LONDON, Nov. 2, 2017 /PRNewswire/ -- Avon Products,
Inc. (NYSE: AVP), a globally recognized leader in direct selling of
beauty and related products, today announced its results for the
quarter ended September 30, 2017.
"Our third quarter has been a productive period. While we saw
mixed results, I am encouraged by the revenue improvement in many
of our top 15 markets and the underlying business trends we are
beginning to see. Our innovation pipeline is starting to gain
traction and we are close to realizing our annual cost reduction
milestone. We remain intensely focused on improving our
Representative experience, which results in higher engagement and
her success," said Sheri McCoy,
Chief Executive Officer, Avon Products, Inc.
Sheri McCoy went on to say, "It
will take time to fully realize the benefits from our near and
long-term initiatives in this highly competitive market, but with
the right team in place we are poised to accelerate the pace of our
progress."
Commenting on behalf of the Board, Chan
Galbato, non-executive Chairman of Avon Products' Board of
Directors said, "The search for a new Chief Executive Officer for
Avon is underway. The Board is
pleased with the progress and the strong interest we are
receiving."
Highlights for Third Quarter of 2017:
- Revenue increased 1% to $1.4
Billion; Relatively unchanged in constant
dollars1
- Active Representatives and Ending Representatives, both from
Reportable Segments, declined 3% and 2%, respectively
- Operating Margin decreased 210 bps to 5.9%;
Adjusted1 Operating Margin decreased 70 bps to 6.3%,
both negatively impacted by higher bad debt and Representative,
sales leader and field expense
- Diluted Earnings Per Share From Continuing Operations of
$0.01; Adjusted Diluted Earnings Per
Share From Continuing Operations of $0.03
- Within approximately $25 million
of our annual cost savings target of $230m and on track to meet three-year goal
- Modest improvement in trends expected to continue in fourth
quarter but results will fall below full year guidance
Third-Quarter 2017 Income Statement Review (compared with
third-quarter 2016)
- Total revenue for Avon Products, Inc. increased 1% to
$1.4 billion and was relatively
unchanged in constant dollars.
- From reportable segments:
-
- Total revenue increased 1% to $1.4
billion and was relatively unchanged in constant
dollars.
- Active Representatives declined 3% with decreases in
South Latin America and
Europe, Middle East & Africa partially offset by an increase in
North Latin America.
- Average order increased 3% with growth in South Latin America, Asia Pacific and North Latin America.
- Ending Representatives declined 2% with decreases in
South Latin America and
Asia Pacific partially offset by
increases in Europe, Middle East & Africa and North
Latin America.
- Gross margin and Adjusted gross margin each increased 30
basis points to 61.2%, primarily due to the favorable net impact of
price/mix.
- Operating margin was 5.9% in the quarter, down 210 basis
points, while Adjusted operating margin was 6.3%, down 70 basis
points. The operating margin comparison was unfavorably impacted by
proceeds recognized in the third quarter of 2016 as a result of a
legal settlement, partially offset by lower costs to implement
("CTI") restructuring in the current year. Both the operating
margin and Adjusted operating margin year-over-year comparisons
were negatively impacted by higher bad debt expense, primarily in
Brazil, and higher Representative,
sales leader and field expense, also primarily in Brazil. These factors were partially offset by
lower incentive compensation plan expenses and lower fixed
expenses, including the benefit of cost reductions associated
with the Transformation Plan.
- The provision for income taxes was $36 million, compared with $38 million for the third quarter of 2016. On an
Adjusted basis, the provision for income taxes was $36 million, compared with $42 million for the third quarter of 2016.
- Income from continuing operations, net of tax was
$12 million, or $0.01 per diluted share, compared with
$36 million, or $0.07 per diluted share, for the third quarter of
2016. Adjusted income from continuing operations, net of tax was
$18 million, or $0.03 per diluted share, compared with
$16 million, or $0.02 per diluted share, for the third quarter of
2016. Earnings allocated to convertible preferred stock had a
negative $0.02 impact on Diluted
earnings per share and a negative $0.01 impact on Adjusted diluted earnings per
share in the third quarter of 2017, compared with a negative
$0.01 impact on Diluted earnings per
share and a negative $0.02 impact on
Adjusted diluted earnings per share in the third quarter of
2016.
- Loss from discontinued operations, net of tax in the
third quarter of the prior year of $1
million, or $0.00 per diluted
share, was associated with the previously separated North America business.
Adjustments to Third-Quarter 2017 GAAP Results to Arrive at
Adjusted Results
During the third quarter of 2017, the Company recorded costs to
implement restructuring within operating profit of approximately
$6 million before and after tax,
primarily related to the Transformation Plan. These restructuring
costs have been reflected as an adjustment to GAAP results to
arrive at Adjusted results and increased diluted earnings per share
from continuing operations by $0.02.
THREE MONTHS ENDED
SEPTEMBER 30, 2017
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SEGMENT
RESULTS
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($ in
millions)
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Revenue
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Active
Representatives
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Average
Order
C$
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Units
Sold
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Price/
Mix C$
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Ending
Representatives
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US$
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C$
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Revenue &
Drivers
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% var.
vs 3Q16
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% var.
vs 3Q16
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% var.
vs 3Q16
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% var. vs
3Q16
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% var. vs
3Q16
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% var. vs
3Q16
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% var.
