Restructuring Initiatives

Transformation Plan

In January 2016, we initiated a transformation plan ("the Transformation Plan"), which included cost reduction efforts to continue to improve our cost structure and to enable us to reinvest in growth. Under this plan, we had 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 were expected to be achieved through restructuring actions, as well as other cost-savings strategies that would not result in restructuring charges. We have reinvested and continue to 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 had initiated the Transformation Plan in an attempt to enable us to achieve our long-term goals of mid-single-digit constant-dollar revenue growth and low double-digit operating margin. 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 Australia, New Zealand and Thailand, which were smaller, under-performing markets. The 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 the restructuring actions approved-to-date, we have recorded total costs to implement these restructuring initiatives of $166.9 before taxes, of which $60.8 was recorded during the year ended December 31, 2017, in our Consolidated Statements of Operations. The additional charges not yet incurred associated with the restructuring actions approved to-date of approximately $15 to $20 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 - 2017

During the year ended December 31, 2017, we recorded costs to implement of $60.8 related to the Transformation Plan, in our Consolidated Statements of Operations. The costs consisted of the following:


•	net charge of $26.9 for employee-related costs, including severance benefits, of which $7.9 was associated with the closure of the Australia and New Zealand markets;


•	contract termination and other net charges of $27.3, associated with vacating our previous corporate headquarters, including the impairment of fixed assets;


•	implementation costs of $4.1 primarily related to professional service fees;


•	accelerated depreciation of $1.9; and


•	inventory write-off of $.6 primarily associated with the closure of the Australia and New Zealand markets.

Of the total costs to implement during the year ended December 31, 2017, $60.2 was recorded in selling, general and administrative expenses and $.6 was recorded in cost of sales.

Restructuring Charges - 2016

During the year ended December 31, 2016, we recorded costs to implement of $83.7 related to the Transformation Plan, in our Consolidated Statements of Operations. The costs consisted of the following:


•	net charge of $62.6 for employee-related costs, including severance benefits;


•	contract termination and other net charges of $8.7;


•	implementation costs of $7.4 primarily related to professional service fees;


•	charge of $2.7 due to the accumulated foreign currency translation adjustments associated with the closure of the Thailand market;


•	accelerated depreciation of $1.9; and


•	inventory write-off of $.4.

Of the total costs to implement during the year ended December 31, 2016, $83.3 was recorded in selling, general and administrative expenses and $.4 was recorded in cost of sales.

Restructuring Charges - 2015

During 2015, we recorded costs to implement of $22.4 related to the Transformation Plan in selling, general and administrative expenses, in our Consolidated Statements of Operations. The costs consisted of $21.4 of employee-related costs due to severance benefits and $1.0 of implementation costs for professional service fees.

The liability balance for the Transformation Plan at December 31, 2017 is as follows:



	Employee-Related Costs			Inventory Write-offs			Foreign Currency Translation Adjustment Write-offs			Contract Terminations/Other			Total
2015 charges	$	21.4		$	—		$	—		$	—		$	21.4
Balance at December 31, 2015	$	21.4		$	—		$	—		$	—		$	21.4
2016 charges	73.4			.4			2.7			8.7			85.2
Adjustments	(10.8		)	—			—			—			(10.8		)
Cash payments	(34.6		)	—			—			(5.9		)	(40.5		)
Non-cash write-offs	—			(.4		)	(2.7		)	—			(3.1		)
Foreign exchange	(.8		)	—			—			—			(.8		)
Balance at December 31, 2016	$	48.6		$	—		$	—		$	2.8		$	51.4
2017 charges	$	31.9		$	.6		$	—		$	—		$	32.5
Adjustments	(5.0		)	—			—			27.3			22.3
Cash payments	(34.8		)	—			—			(8.1		)	(42.9		)
Non-cash write-offs	—			(.6		)	—			(14.0		)	(14.6		)
Foreign exchange	.5			—			—			—			.5
Balance at December 31, 2017	$	41.2		$	—		$	—		$	8.0		$	49.2

The majority of cash payments, if applicable, associated with the year-end liability are expected to be made during 2018.

