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Avon Highlights Restructuring Plans; Jobs Supply Chain Impacted

Posted: July 22, 2009

Avon Products, Inc. highlighted the initial restructuring actions under the 2009 program it announced in February to continue driving the long-term transformation of its cost structure and to increase efficiency and organization effectiveness across its global operations.

Avon said that it expects total costs to implement the initiatives approved to date to be approximately $165 million, including a charge of approximately $77 million pretax in the second quarter of 2009. When combined with costs of approximately $13 million to implement initiatives from its 2005 restructuring program, the company said that it will incur a total charge of approximately $90 million in the quarter, or $0.19 per share, including $0.05 per share for a one-time restructuring tax charge.

"When fully implemented, the initiatives approved to date reflect almost half the costs to implement the 2009 restructuring program, and are expected to generate approximately 60% of the targeted annualized savings," said Charles Cramb, vice chairman, chief finance and strategy officer, Avon. "As a result, we are on track to achieve our stated goal of approximately $200 million in total annualized savings by 2012-2013, with costs to implement all initiatives expected to be in the range of $300-$400 million."

Summary of Restructuring Initiatives

"The initiatives announced today result from our 'constant turnaround mentality' and reflect our continuing determination to transform our cost structure, improve operating efficiencies, and be a stronger competitor globally as we drive Avon's turnaround strategies and address the current macroeconomic challenges," said Cramb.