Restructuring Initiatives

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Transformation Plan and Open Up Avon

Open Up Avon

In September 2018, we initiated Open Up Avon. The Open Up Avon strategy is integral to our ability to return Avon to growth, built around the necessity of incorporating new approaches to various elements of our business, including increased utilization of third-party providers in manufacturing and technology, a more fit for purpose asset base, and a focus on enabling our Representatives to more easily interact with the company and achieve relevant earnings. The commercial elements of the strategy were developed to help increase Representative earnings and thereby retention. Elements of the Representative strategy include improvements in service functions, increased training on utilization of digital tools to expand her consumer reach, product bundling and regimens designed to help improve her earnings opportunity and sharper more targeted product innovation to drive brand relevancy. Cost savings under this plan are expected to be generated from efficiencies in manufacturing and sourcing, distribution, general and administrative activities, and back office functions, as well as through revenue management, interest and tax. These savings are expected to be achieved through restructuring actions (that may result in charges related to severance, contract terminations and inventory and other asset write-offs), as well as other cost-savings strategies that would not result in restructuring charges. In January 2019, we announced significant advancements in this strategy, including a structural reset of inventory processes resulting in an incremental one-off inventory obsolescence expense of $88 recognized at December 31, 2018. As a result of Open Up Avon restructuring actions approved to-date, we have recorded total costs to implement these restructuring initiatives of $249.8 before taxes, of which $106.6 and $143.2 was recorded during the twelve months ended December 31, 2019 and 2018, respectively, in our Consolidated Statements of Operations.

Transformation Plan

In January 2016, we initiated the Transformation Plan, in order to enable us to achieve our long-term goals of mid-single-digit constant-dollar ("Constant $") revenue growth and low double-digit operating margin.

As a result of these restructuring actions approved to-date, we have recorded total costs to implement these restructuring initiatives of $214.7 before taxes, of which $9.3 and $38.0 was recorded during the twelve months ended December 31, 2019 and 2018, respectively, in our Consolidated Statements of Operations. There are no further restructuring actions to be taken associated with our Transformation Plan, as beginning in the third quarter of 2018, all new restructuring actions approved operate under our new Open Up Avon plan described above.

Costs to Implement Restructuring Initiatives - Twelve Months Ended December 31, 2019 and 2018

During the twelve months ended December 31, 2019, we recorded net costs to implement of $116.0, of which $106.6 related to Open Up Avon, $9.3 related to the Transformation Plan, and $.1 related to other restructuring initiatives, in our Consolidated Statements of Operations. During the twelve months ended December 31, 2018, we recorded costs to implement of $180.5 of which $143.2 related to Open Up Avon, $38.0 related to the Transformation Plan, and a benefit of $.7 related to other restructuring initiatives, in our Consolidated Statements of Operations.

The costs during the twelve months ended December 31, 2019 and 2018 consisted of the following:


	December 31,		December 31,
	2019		2018
CTI recorded in operating profit - COGS
Manufacturing asset write-offs	$	11.1	$	—
Inventory write-off	1.4		89.8
Accelerated depreciation	—		1.7
	12.5		91.5

CTI recorded in operating profit - SG&A
Net charges for employee-related costs, including severance benefits	56.4		42.6
Implementation costs, primarily related to professional service fees	44.9		30.9
Dual running costs	9.1		4.1
Contract termination and other net costs	7.9		3.2
Impairment of other assets	5.3		4.0
Accelerated depreciation	1.3		3.5
Variable lease charges	1.9		—
Foreign Currency Translation Adjustment Write-offs	—		0.7
	126.8		89.0

CTI recorded in operating profit	139.3		180.5

CTI recorded in other (income) expense
Gain on sale of business / assets	(23.3)		—
Total CTI	$	116.0	$	180.5

Open Up Avon	$	106.6	$	143.2
Transformation Plan	$	9.3	$	38.0
Other	$	0.1	$	(0.7)

The tables below include restructuring costs such as employee-related costs, inventory and asset write-offs, foreign currency translation write-offs and contract terminations, and do not include other costs to implement restructuring initiatives such as professional services fees, dual running costs, accelerated depreciation and gain on sale of business.