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 on approved initiatives	$	110.9	$	1.0	$	2.7	$	36.0	$	150.6
Estimated charges to be incurred on approved initiatives	7.3		—		1.2		6.8		15.3
Total expected charges on approved initiatives	$	118.2	$	1.0	$	3.9	$	42.8	$	165.9

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
2017	.9		5.6		(.6		)	8.0		40.9		54.8
Charges incurred to-date on approved initiatives	31.8		18.8		3.8			19.7		76.5		150.6
Estimated charges to be incurred on approved initiatives	.5		—		—			8.5		6.3		15.3
Total expected charges on approved initiatives	$	32.3	$	18.8	$	3.8		$	28.2	$	82.8	$	165.9

The charges above are not included in segment profit, as this excludes costs to implement restructuring initiatives. We expect our total costs to implement restructuring on approved initiatives to be an estimated $180 to $185 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.

Additional Restructuring Charges 2015

As a result of the then-current economic environment, including the impact of foreign currency movements and inflation on our expenses, and in an effort to continue to improve our cost structure, we identified certain actions during 2015 that we believe would reduce ongoing costs. These actions primarily consisted of global headcount reductions.

As a result of these restructuring actions, we recorded costs to implement of $28.7 before taxes, of which a net benefit of $.2 was recorded in 2017, in selling, general and administrative expenses, in our Consolidated Statements of Operations. There are no material remaining costs for restructuring actions approved-to-date.

Restructuring Charges – 2017

During 2017, we recorded a net benefit of $.2 in selling, general and administrative expenses, in our Consolidated Statements of Operations, primarily for employee-related costs due to severance benefits.

Restructuring Charges – 2016

During 2016, we recorded a net benefit of $.8 in selling, general and administrative expenses, in our Consolidated Statements of Operations, primarily for employee-related costs due to severance benefits.

Restructuring Charges - 2015

During 2015, we recorded costs to implement of $29.7 in selling, general and administrative expenses, in our Consolidated Statements of Operations. The costs consisted of the following:


•	charge of $22.1 for employee-related costs due to severance benefits; and


•	implementation costs of $7.6 primarily for professional service fees associated with Global and Asia Pacific.

The liability balance, which primarily consists of employee-related costs, for these various restructuring initiatives at December 31, 2017 is as follows:



	Total
2015 charges	$	24.9
Adjustments	(2.8		)
Cash payments	(17.8		)
Foreign exchange	(.3		)
Balance at December 31, 2015	$	4.0
2016 charges	—
Adjustments	(.7		)
Cash payments	(2.2		)
Foreign exchange	—
Balance at December 31, 2016	$	1.1
2017 charges	—
Adjustments	(.2		)
Cash payments	(.5		)
Foreign exchange	—
Balance at December 31, 2017	$	.4

The majority of cash payments, if applicable, associated with this liability are expected to be made during 2018.

The charges approved to date under these various restructuring initiatives by reportable business segment were as follows:



	Europe, Middle East & Africa		South Latin America		North Latin America		Asia Pacific		Global & Other Operating Segments		Total
Total charges incurred	$	4.2	$	2.6	$	.2	$	5.7	$	8.4	$	21.1

In addition to the charges included in the tables above, we have incurred other costs to implement restructuring initiatives such as professional services fees.

Other Restructuring Initiatives

During 2017, 2016 and 2015, we recorded net benefits of $.4, $5.5 and $3.0, respectively, primarily in selling, general and administrative expenses, in our Consolidated Statements of Operations, associated with the restructuring programs launched in 2005 and 2009 and the restructuring initiative launched in 2012 (the "Other Restructuring Initiatives"), each of which are substantially complete. The net benefit in 2016 primarily consisted of a net gain of $3.7 due to the sale of a distribution center in the U.S. The liability balance associated with the Other Restructuring Initiatives is not material at December 31, 2017.