximately $60 to $100 and $20 to $30 to our U.S. and non-U.S. pension plans, respectively, in 2009. As of September30, 2009, we made approximately $20 and $15 of contributions to the U.S. and non-U.S. pension plans, respectively. We now anticipate contributing approximately $1 to $2 and $5 to $15 to fund our U.S. and non-U.S. pension plans, respectively, during the remainder of 2009. Our funding requirements may be impacted by regulations or interpretations thereof. In August 2009, we announced changes to our postretirement medical and life insurance benefits offered to U.S. retirees. The changes to the retiree medical benefits reduced the plans obligations by $36.3. This amount is being amortized as a negative prior service cost over the average future service of active participants which is approximately 12 years. The changes to the retiree life insurance benefits reduced the plans obligations by $27.7. This amount is being |
5. CONTINGENCIES
| 5. CONTINGENCIES | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 5. CONTINGENCIES | 5. CONTINGENCIES In 2002, 2003 and 2004, our Brazilian subsidiary received a series of excise tax assessments from the Brazilian tax authorities for alleged tax deficiencies during the years 1997-2001 asserting that the establishment in 1995 of separate manufacturing and distribution companies in that country was done without a valid business purpose and that Avon Brazil did not observe transfer pricing rules to define the taxable basis of excise tax, based on purported market sales data. The structure adopted in 1995 is comparable to that used by other companies in Brazil. We believe that our Brazilian corporate structure is appropriate, both operationally and legally, and that the assessments are unfounded. This matter is being vigorously contested and in the opinion of our outside counsel, the likelihood that the assessments ultimately will be upheld is remote. Management believes that the likelihood that the assessments will have a material impact on our consolidated financial position, results of operations or cash flows is correspondingly remote. As of September30, 2009, the total assessments related to these remote contingencies, including penalties and accruing interest, amounted to approximately $600 at the exchange rate on September30, 2009. In the event that assessments are upheld in the earlier stages of review, it may be necessary for us to provide security to pursue further appeals, which, depending on the circumstances, may result in a charge to income. We are currently awaiting decisions at the first administrative level for the 2002 assessment and at the second administrative level for the 2003 and 2004 assessments. It is not possible to make a reasonable estimate of the amount or range of expense that could result from an unfavorable outcome in respect of these or any additional assessments that may be issued for subsequent periods. We are conducting an internal investigation under the oversight of the Audit Committee and with the assistance of outside independent counsel into compliance with the Foreign Corrupt Practices Act (FCPA) and related U.S. and foreign laws. The initial focus of the internal investigation has been on certain expenses incurred in connection with our China operations. In order to evaluate our compliance efforts, we are also reviewing our practices relating to FCPA and related U.S. and foreign laws in additional countries. We have voluntarily advised the United States Securities and Exchange Commission and the United States Department of Justice of the internal investigation. Because the internal investigation is ongoing, we cannot predict how the results of the investigation may impact our internal controls, business, and results of operations or financial condition. Various other lawsuits and claims, arising in the ordinary course of business or related to businesses previously sold, are pending or threatened against Avon. In managements opinion, based on its review of the information available at this time, the total cost of resolving such other contingencies at September30, 2009, should not have a material adverse effect on our consolidated financial position, results of operations or cash |
6. COMPREHENSIVE INCOME
| 6. COMPREHENSIVE INCOME | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 6. COMPREHENSIVE INCOME | 6. COMPREHENSIVE INCOME ThreeMonthsEnded September30, NineMonthsEnded September30, Components of Comprehensive Income 2009 2008 2009 2008 Net income $ 157.6 $ 224.7 $ 359.7 $ 647.9 Foreign currency translation adjustments 100.5 (158.5 ) 176.5 (4.4 ) Change in unrealized gains from available-for-sale securities (.2 ) (.3 ) (.3 ) (.6 ) Change in derivative losses on cash flow hedges 2.5 1.3 6.9 (5.6 ) Adjustment for amortization of net actuarial loss, prior service cost, and transition obligation, net of taxes 46.2 5.1 71.7 15.3 Comprehensive income $ 306.6 $ 72.3 $ 614.5 $ 652.6 Less: comprehensive income attributable to noncontrolling interest (3.3 ) (2.4 ) (3.6 ) (3.4 ) Comprehensive income attributable to Avon $ 303.3 69.9 $ 610.9 649.2 |