vs 3Q16
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Europe, Middle East
&
Africa
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$
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482.8
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1
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%
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(2)
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%
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(2)
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%
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—
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%
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(5)
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%
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3
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%
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1
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%
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South Latin
America
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589.7
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(1)
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—
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(6)
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6
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(7)
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7
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(6)
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North Latin
America
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206.0
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5
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2
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1
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1
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(3)
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5
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1
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Asia
Pacific
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130.1
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(1)
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3
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—
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3
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3
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—
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(3)
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Total from
reportable
segments
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1,408.6
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1
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—
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(3)
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3
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(5)
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5
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(2)
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Other operating
segments and
business activities
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9.2
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(2)
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(2)
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(100)
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*
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*
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*
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(100)
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Total
Avon
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$
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1,417.8
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1
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%
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—
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%
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(3)
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%
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3
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%
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(5)
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%
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5
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%
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(2)
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%
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Operating
Profit/Margin
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2017 Operating
Profit US$
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2017 Operating
Margin US$
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Change in
US$ vs
3Q16
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Change in
C$ vs
3Q16
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Segment
profit/margin
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Europe, Middle East
& Africa
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$
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65.9
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13.6
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%
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(30) bps
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(90) bps
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South Latin
America
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66.3
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11.2
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(120)
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(110)
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North Latin
America
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17.2
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8.3
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(410)
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(350)
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Asia
Pacific
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13.0
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10.0
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20
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110
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Total from
reportable segments
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162.4
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11.5
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(120)
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(120)
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Other operating
segments and business
activities
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1.1
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Unallocated global
expenses
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(74.3)
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CTI restructuring
initiatives
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(6.2)
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Total
Avon
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$
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83.0
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5.9
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%
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(210)
bps
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(230)
bps
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*Calculation not meaningful.
Other operating segments and business activities include revenue
from the sale of products to New Avon LLC since the separation of
the Company's North America
business into New Avon LLC on March 1,
2016 and ongoing royalties from the licensing of the
Company's name and products. Other operating segments and business
activities also include the business results for Thailand, which was closed in 2016.
Third-Quarter 2017 Segment Review (compared with
third-quarter 2016)
With regards to the discussion below on segment revenue, the
difference between the reported and constant-dollar revenue growth
is the estimated impact of foreign currency translation.
Total Reportable Segment constant-dollar revenue was relatively
unchanged, with average order growth offset by Active
Representative declines, primarily in Brazil. The Company saw
constant-dollar revenue improvement in many of its top 15
markets. While these trends are encouraging, there is still a lot
of work to be done, particularly in some of its larger markets,
which are highly competitive and in various stages of recovery.
- Europe, Middle East & Africa revenue was up 1%, or down 2% in
constant dollars, driven by a decrease in Active
Representatives.
-
- Russia revenue was up
3%, or down 6% in constant dollars, due to a decrease in Active
Representatives, as well as lower average order.
- U.K. revenue was down 13%, or 12% in constant dollars,
primarily due to a decrease in Active Representatives.
- South Latin America
revenue was down 1%, or relatively unchanged in constant dollars,
driven by a decrease in Active Representatives, offset by higher
average order.
-
- Brazil revenue was down
3%, or 5% in constant dollars, primarily due to a decrease in
Active Representatives, partially offset by higher average
order.
- North Latin America
revenue was up 5%, or 2% in constant dollars, driven by higher
average order and an increase in Active Representatives.
-
- Mexico revenue was up
4%, or down 1% in constant dollars, primarily due to a decline in
Active Representatives.
- Asia Pacific revenue
was down 1%, or up 3% in constant dollars, primarily due to higher
average order.
-
- Philippines revenue was
up 4%, or 12% in constant dollars, driven by higher average order
and an increase in Active Representatives.
Third-Quarter 2017 Cash Flow Review
- Net cash provided by operating activities of continuing
operations was $35 million for
the nine months ended September 30,
2017, compared with $104
million net cash used in the same period in 2016. The
$139 million increase was primarily
due to improvements in working capital. The year-over-year
comparison also benefited from Industrial Production Tax ("IPI")
payments made in Brazil in 2016
that did not recur in 2017 (based on an injunction received in
May 2016 that no longer required the
Company to make cash deposits related to IPI taxes).
- Net cash used by investing activities of continuing
operations was $42 million for
the nine months ended September 30,
2017, compared with $68
million in the same period in 2016. The year-over-year
improvement was primarily due to a $22
million cash distribution received from New Avon LLC in the
third quarter of 2017.
- Net cash used by financing activities of continuing
operations was $10 million for
the nine months ended September 30,
2017, as compared to net cash provided of $569 million in the same period in 2016. The
$579 million decrease was primarily
due to the net proceeds of debt issued in the third quarter of 2016
and the net proceeds related to the issuance of Series C Preferred
Stock received in 2016, partially offset by third quarter 2016
payments for cash tender offers.
Transformation Plan
The Company is in the second year of its three-year
transformation plan which is focused on three pillars - reducing
cost, improving financial resilience and investing in growth.
To achieve its plan, the Company recognizes the need to focus on
the foundations of its business and drive a
performance-based culture. This will increase its ability to
drive results and deliver steady execution going forward. While the
Company is addressing challenges in the business, it is moving
forward with urgency, focusing on the following key elements of its
roadmap to growth:
- Deliver a Seamless, Competitive Representative Experience -
investment to upgrade systems and drive mobile connectivity in its
markets to make doing business easier for our Representatives;
- Insightful Data & Analytics - improve the Company's ability
to support the Representative and help her run her business more
effectively through deeper insight and analytics into
Representative behavior and needs;
- Rigorous Performance Management - the new executive team is a
key enabler to driving a performance-based culture for ownership of
results; and
- Relentless Focus on Execution Capabilities - focus on
developing a service mindset and enable the implementation of
changes, with minimal disruption, through pilot programs that cover
service from end to end.
The Company's Transformation Plan cost savings target is
$230 million for 2017, which includes
both run-rate savings from 2016, along with in-year savings from
current year initiatives. Based on savings realized through the
first nine months of 2017, the Company is within approximately
$25 million of its annual savings
target and is more than half way to the total cost savings targeted
for the three-year Transformation Plan of $350 million. These savings have helped offset
the impact of inflation.