The liability balance included in other accrued liabilities in our Consolidated Balance Sheet for the restructuring actions associated with Open Up Avon at December 31, 2019 is as follows:


	Employee-Related Costs		Inventory Write-offs		Foreign Currency Translation Adjustment Write-offs		Contract Terminations/Other		Total
Balance at December 31, 2017	$	—	$	—	$	—	$	—	$	—
2018 charges	$	26.4	$	88.5	$	—	$	0.8	$	115.7
Adjustments	—		—		—		—		—
Cash payments	(6.8)		—		—		.3		(6.5)
Non-cash write-offs	—		(88.5)		—		—		(88.5)
Foreign exchange	—		—		—		—		—
Balance at December 31, 2018	$	19.6	$	—	$	—	$	1.1	$	20.7
2019 charges	$	61.8	$	17.5	$	(10.9)	$	8.2	$	76.6
Adjustments	(4.5)		—		—		(.5)		$	(5.0)
Cash payments	(56.3)		—		—		(2.4)		$	(58.7)
Non-cash write-offs	—		(17.5)		10.9		—		$	(6.6)
Foreign exchange	(2.8)		—		—		—		$	(2.8)
Balance at December 31, 2019	$	17.8	$	—	$	—	$	6.4	$	24.2

The liability balance included in other accrued liabilities in our Consolidated Balance Sheet for the restructuring actions associated with our Transformation Plan as of December 31, 2019 is as follows:


	Employee-Related Costs		Inventory Write-offs		Foreign Currency Translation Adjustment Write-offs		Contract Terminations/Other		Total
Balance at December 31, 2017	$	41.2	$	—	$	—	$	8.0	$	49.2
2018 charges	$	29.5	$	1.4	$	.7	$	5.5	$	37.1
Adjustments	(12.6)		—		—		(3.4)		(16.0)
Cash payments	(21.3)		—		—		(6.3)		(27.6)
Non-cash write-offs	—		(1.4)		(.7)		—		(2.1)
Foreign exchange	(2.4)		—		—		(.2)		(2.6)
Balance at December 31, 2018	$	34.4	$	—	$	—	$	3.6	$	38.0
2019 charges	$	(.7)	$	.3	$	—	$	.2	$	(.2)
Adjustments	(.2)		—		—		—		(.2)
Cash payments	(25.0)		—		—		(2.4)		(27.4)
Non-cash write-offs	—		(.3)		—		—		(.3)
Foreign exchange	(.1)		—		—		.1		—
Balance at December 31, 2019	8.4		$	—	$	—	1.5		9.9

The majority of cash payments, if applicable, associated with the year-end liability are expected to be made during 2020.

The following table presents the restructuring charges incurred to date, under the Open Up Avon and the Transformation Plan, along with the estimated charges expected to be incurred on approved initiatives under the plans:


	Employee- Related Costs		Inventory/ Asset Write-offs		Contract Terminations/Other		Foreign Currency Translation Adjustment Write-offs		Total
Open Up Avon
Charges incurred to-date	$	83.6	$	107.5	$	8.5	$	(10.9)	$	188.7
Estimated charges to be incurred on approved initiatives	—		—		6.1		—		6.1
Total expected charges on approved initiatives	$	83.6	$	107.5	$	14.6	$	(10.9)	$	194.8

Transformation Plan
Charges incurred to-date	$	127.1	$	2.5	$	40.9	$	3.4	$	173.9
Estimated charges to be incurred on approved initiatives	—		—		—		—		—
Total expected charges on approved initiatives	$	127.1	$	2.5	$	40.9	$	3.4	$	173.9

The charges, net of adjustments, of initiatives under the Open Up Avon and the Transformation Plan, along with the estimated charges expected to be incurred on approved initiatives under the plans, by reportable segment are as follows:


	Europe, Middle East & Africa		South Latin America		North Latin America		Asia Pacific		Global & Other Operating Segments		Total
Open Up Avon
2018	$	32.2	$	36.4	$	27.9	$	14.4	$	6.2	$	117.1
2019	24.3		26.6		10.3		(4.9)		15.3		71.6
Charges incurred to-date	56.5		63.0		38.2		9.5		21.5		188.7
Estimated charges to be incurred on approved initiatives	5.8		—		—		.3		—		6.1
Total expected charges on approved initiatives	$	62.3	$	63.0	$	38.2	$	9.8	$	21.5	$	194.8

Transformation Plan
2015	$	—	$	—	$	—	$	—	$	21.4	$	21.4
2016	30.9		13.2		4.4		9.1		16.8		74.4
2017	.9		5.6		(.6)		(.5)		49.4		54.8
2018	5.0		4.1		.6		.6		13.4		23.7
2019	(1.3)		.6		—		—		.3		(.4)
Charges incurred to-date	35.5		23.5		4.4		9.2		101.3		173.9
Estimated charges to be incurred on approved initiatives	—		—		—		—		—		—
Total expected charges on approved initiatives	$	35.5	$	23.5	$	4.4	$	9.2	$	101.3	$	173.9

The charges above are not included in segment profit, as this excludes costs to implement restructuring initiatives. The amounts shown in the tables above as charges recorded to-date relate to initiatives that have been approved and recorded in the consolidated financial statements, as the costs are probable and estimable. The amounts shown in the tables above as total expected charges on approved initiatives represent charges recorded to-date plus charges yet to be recorded for approved initiatives as the relevant accounting criteria for recording an expense have not yet been met.