7. SEGMENT INFORMATION
| 7. SEGMENT INFORMATION | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 7. SEGMENT INFORMATION | 7. SEGMENT INFORMATION Summarized financial information concerning our reportable segments was as follows: Three Months Ended September30, 2009 2008 Revenue Operating Profit (Loss) Revenue Operating Profit (Loss) Latin America $ 1,113.9 $ 192.4 $ 1,064.8 $ 207.1 North America 535.2 24.1 584.5 29.9 Central Eastern Europe 314.1 46.7 382.4 59.3 Western Europe, Middle East Africa 298.2 11.8 315.8 18.3 Asia Pacific 222.6 23.2 221.4 24.3 China 67.3 2.5 75.8 (7.3 ) Total from operations 2,551.3 300.7 2,644.7 331.6 Global and other (42.2 ) (34.5 ) Total $ 2,551.3 $ 258.5 $ 2,644.7 $ 297.1 Nine Months Ended September30, 2009 2008 Revenue Operating Profit (Loss) Revenue Operating Profit (Loss) Latin America $ 2,885.0 $ 414.4 $ 2,939.8 $ 515.2 North America 1,631.5 71.7 1,811.4 169.0 Central Eastern Europe 960.0 114.4 1,236.6 244.0 Western Europe, Middle East Africa 841.2 30.8 987.4 79.5 Asia Pacific 631.0 49.9 666.0 74.8 China 252.7 23.1 241.3 (1.6 ) Total from operations 7,201.4 704.3 7,882.5 1,080.9 Global and other (94.5 ) (113.7 ) Total $ 7,201.4 $ 609.8 $ 7,882.5 $ 967.2 Our consolidated net sales by classes of principal products were as follows: Three Months Ended September30, Nine Months Ended September30, 2009 2008 2009 2008 Beauty(1) $ 1,841.8 $ 1,905.3 $ 5,163.4 $ 5,646.0 Fashion(2) 425.2 439.0 1,243.2 1,373.8 Home(3) 260.0 274.4 723.8 787.8 Net sales 2,527.0 2,618.7 7,130.4 7,807.6 Other revenue(4) 24.3 26.0 71.0 74.9 Total revenue $ 2,551.3 $ 2,644.7 $ 7,201.4 $ 7,882.5 (1) Beauty includes color cosmetics, fragrances, skin care and personal care. (2) Fashion includes fashion jewelry, watches, apparel, footwear and accessories. (3) Home includes gift and decorative products, housewares, entertainment and leisure products and childrens and nutritional products. (4) Other revenue primarily includes shipping and handling fees billed to Representatives. Sales from Health and Wellness products and mark. are included among these categories based on product type. |
8. SUPPLEMENTAL BALANCE SHEET I
| 8. SUPPLEMENTAL BALANCE SHEET INFORMATION | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 8. SUPPLEMENTAL BALANCE SHEET INFORMATION | 8. SUPPLEMENTAL BALANCE SHEET INFORMATION At September30, 2009 and December31, 2008, prepaid expenses and other included the following: Components of Prepaid Expenses and Other September30, 2009 December31, 2008 Deferred tax assets $ 247.3 $ 194.6 Receivables other than trade 147.5 127.1 Prepaid taxes and tax refunds receivable 283.0 156.5 Prepaid brochure costs, paper and other literature 130.8 126.0 Short-term investments 33.4 40.1 Property, plant and equipment held for sale 8.2 Other 124.3 112.2 Prepaid expenses and other $ 974.5 $ 756.5 At September30, 2009 and December31, 2008, other assets included the following: Components of Other Assets September30, 2009 December31, 2008 Deferred tax assets $ 490.7 $ 502.5 Goodwill (Note 10) 225.2 224.5 Intangible assets (Note 10) 17.5 28.6 Investments 52.3 108.9 Deferred software 103.9 98.3 Interest-rate swap agreements (Note 11 and 12) 73.1 103.7 Other 125.1 106.7 Other assets $ 1,087.8 $ 1,173.2 |
9. RESTRUCTURING INITIATIVES
| 9. RESTRUCTURING INITIATIVES | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 9. RESTRUCTURING INITIATIVES | 9. RESTRUCTURING INITIATIVES 2005 Restructuring Program In November 2005, we announced a multi-year turnaround plan to restore sustainable growth. As part of our turnaround plan, we launched a restructuring program in late 2005 (the 2005 Restructuring Program). Restructuring initiatives under this program include: enhancement of organizational effectiveness, including efforts to flatten the organization and bring senior management closer to consumers through a substantial organization downsizing; implementation of a global manufacturing strategy through facilities realignment; implementation of additional supply chain efficiencies in distribution; and streamlining of transactional and other services through outsourcing and moves to lower-cost countries. We have approved and announced all of the initiatives that are part of our 2005 Restructuring Program. We expect to record total restructuring charges and other costs to implement restructuring initiatives of approximately $530 before taxes. We have recorded total costs to implement, net of adjustments, of $523.8 ($19.6 in the first nine months of 2009, $60.6 in 2008, $158.3 in 2007, $228.8 in 2006, and $56.5 in 2005) for actions associated with our restructuring initiatives. Restructuring ChargesFirst, Second and Third Quarters of 2009 During the three and nine months ended September30, 2009, we recorded total costs to implement associated with previously approved initiatives that