Full-Year 2017 Outlook
"With mixed results in Q3 and some positive trends, we expect to
see modest improvement continue in Q4. However, it will not be
enough to overcome the slow start to 2017, and thus we expect
annual results to come in below our 2017 guidance. We are focused
on improving key operating metrics in our core markets, which is
crucial as we exit the year and continue on our roadmap to growth.
With that in mind, we remain focused on initiating the execution of
key programs that will allow us to achieve our long-term goals,"
said Jamie Wilson, Chief Financial
Officer, Avon Products, Inc.
Management has been focused on fixing the business fundamentals
to improve operating performance, particularly in its largest
markets. After a slow start to the year, management is encouraged
by the traction that it saw in key financial areas as it exited the
quarter, including improving run rates for both constant-dollar
revenue and Adjusted operating margin. Management expects to see
continued improvement in the fourth quarter, with flat to slightly
positive performance compared to last year in constant-dollar
revenue and Adjusted operating margin. Management expects to meet
its 2017 cost savings target and deliver positive free cash flow
for the year, enhanced by slower than planned capital expenditures
in the year.
Conference call
Avon will conduct a conference
call at 8:30 a.m. Eastern Time today
to discuss its quarterly results. The dial-in number for the call
is (800) 843-2086 in the U.S. or (706) 643-1815 from non-U.S.
locations (conference ID number: 93387068). The call and related
slide presentation will be webcast live at www.avoninvestor.com and
can be accessed or downloaded from that site for a period of one
year.
About Avon Products, Inc.
Avon is the Company that for
130 years has proudly stood for beauty, innovation, optimism and,
above all, for women. Avon
products include well-recognized and beloved brands such as ANEW,
Avon Color, Avon Care, Skin-So-Soft, and Advance Techniques sold
through approximately 6 million active independent Avon Sales
Representatives. Learn more about Avon and its products at
www.avoncompany.com.
Footnotes
1 "Adjusted" items refer to financial measures that
are derived from measures calculated in accordance with generally
accepted accounting principles in the
United States ("GAAP"), but which have been adjusted to
exclude certain items. Other Adjusted financial measures that the
Company refers to include constant dollar ("C$") items. All of
these adjusted items are Non-GAAP financial measures as described
below under "Non-GAAP Financial Measures." These Non-GAAP measures
should not be considered in isolation, or as a substitute for, or
superior to, financial measures calculated in accordance with GAAP.
Please refer to the Company's "Non-GAAP Financial Measures"
description at the end of this release and the reconciliations the
Company provides of these Non-GAAP financial measures to their
comparable GAAP measures.
Forward-Looking Statements
Statements in this release that are not historical facts may be
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially. These risks
and uncertainties are detailed from time to time in reports filed
by Avon Products, Inc. with the U.S. Securities and Exchange
Commission, including Forms 8-K, 10-Q, and 10-K. Some
forward-looking statements in this release include and concern the
Company's outlook and expected results, cost reduction actions and
savings, the Company's Transformation Plan, including planned
executive changes, and the impact of foreign currency, taxes and
tax rates amongst others. These forward-looking statements involve
risks, uncertainties and other factors, which may cause the actual
results, levels of activity, performance or achievement of
Avon to be materially different
from any future results expressed or implied by such
forward-looking statements. These risks and uncertainties include,
but are not limited to, the Company's ability to improve its
financial and operational performance, its ability to achieve the
anticipated benefits of the strategic partnership with Cerberus,
the impact of a continued decline in the Company's business
results, the possibility of business disruption, competitive
uncertainties, and general economic and business conditions in its
markets, including fluctuations in foreign currency exchange rates.
There can be no assurance that actual results will not differ
materially from management's expectations. Therefore, you should
not rely on any of these forward-looking statements as predictors
of future events. Any forward-looking statements speak only as of
the date they are made. The Company does not undertake to update
any such forward-looking statements.
