RESTRUCTURING INITIATIVES

Transformation Plan

In January 2016, we announced the Transformation Plan, which includes cost reduction efforts to continue to improve our cost structure and to enable us to reinvest in growth. As a result of this plan, we have targeted pre-tax annualized cost savings of approximately $350 after three years, with an estimated $200 from supply chain reductions and an estimated $150 from other cost reductions, which are expected to be achieved through restructuring actions, as well as other cost-savings strategies that will not result in restructuring charges. We plan to reinvest a portion of these cost savings in growth initiatives, including media, social selling and information technology systems that will help us modernize our business. We initiated the Transformation Plan in order to enable us to achieve our long-term goals of double-digit operating margin and mid single-digit constant-dollar revenue growth. As part of the Transformation Plan, we identified certain actions, that we believe will reduce ongoing costs, primarily consisting of global headcount reductions relating to operating model changes, as well as the closure of Thailand, a smaller, under-performing market. These operating model changes include the streamlining of our corporate functions to align with the current and future needs of the business and an information technology infrastructure outsourcing initiative.

As a result of these restructuring actions approved-to-date, we have recorded total costs to implement these restructuring initiatives of $116.1 before taxes, of which $10.0 was recorded during the three months ended March 31, 2017, in our Consolidated Statements of Operations. The additional charges not yet incurred associated with the restructuring actions approved to-date of approximately $10 to $15 before taxes are expected to be recorded primarily in 2018. At this time we are unable to quantify the total costs to implement the restructuring initiatives that will be incurred through the time the Transformation Plan is fully implemented as we have not yet identified all actions to be taken.

Restructuring Charges - Three Months Ended March 31, 2017

During the three months ended March 31, 2017, we recorded costs to implement of $10.0 related to the Transformation Plan, in our Consolidated Statements of Operations. The costs consisted of the following:


•	net charges of $7.6, primarily for employee-related costs, including severance benefits;


•	contract termination and other net charge of $1.4;


•	implementation costs of $.5 primarily related to professional service fees; and


•	accelerated depreciation of $.5.

Of the total costs to implement during the three months ended March 31, 2017, $10.1 was recorded in selling, general and administrative expenses and a benefit of $.1 was recorded in cost of sales.

Restructuring Charges - Three Months Ended March 31, 2016

During the three months ended March 31, 2016, we recorded costs to implement of $47.5 related to the Transformation Plan, in selling, general and administrative expenses, in our Consolidated Statements of Operations. The costs consisted of the following:


•	net charge of $47.1 primarily for employee-related costs, including severance benefits; and


•	implementation costs of $.4 primarily related to professional service fees.

The liability balance for the Transformation Plan as of March 31, 2017 is as follows:



	Employee-Related Costs			Contract Terminations/Other			Total
Balance at December 31, 2016	$	48.6		$	2.8		$	51.4
2017 charges	9.7			—			9.7
Adjustments	(2.1		)	1.4			(.7		)
Cash payments	(9.0		)	(.5		)	(9.5		)
Foreign exchange	.5			—			.5
Balance at March 31, 2017	$	47.7		$	3.7		$	51.4

The majority of cash payments, if applicable, associated with these charges are expected to be made during 2017.

The following table presents the restructuring charges incurred to date, under the Transformation Plan, along with the estimated charges expected to be incurred on approved initiatives under the plan:



	Employee- Related Costs		Inventory Write-offs		Foreign Currency Translation Adjustment Write-offs		Contract Terminations/Other		Total
Charges incurred to-date	$	91.6	$	.4	$	2.7	$	10.1	$	104.8
Estimated charges to be incurred on approved initiatives	6.2		—		—		1.2		7.4
Total expected charges on approved initiatives	$	97.8	$	.4	$	2.7	$	11.3	$	112.2

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



	Europe, Middle East & Africa		South Latin America		North Latin America			Asia Pacific			Global & Other Operating Segments		Total
2015	$	—	$	—	$	—		$	—		$	21.4	$	21.4
2016	30.9		13.2		4.4			11.7			14.2		74.4
First quarter 2017	3.0		2.7		(.1		)	(.5		)	3.9		9.0
Charges incurred to-date	33.9		15.9		4.3			11.2			39.5		104.8
Estimated charges to be incurred on approved initiatives	1.2		—		—			—			6.2		7.4
Total expected charges on approved initiatives	$	35.1	$	15.9	$	4.3		$	11.2		$	45.7	$	112.2

We expect our total costs to implement restructuring on approved initiatives to be an estimated $125 to $130 before taxes under the Transformation Plan. The amounts shown in the tables above as charges recorded to-date relate to initiatives that have been approved and recorded in the 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. In addition to the charges included in the tables above, we have incurred and will continue to incur other costs to implement restructuring initiatives such as professional services fees and accelerated depreciation.

Other Restructuring Initiatives

During the three months ended March 31, 2017 and 2016, we recorded an immaterial amount and a net benefit of $.7, respectively, in selling, general and administrative expenses, in the Consolidated Statements of Operations, associated with the restructuring programs launched in 2005 and 2009, the restructuring initiatives launched in 2012 (including the cost savings initiative known as the "$400M Cost Savings Initiative"), and the restructuring actions identified during 2015 (collectively, the "Other Restructuring Initiatives"), which are substantially complete. The liability balance associated with the Other Restructuring Initiatives, which primarily consists of employee-related costs, as of March 31, 2017 is not material.