are part of our 2005 Restructuring Program of $2.6 and $19.6, respectively, and the costs consisted of the following: net charges of $0.5 and $6.8, respectively, primarily for employee-related costs; implementation costs of $0.9 and $7.6, respectively, for professional service fees, primarily associated with our initiatives to outsource certain finance processes and realign certain distribution operations; and accelerated depreciation of $1.2 and $5.2, respectively, associated with our initiatives to realign certain distribution operations. Of the total costs to implement, $2.5 and $19.2 were recorded in selling, general and administrative expenses for the three and nine months ended September30, 2009, respectively, and $.1 and $.4 were recorded in cost of sales for each of the three and nine months ended September30, 2009, respectively. Restructuring ChargesFirst, Second and Third Quarters of 2008 During the three and nine months ended September30, 2008, we recorded total costs to implement associated with previously approved initiatives that are part of our 2005 Restructuring Program of $14.4 and $53.2, respectively, and the costs consisted of the following: net charges of $3.8 and $18.5, respectively, primarily for employee-related costs; implementation costs of $6.4 and $27.0, respectively, for professional service fees, primarily associated with our initiatives to outsource certain finance and human resource processes; and accelerated depreciation of $4.2 and $7.7, respectively, associated with our initiatives to realign certain distribution operations and close certain manuf |
10. GOODWILL AND INTANGIBLE ASS
| 10. GOODWILL AND INTANGIBLE ASSETS | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 10. GOODWILL AND INTANGIBLE ASSETS | 10. GOODWILL AND INTANGIBLE ASSETS Goodwill Latin America Central Eastern Europe Western Europe, MiddleEast Africa Asia Pacific China Total Balance at December31, 2008 $ 94.9 $ 8.8 $ 33.3 $ 12.4 $ 75.1 $ 224.5 Adjustments (.4 ) (.4 ) Foreign exchange .1 .8 .1 .1 1.1 Balance at September30, 2009 $ 94.9 $ 8.9 $ 34.1 $ 12.1 $ 75.2 $ 225.2 Intangible assets September30, 2009 December31, 2008 Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Amortized Intangible Assets Customer relationships $ 38.6 $ (29.7 ) $ 38.4 $ (25.6 ) Licensing agreements 42.3 (35.2 ) 42.4 (28.3 ) Noncompete agreements 7.4 (5.9 ) 7.4 (5.7 ) Total $ 88.3 $ (70.8 ) $ 88.2 $ (59.6 ) Estimated Amortization Expense: 2009 $ 14.0 2010 2.0 2011 2.0 2012 2.0 2013 2.0 Aggregate amortization expense during the three and nine months ended September30, 2009, was $3.7 and $11.2, respectively, compared to $3.3 and $11.9, respectively, for the same periods of 2008. |
11. FAIR VALUE
| 11. FAIR VALUE | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 11. FAIR VALUE | 11. FAIR VALUE We adopted the fair value measurement provisions required by the Fair Value Measurements and Disclosures Topic of the Codification as of January1, 2008, with the exception of the application to non-recurring, nonfinancial assets and liabilities, which was adopted as of January1, 2009, with no impact on our Consolidated Financial Statements. The adoption of the fair value measurement provisions did not have a material impact on our fair value measurements. The fair value measurement provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In addition, the fair value measurement provisions establish a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1Quoted prices in active markets for identical assets or liabilities. Level 2Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3Unobservable inputs based on our own assumptions. The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September30, 2009: Fair Value at September30, 2009 Level1 Level2 Level3 Total Assets: Available-for-sale securities $ 1.9 $ 1.9 Interest-rate swap agreements $ 73.1 73.1 Foreign exchange forward contracts 16.5 16.5 Total $ 1.9 $ 89.6 $ 91.5 Liabilities: Interest-rate swap agreements $ 12.6 $ 12.6 Foreign exchange forward contracts 9.4 9.4 Total $ 22.0 $ 22.0 The net asset (liability) amounts recorded in the balance sheet (carrying amount) and the estimated fair values of financial instruments at September30, 2009 and December31, 2008, consisted of the following: 2009 2008 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 1,293.4 $ 1,293.4 $ 1,104.7 $ 1,104.7 Available-for-sale securities 1.9 1.9 2.3 2.3 Grantor trust cash and cash equivalents 8.4 8.4 20.1 20.1 Debt maturing within one year 431.2 433.4 1,031.4 1,038.6 Long-term debt, net of related discount or premium 2,328.0 2,371.3 1,456.2 1,346.1 Foreign exchange forward contracts 7.1 7.1 (10.7 ) (10.7 ) Interest-rate swap agreements 60.5 60.5 87.6 87.6 The methods and assumptions used to estimate fair value are as follows: Available-for-sale securitiesThe fair values of these investments were based on the quoted market prices for issues listed on securities exchanges. Debt maturing within one year and long-term debtThe fair |