AVON PRODUCTS,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In millions,
except per share data)
|
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|
Three Months
Ended
|
|
Percent
Change
|
|
Nine Months
Ended
|
|
Percent
Change
|
|
|
September
30
|
|
|
September
30
|
|
|
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|
|
Net sales
|
|
$
|
1,378.2
|
|
|
$
|
1,367.5
|
|
|
1
|
%
|
|
$
|
4,029.8
|
|
|
$
|
4,047.0
|
|
|
—
|
%
|
Other
revenue
|
|
39.6
|
|
|
41.3
|
|
|
|
|
117.0
|
|
|
102.6
|
|
|
|
Total
revenue
|
|
1,417.8
|
|
|
1,408.8
|
|
|
1
|
%
|
|
4,146.8
|
|
|
4,149.6
|
|
|
—
|
%
|
Cost of
sales
|
|
550.0
|
|
|
550.9
|
|
|
|
|
1,592.1
|
|
|
1,634.7
|
|
|
|
Selling, general and
administrative expenses
|
|
784.8
|
|
|
745.9
|
|
|
|
|
2,411.4
|
|
|
2,300.0
|
|
|
|
Operating
profit
|
|
83.0
|
|
|
112.0
|
|
|
(26)
|
%
|
|
143.3
|
|
|
214.9
|
|
|
(33)
|
%
|
Interest
expense
|
|
34.8
|
|
|
34.4
|
|
|
|
|
106.0
|
|
|
100.3
|
|
|
|
Gain on
extinguishment of debt
|
|
—
|
|
|
(3.9)
|
|
|
|
|
—
|
|
|
(3.9)
|
|
|
|
Interest
income
|
|
(3.4)
|
|
|
(3.5)
|
|
|
|
|
(11.2)
|
|
|
(12.8)
|
|
|
|
Other expense,
net
|
|
3.6
|
|
|
10.4
|
|
|
|
|
19.4
|
|
|
142.9
|
|
|
|
Total other
expenses
|
|
35.0
|
|
|
37.4
|
|
|
|
|
114.2
|
|
|
226.5
|
|
|
|
Income (loss) from
continuing operations, before taxes
|
|
48.0
|
|
|
74.6
|
|
|
(36)
|
%
|
|
29.1
|
|
|
(11.6)
|
|
|
*
|
Income
taxes
|
|
(36.1)
|
|
|
(38.3)
|
|
|
|
|
(99.5)
|
|
|
(72.1)
|
|
|
|
Income (loss) from
continuing operations, net of tax
|
|
11.9
|
|
|
36.3
|
|
|
(67)
|
%
|
|
(70.4)
|
|
|
(83.7)
|
|
|
16
|
%
|
Loss from
discontinued operations, net of tax
|
|
—
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|
|
(0.7)
|
|
|
|
|
—
|
|
|
(12.9)
|
|
|
|
Net income
(loss)
|
|
11.9
|
|
|
35.6
|
|
|
|
|
(70.4)
|
|
|
(96.6)
|
|
|
|
Net loss (income)
attributable to noncontrolling interests
|
|
0.6
|
|
|
0.4
|
|
|
|
|
0.9
|
|
|
(0.3)
|
|
|
|
Net income (loss)
attributable to Avon
|
|
$
|
12.5
|
|
|
$
|
36.0
|
|
|
(65)
|
%
|
|
$
|
(69.5)
|
|
|
$
|
(96.9)
|
|
|
28
|
%
|
Earnings (loss) per
share:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from
continuing operations
|
|
$
|
0.01
|
|
|
$
|
0.07
|
|
|
(86)
|
%
|
|
$
|
(0.20)
|
|
|
$
|
(0.22)
|
|
|
9
|
%
|
Basic EPS from
discontinued operations
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(0.03)
|
|
|
|
Basic EPS
attributable to Avon
|
|
$
|
0.01
|
|
|
$
|
0.07
|
|
|
(86)
|
%
|
|
$
|
(0.20)
|
|
|
$
|
(0.25)
|
|
|
20
|
%
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
0.01
|
|
|
$
|
0.07
|
|
|
(86)
|
%
|
|
$
|
(0.20)
|
|
|
$
|
(0.22)
|
|
|
9
|
%
|
Diluted EPS from
discontinued operations
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(0.03)
|
|
|
|
Diluted EPS
attributable to Avon
|
|
$
|
0.01
|
|
|
$
|
0.07
|
|
|
(86)
|
%
|
|
$
|
(0.20)
|
|
|
$
|
(0.25)
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
440.0
|
|
|
437.4
|
|
|
|
|
439.5
|
|
|
436.7
|
|
|
|
Diluted
|
|
440.0
|
|
|
437.4
|
|
|
|
|
439.5
|
|
|
436.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Under the
two-class method, earnings (loss) per share is calculated using net
income (loss) allocable to common shares, which is derived by
reducing net income (loss) by the earnings (loss) allocable to
participating securities and earnings allocated to convertible
preferred stock. Net income allocable to common shares used in the
basic and diluted earnings per share calculation was $6.5 and $29.4
for the three months ended September 30, 2017 and 2016,
respectively. Net loss allocable to common shares used in the basic
and diluted loss per share calculation was ($85.8) and ($108.4) for
the nine months ended September 30, 2017 and 2016,
respectively.
|
AVON PRODUCTS,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
(In
millions)
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2017
|
|
2016
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
663.8
|
|
|
$
|
654.4
|
|
Accounts receivable,
net
|
|
473.5
|
|
|
458.9
|
|
Inventories
|
|
662.5
|
|
|
586.4
|
|
Prepaid expenses and
other
|
|
292.2
|
|
|
291.3
|
|
Current assets of
discontinued operations
|
|
0.5
|
|
|
1.3
|
|
Total current
assets
|
|
2,092.5
|
|
|
1,992.3
|
|
Property, plant and
equipment, at cost
|
|
1,488.3
|
|
|
1,424.1
|
|
Less accumulated
depreciation
|
|
(781.8)
|
|
|
(712.8)
|
|
Property, plant and
equipment, net
|
|
706.5
|
|
|
711.3
|
|
Goodwill
|
|
96.8
|
|
|
93.6
|
|
Other
assets
|
|
620.8
|
|
|
621.7
|
|
Total
assets
|
|
$
|
3,516.6
|
|
|
$
|
3,418.9
|
|
Liabilities,
Series C Convertible Preferred Stock and Shareholders'
Deficit
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Debt maturing within
one year
|
|
$
|
16.1
|
|
|
$
|
18.1
|
|
Accounts
payable
|
|
796.7
|
|
|
768.1
|
|
Accrued