12. DERIVATIVE INSTRUMENTS AND
| 12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivatives are recognized on the balance sheet at their fair values. The following table presents the fair value of derivative instruments outstanding at September30, 2009: Asset Liability BalanceSheet Classification Fair Value BalanceSheet Classification Fair Value Derivatives designated as hedges: Interest-rate swap agreements Otherassets $ 58.0 OtherLiabilities $ Foreign exchange forward contracts Prepaidexpensesandother AccountsPayable 1.3 Total derivatives designated as hedges $ 58.0 $ 1.3 Derivatives not designated as hedges: Interest-rate swap agreements Other assets $ 15.1 Other Liabilities $ 12.6 Foreign exchange forward contracts Prepaid expenses and other 16.5 Accounts Payable 8.1 Total derivatives not designated as hedges $ 31.6 $ 20.7 Total derivatives $ 89.6 $ 22.0 When we become a party to a derivative instrument, we designate, for financial reporting purposes, the instrument as a fair value hedge, a cash flow hedge, a net investment hedge, or a non-hedge. We assess, both at the hedges inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The ineffective portion of a derivatives gain or loss, if any, is recorded in earnings in other expense, net on the Consolidated Statements of Income. When we determine that a derivative is not highly effective as a hedge, hedge accounting is discontinued. When it is probable that a hedged forecasted transaction will not occur, we discontinue hedge accounting for the affected portion of the forecasted transaction, and reclassify gains or losses that were accumulated in accumulated other comprehensive income (AOCI) to earnings. Interest Rate Risk We use interest-rate swap agreements, which effectively convert the fixed rate on long-term debt to a floating interest rate, to manage our interest rate exposure. These agreements are designated as fair value hedges. At September30, 2009, we held interest-rate swap agreements that effectively converted approximately 82% of our outstanding long-term, fixed-rate borrowings to a variable interest rate based on LIBOR. Our total exposure to floating interest rates at September30, 2009, was approximately 78%. At September30, 2009, we had interest-rate swap agreements designated as fair value hedges of fixed-rate debt, with notional amounts totaling $1,975. During the three and nine months ended September30, 2009, we recorded a net gain of $24.6 and a net loss of $30.2, respectively, in interest expense for these interest-rate swap agreements designated as fair value hedges. The impact on interest expense of these interest-rate swap agreements was offset by an equal and offsetting impact in interest expense on our fixed-rate debt. At times, we may de-designate the hedging relationshi |
13. DEBT AND FINANCIAL INSTRUME
| 13. DEBT AND FINANCIAL INSTRUMENTS | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 13. DEBT AND FINANCIAL INSTRUMENTS | 13. DEBT AND FINANCIAL INSTRUMENTS In March 2009, we issued $850.0 principal amount of notes payable in a public offering. $500.0 of the notes bear interest at a per annum coupon rate equal to 5.625%, payable semi-annually, and mature on March1, 2014 (the 2014 Notes). $350.0 of the notes bear interest at a per annum coupon rate equal to 6.500%, payable semi-annually, and mature on March1, 2019. The net proceeds from the offering of $837.6 were used to repay the outstanding indebtedness under our commercial paper program and for general corporate purposes. In connection with the offering of the 2014 Notes, we entered into five-year interest-rate swap agreements with notional amounts totaling $500.0 to effectively convert the fixed interest rate on the 2014 Notes to a variable interest rate, based on LIBOR. In September 2009, we entered into a financing lease obligation for $60.8. The lease obligation relates to the sale and leaseback of equipment in one of our distribution facilities in North America. The indentures under which the above notes were issued contain certain covenants, including limits on the incurrence of liens and restrictions on the incurrence of sale/leaseback transactions and transactions involving a merger, consolidation or sale of substantially all of our assets. At September30, 2009, we were in compliance with all covenants in our indentures. |
Document Information
| Document Information | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Document Information [Text Block] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Document Period End Date | 2009-09-30 |
Entity Information
| Entity Information (USD $) | |
| 9 Months Ended
Sep. 30, 2009 | |
| Entity [Text Block] | |
| Trading Symbol | AVP |
| Entity Registrant Name | AVON PRODUCTS INC |
| Entity Central Index Key | 0000008868 |
| Current Fiscal Year End Date | --12-31 |
| Entity Filer Category | Large Accelerated Filer |
| Entity Common Stock, Shares Outstanding | 427,056,045 |