compensation
|
|
149.0
|
|
|
129.2
|
|
Other accrued
liabilities
|
|
360.6
|
|
|
401.9
|
|
Sales taxes and taxes
other than income
|
|
137.5
|
|
|
147.0
|
|
Income
taxes
|
|
9.1
|
|
|
10.7
|
|
Current liabilities
of discontinued operations
|
|
2.5
|
|
|
10.7
|
|
Total current
liabilities
|
|
1,471.5
|
|
|
1,485.7
|
|
Long-term
debt
|
|
1,873.0
|
|
|
1,875.8
|
|
Employee benefit
plans
|
|
160.9
|
|
|
164.5
|
|
Long-term income
taxes
|
|
82.9
|
|
|
78.6
|
|
Long-term sales taxes
and taxes other than income
|
|
185.2
|
|
|
124.5
|
|
Other
liabilities
|
|
90.6
|
|
|
81.3
|
|
Total
liabilities
|
|
3,864.1
|
|
|
3,810.4
|
|
|
|
|
|
|
Series C convertible
preferred stock
|
|
461.9
|
|
|
444.7
|
|
|
|
|
|
|
Shareholders'
Deficit
|
|
|
|
|
Common
stock
|
|
189.7
|
|
|
188.8
|
|
Additional paid-in
capital
|
|
2,290.7
|
|
|
2,273.9
|
|
Retained
earnings
|
|
2,235.4
|
|
|
2,322.2
|
|
Accumulated other
comprehensive loss
|
|
(934.6)
|
|
|
(1,033.2)
|
|
Treasury stock, at
cost
|
|
(4,601.7)
|
|
|
(4,599.7)
|
|
Total Avon
shareholders' deficit
|
|
(820.5)
|
|
|
(848.0)
|
|
Noncontrolling
interests
|
|
11.1
|
|
|
11.8
|
|
Total shareholders'
deficit
|
|
(809.4)
|
|
|
(836.2)
|
|
Total liabilities,
series C convertible preferred stock and shareholders'
deficit
|
|
$
|
3,516.6
|
|
|
$
|
3,418.9
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
millions)
|
|
|
|
Nine Months
Ended
|
|
|
September
30
|
|
|
2017
|
|
2016
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net loss
|
|
$
|
(70.4)
|
|
|
$
|
(96.6)
|
|
Loss from
discontinued operations, net of tax
|
|
—
|
|
|
12.9
|
|
Loss from continuing
operations, net of tax
|
|
$
|
(70.4)
|
|
|
$
|
(83.7)
|
|
Adjustments to
reconcile net loss to net cash provided (used) by operating
activities:
|
|
|
|
|
Depreciation
|
|
63.4
|
|
|
62.5
|
|
Amortization
|
|
22.2
|
|
|
22.4
|
|
Provision for
doubtful accounts
|
|
168.5
|
|
|
114.6
|
|
Provision for
obsolescence
|
|
27.7
|
|
|
26.6
|
|
Share-based
compensation
|
|
22.0
|
|
|
23.1
|
|
Foreign exchange
losses (gains)
|
|
12.0
|
|
|
(0.3)
|
|
Deferred income
taxes
|
|
15.4
|
|
|
(16.3)
|
|
Loss on
deconsolidation of Venezuela
|
|
—
|
|
|
120.5
|
|
Other
|
|
37.0
|
|
|
3.0
|
|
Changes in assets and
liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(170.1)
|
|
|
(167.1)
|
|
Inventories
|
|
(71.6)
|
|
|
(109.5)
|
|
Prepaid expenses and
other
|
|
18.0
|
|
|
(16.8)
|
|
Accounts payable and
accrued liabilities
|
|
(51.1)
|
|
|
(41.7)
|
|
Income and other
taxes
|
|
(15.3)
|
|
|
(15.3)
|
|
Noncurrent assets and
liabilities
|
|
27.3
|
|
|
(26.3)
|
|
Net cash provided
(used) by operating activities of continuing
operations
|
|
35.0
|
|
|
(104.3)
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
Capital
expenditures
|
|
(66.7)
|
|
|
(68.2)
|
|
Disposal of
assets
|
|
3.3
|
|
|
3.3
|
|
Distribution from New
Avon LLC
|
|
22.0
|
|
|
—
|
|
Reduction of cash due
to Venezuela deconsolidation
|
|
—
|
|
|
(4.5)
|
|
Other investing
activities
|
|
(0.1)
|
|
|
1.6
|
|
Net cash used by
investing activities of continuing operations
|
|
(41.5)
|
|
|
(67.8)
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
Debt, net (maturities
of three months or less)
|
|
(0.7)
|
|
|
(31.4)
|
|
Proceeds from
debt
|
|
—
|
|
|
508.7
|
|
Repayment of
debt
|
|
(2.3)
|
|
|
(311.9)
|
|
Repurchase of common
stock
|
|
(6.6)
|
|
|
(5.3)
|
|
Net proceeds from the
sale of series C convertible preferred stock
|
|
—
|
|
|
426.3
|
|
Other financing
activities
|
|
(.2)
|
|
|
(17.2)
|
|
Net cash (used)
provided by financing activities of continuing
operations
|
|
(9.8)
|
|
|
569.2
|
|
Cash Flows from
Discontinued Operations
|
|
|
|
|
Net cash used by
operating activities of discontinued operations
|
|
(7.5)
|
|
|
(67.6)
|
|
Net cash used by
investing activities of discontinued operations
|
|
—
|
|
|
(94.6)
|
|
Net cash used by
discontinued operations
|
|
(7.5)
|
|
|
(162.2)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
33.2
|
|
|
(17.9)
|
|
Net increase in cash
and cash equivalents
|
|
9.4
|
|
|
217.0
|
|
Cash and cash
equivalents at beginning of year(1)
|
|
654.4
|
|
|
684.7
|
|
Cash and cash
equivalents at end of period
|
|
$
|
663.8
|
|
|
$
|
901.7
|
|
|
(1) Includes cash and cash
equivalents of discontinued operations of $(2.2) at the beginning
of the year in 2016.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
SEGMENT
PERFORMANCE METRICS
|
(Unaudited)
|
(In
millions)
|
|
NINE MONTHS ENDED
SEPTEMBER 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Active
Representatives
|
|
Average
Order
C$
|
|
Units
Sold
|
|
Price/
Mix C$
|
|
Ending
Representatives
|
|
US$
|
|
C$
|
|
|
|
|
|
Revenue &
Drivers
|
|
|
% var.
vs 9M16
|
|
% var.
vs 9M16
|
|
% var.
vs 9M16
|
|
% var. vs
9M16
|
|
% var.
vs 9M16
|
|
% var. vs
9M16
|
|
% var.
vs 9M16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe, Middle East
&
Africa
|
$
|
1,484.9
|
|
|
(2)
|
%
|
|
(4)
|
%
|
|
(3)
|
%
|
|
(1)
|
%
|
|
(9)
|
%
|
|
5
|
%
|
|
1
|
%
|
South Latin
America
|
1,647.0
|
|
|
6
|
|
|
1
|
|
|
(4)
|
|
|
5
|
|
|
(5)
|
|
|
6
|
|
|
(6)
|
|
North Latin
America
|
607.0
|
|
|
(3)
|
|
|
—
|
|
|
(1)
|
|
|
1
|
|
|
(2)
|
|
|
2
|
|
|
1
|
|
Asia
Pacific
|
379.0
|
|
|
(7)
|
|
|
(3)
|
|
|
(5)
|
|
|
2
|
|
|
(1)
|
|
|
(2)
|
|
|
(3)
|
|
Total from
reportable segments
|
4,117.9
|
|
|
—
|
|
|
(2)
|
|
|
(3)
|
|
|
1
|
|
|
(6)
|
|
|
4
|
|
|
(2)
|
|
Other operating
segments and
business activities
|
28.9
|
|
|
(32)
|
|
|
(14)
|
|
|
(100)
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|
(100)
|
|
Total
Avon
|
$
|
4,146.8
|
|
|
—
|
%
|
|
(2)
|
%
|
|
(3)
|
%
|
|
1
|
%
|
|
(6)
|
%
|
|
4
|
%
|
|
(2)
|
%
|
Operating
Profit/Margin
|
|
2017 Operating
Profit US$
|
|
2017 Operating
Margin US$
|
|
Change in
US$ vs
9M16
|
|
Change in
C$ vs
9M16
|
|
|
|
|
|
|
|
|
|
Segment
profit/margin
|
|
|
|
|
|
|
|
|
Europe, Middle East
& Africa
|
|
$
|
222.5
|
|
|
15.0
|
%
|
|
60 bps
|
|
20 bps
|
South Latin
America
|
|
124.8
|
|
|
7.6
|
|
|
(250)
|
|
(220)
|
North Latin
America
|
|
56.0
|
|
|
9.2
|
|
|
(440)
|
|
(410)
|
Asia
Pacific
|
|
34.1
|
|
|
9.0
|
|
|
(160)
|
|
(100)
|
Total from
reportable segments
|
|
437.4
|
|
|
10.6
|
|
|
(170)
|
|
(150)
|
Other operating
segments and business
activities
|
|
3.9
|
|
|
|
|
|
|
|
Unallocated global
expenses
|
|
(243.3)
|
|
|
|
|
|
|
|
CTI restructuring
initiatives
|
|
(36.5)
|
|
|
|
|
|
|
|
Loss
contingency
|
|
(18.2)
|
|
|
|
|
|
|
|
Total
Avon
|
|
$
|
143.3
|
|
|
3.5
|
%
|
|
(170)
bps
|
|
(170)
bps
|
|
|
|
|
|
|
|
|
|
|
*Calculation not
meaningful.
|
|
Other operating
segments and business activities include revenue from the sale of
products to New Avon LLC since the separation of the Company's
North America business into New Avon LLC on March 1, 2016 and
ongoing royalties from the licensing of the Company's name and
products. Other operating segments and business activities also
include the business results for Thailand, which was closed in
2016, as well as the business results for Venezuela, which was
deconsolidated effective March 31, 2016.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
(Unaudited)
|
(In
millions)
|
|
CATEGORY SALES
FROM REPORTABLE SEGMENTS (US$)
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
Three Months
Ended
September 30
|
|
US$
|
|
C$
|
|
|
2017
|
|
2016
|
|
% var. vs
3Q16
|
|
% var. vs
3Q16
|
Beauty:
|
|
|
|
|
|
|
|
|
Skincare
|
|
$
|
397.1
|
|
|
$
|
396.7
|
|
|
—%
|
|
(2)%
|
Fragrance
|
|
389.8
|
|
|
373.2
|
|
|
4
|
|
4
|
Color
|
|
246.3
|
|
|
243.9
|
|
|
1
|
|
—
|
Total
Beauty
|
|
1,033.2
|
|
|
1,013.8
|
|
|
2
|
|
1
|
Fashion &
Home:
|
|
|
|
|
|
|
|
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
195.2
|
|
|
201.9
|
|
|
(3)
|
|
(4)
|
Home (gift & decorative products/housewares/entertainment & leisure/
children's/nutrition)
|
|
149.8
|
|
|
150.4
|
|
|
—
|
|
(1)
|
Total Fashion &
Home
|
|
345.0
|
|
|
352.3
|
|
|
(2)
|
|
(2)
|
Net sales from
reportable segments
|
|
1,378.2
|
|
|
1,366.1
|
|
|
1
|
|
—
|
Other revenue from
reportable segments
|
|
30.4
|
|
|
33.3
|
|
|
(9)
|
|
(10)
|
Total revenue from
reportable segments
|
|
1,408.6
|
|
|
1,399.4
|
|
|
1
|
|
—
|
Total revenue from
Other operating segments and business activities
|
|
9.2
|
|
|
9.4
|
|
|
(2)
|
|
(2)
|
Total
revenue
|
|
$
|
1,417.8
|
|
|
$
|
1,408.8
|
|
|
1
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
CATEGORY SALES
FROM REPORTABLE SEGMENTS (US$)
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
Nine Months
Ended
September 30
|
|
US$
|
|
C$
|
|
|
2017
|
|
2016
|
|
% var. vs
9M16
|
|
% var. vs
9M16
|
Beauty:
|
|
|
|
|
|
|
|
|
Skincare
|
|
$
|
1,182.0
|
|
|
$
|
1,175.9
|
|
|
1%
|
|
(2)%
|
Fragrance
|
|
1,101.3
|
|
|
1,065.2
|
|
|
3
|
|
2
|
Color
|
|
724.3
|
|
|
743.7
|
|
|
(3)
|
|
(5)
|
Total
Beauty
|
|
3,007.6
|
|
|
2,984.8
|
|
|
1
|
|
(2)
|
Fashion &
Home:
|
|
|
|
|
|
|
|
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
591.8
|
|
|
615.0
|
|
|
(4)
|
|
(5)
|
Home (gift & decorative products/housewares/entertainment & leisure/
children's/nutrition)
|
|
430.3
|
|
|
428.6
|
|
|
—
|
|
(1)
|
Total Fashion &
Home
|
|
1,022.1
|
|
|
1,043.6
|
|
|
(2)
|
|
(3)
|
Net sales from
reportable segments
|
|
4,029.7
|
|
|
4,028.4
|
|
|
—
|
|
(2)
|
Other revenue from
reportable segments
|
|
88.2
|
|
|
78.5
|
|
|
12
|
|
10
|
Total revenue from
reportable segments
|
|
4,117.9
|
|
|
4,106.9
|
|
|
—
|
|
(2)
|
Total revenue from
Other operating segments and business activities
|
|
28.9
|
|
|
42.7
|
|
|
(32)
|
|
(14)
|
Total
revenue
|
|
$
|
4,146.8
|
|
|
$
|
4,149.6
|
|
|
—
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited)
|
(In millions,
except per share data)
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial measure and the financial measure calculated and reported
in accordance with GAAP.
|
|
|
|
THREE MONTHS ENDED
SEPTEMBER 30, 2017
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Adjusted
(Non-GAAP)
|
Total
revenue
|
|
$
|
1,417.8
|
|
|
$
|
—
|
|
|
$
|
1,417.8
|
|
Cost of
sales
|
|
550.0
|
|
|
—
|
|
|
550.0
|
|
Selling, general and
administrative expenses
|
|
784.8
|
|
|
6.2
|
|
|
778.6
|
|
Operating
profit
|
|
83.0
|
|
|
6.2
|
|
|
89.2
|
|
Income from
continuing operations, before taxes
|
|
48.0
|
|
|
6.2
|
|
|
54.2
|
|
Income
taxes
|
|
(36.1)
|
|
|
(0.1)
|
|
|
(36.2)
|
|
Income from
continuing operations, net of tax
|
|
$
|
11.9
|
|
|
$
|
6.1
|
|
|
$
|
18.0
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
0.01
|
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
61.2
|
%
|
|
—
|
|
|
61.2
|
%
|
SG&A as a % of
revenues
|
|
55.4
|
%
|
|
(0.4)
|
|
|
54.9
|
%
|
Operating
margin
|
|
5.9
|
%
|
|
0.4
|
|
|
6.3
|
%
|
Effective tax
rate
|
|
75.2
|
%
|
|
|
|
66.8
|
%
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
Note: The diluted EPS
impact for each Non-GAAP item on the table above is not provided
due to the participation rights of the Series C convertible
preferred stock. The Reported and Adjusted diluted EPS from
continuing operations are calculated independently and factor in
the participation rights of the Series C convertible preferred
stock, and, therefore, would cause the amounts not to sum to
Adjusted diluted EPS from continuing operations.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited)
|
(In millions,
except per share data)
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial measure and the financial measure calculated and reported
in accordance with GAAP.
|
|
|
|
NINE MONTHS ENDED
SEPTEMBER 30, 2017
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Loss
contingency
|
|
Adjusted
(Non-GAAP)
|
Total
revenue
|
|
$
|
4,146.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,146.8
|
|
Cost of
sales
|
|
1,592.1
|
|
|
(0.1)
|
|
|
—
|
|
|
1,592.2
|
|
Selling, general and
administrative expenses
|
|
2,411.4
|
|
|
36.6
|
|
|
18.2
|
|
|
2,356.6
|
|
Operating
profit
|
|
143.3
|
|
|
36.5
|
|
|
18.2
|
|
|
198.0
|
|
Income from
continuing operations, before taxes
|
|
29.1
|
|
|
36.5
|
|
|
18.2
|
|
|
83.8
|
|
Income
taxes
|
|
(99.5)
|
|
|
(1.9)
|
|
|
—
|
|
|
(101.4)
|
|
Loss from continuing
operations, net of tax
|
|
$
|
(70.4)
|
|
|
$
|
34.6
|
|
|
$
|
18.2
|
|
|
$
|
(17.6)
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(0.20)
|
|
|
|
|
|
|
$
|
(0.08)
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
61.6
|
%
|
|
—
|
|
|
—
|
|
|
61.6
|
%
|
SG&A as a % of
revenues
|
|
58.2
|
%
|
|
(0.9)
|
|
|
(0.4)
|
|
|
56.8
|
%
|
Operating
margin
|
|
3.5
|
%
|
|
0.9
|
|
|
0.4
|
|
|
4.8
|
%
|
Effective tax
rate
|
|
*
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*Calculation not
meaningful
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
Note: The diluted EPS
impact for each Non-GAAP item on the table above is not provided
due to the participation rights of the Series C convertible
preferred stock. The Reported and Adjusted diluted EPS from
continuing operations are calculated independently and factor in
the participation rights of the Series C convertible preferred
stock, and, therefore, would cause the amounts not to sum to
Adjusted diluted EPS from continuing operations.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited)
|
(In millions,
except per share data)
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial measure and the financial measure calculated and reported
in accordance with GAAP.
|
|
|
|
THREE MONTHS ENDED
SEPTEMBER 30, 2016
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Legal
settlement
|
|
Gain on
extinguishment
of debt
|
|
Adjusted
(Non-GAAP)
|
Total
revenue
|
|
$
|
1,408.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,408.8
|
|
Cost of
sales
|
|
550.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
550.9
|
|
Selling, general and
administrative expenses
|
|
745.9
|
|
|
14.0
|
|
|
(27.2)
|
|
|
—
|
|
|
759.1
|
|
Operating
profit
|
|
112.0
|
|
|
14.0
|
|
|
(27.2)
|
|
|
—
|
|
|
98.8
|
|
Income from
continuing operations, before taxes
|
|
74.6
|
|
|
14.0
|
|
|
(27.2)
|
|
|
(3.9)
|
|
|
57.5
|
|
Income
taxes
|
|
(38.3)
|
|
|
(3.4)
|
|
|
$
|
—
|
|
|
—
|
|
|
(41.7)
|
|
Income from
continuing operations, net of tax
|
|
$
|
36.3
|
|
|
$
|
10.6
|
|
|
$
|
(27.2)
|
|
|
$
|
(3.9)
|
|
|
$
|
15.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.9
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60.9
|
%
|
SG&A as a % of
revenues
|
|
52.9
|
%
|
|
(1.0)
|
|
|
1.9
|
|
|
—
|
|
|
53.9
|
%
|
Operating
margin
|
|
8.0
|
%
|
|
1.0
|
|
|
(1.9)
|
|
|
—
|
|
|
7.0
|
%
|
Effective tax
rate
|
|
51.3
|
%
|
|
|
|
|
|
|
|
72.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
Note: The diluted EPS
impact for each Non-GAAP item on the table above is not provided
due to the participation rights of the Series C convertible
preferred stock. The Reported and Adjusted diluted EPS from
continuing operations are calculated independently and factor in
the participation rights of the Series C convertible preferred
stock, and, therefore, would cause the amounts not to sum to
Adjusted diluted EPS from continuing operations.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited)
|
(In millions,
except per share data)
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial measure and the financial measure calculated and reported
in accordance with GAAP.
|
|
|
|
NINE MONTHS ENDED
SEPTEMBER 30, 2016
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Legal
settlement
|
|
Venezuelan
special
items
|
|
Gain on
extinguishment
of debt
|
|
Special
tax items
|
|
Adjusted
(Non-
GAAP)
|
Total
revenue
|
|
$
|
4,149.6
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,149.6
|
|
Cost of
sales
|
|
1,634.7
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
1,634.4
|
|
Selling, general and
administrative
expenses
|
|
2,300.0
|
|
|
69.9
|
|
|
(27.2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,257.3
|
|
Operating
profit
|
|
214.9
|
|
|
70.2
|
|
|
(27.2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
257.9
|
|
(Loss) income from
continuing
operations, before taxes
|
|
(11.6)
|
|
|
70.2
|
|
|
(27.2)
|
|
|
120.5
|
|
|
(3.9)
|
|
|
—
|
|
|
148.0
|
|
Income
taxes
|
|
(72.1)
|
|
|
(13.6)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36.4)
|
|
|
(122.1)
|
|
(Loss) income from
continuing
operations, net of tax
|
|
$
|
(83.7)
|
|
|
$
|
56.6
|
|
|
$
|
(27.2)
|
|
|
$
|
120.5
|
|
|
$
|
(3.9)
|
|
|
$
|
(36.4)
|
|
|
$
|
25.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing
operations
|
|
$
|
(0.22)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.6
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60.6
|
%
|
SG&A as a % of
revenues
|
|
55.4
|
%
|
|
(1.7)
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54.4
|
%
|
Operating
margin
|
|
5.2
|
%
|
|
1.7
|
|
|
(0.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.2
|
%
|
Effective tax
rate
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
82.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Calculation not
meaningful
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
Note: The diluted EPS
impact for each Non-GAAP item on the table above is not provided
due to the participation rights of the Series C convertible
preferred stock. The Reported and Adjusted diluted EPS from
continuing operations are calculated independently and factor in
the participation rights of the Series C convertible preferred
stock, and, therefore, would cause the amounts not to sum to
Adjusted diluted EPS from continuing operations.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
(Unaudited)
|
(In millions,
except per share data)
|
|
Approximate Impact
of Foreign Currency
|
|
|
|
|
|
|
Three Months
Ended
September 30, 2017
|
|
Nine Months
Ended
September 30, 2017
|
|
Year-on-Year
impact on Reported
(GAAP) results:
|
Estimated
impact
($ in millions)
|
|
Estimated
impact
on diluted EPS
|
|
Estimated
impact
($ in millions)
|
|
Estimated
impact
on diluted EPS
|
|
Total
revenue
|
1 pt
|
|
|
|
2 pts
|
|
|
|
Operating profit -
transaction
|
$
|
(10)
|
|
|
$
|
(0.01)
|
|
|
$
|
10
|
|
|
$
|
0.02
|
|
|
Operating profit -
translation
|
5
|
|
|
—
|
|
|
15
|
|
|
0.02
|
|
|
Total operating
profit
|
$
|
(5)
|
|
|
$
|
(0.01)
|
|
|
$
|
25
|
|
|
$
|
0.04
|
|
|
Operating
margin
|
(20 bps)
|
|
|
|
60 bps
|
|
|
|
Revaluation of
working capital
|
$
|
4
|
|
|
$
|
0.01
|
|
|
$
|
9
|
|
|
$
|
0.01
|
|
|
Diluted
EPS
|
|
|
$
|
—
|
|
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
Year-on-Year
impact on Adjusted (Non-
GAAP) results:
|
|
|
|
|
|
|
|
|
Adjusted operating
profit - transaction
|
$
|
(10)
|
|
|
$
|
(0.01)
|
|
|
$
|
10
|
|
|
$
|
0.02
|
|
|
Adjusted operating
profit - translation
|
5
|
|
|
—
|
|
|
15
|
|
|
0.02
|
|
|
Total Adjusted
operating profit
|
$
|
(5)
|
|
|
$
|
(0.01)
|
|
|
$
|
25
|
|
|
$
|
0.04
|
|
|
Adjusted operating
margin
|
(20 bps)
|
|
|
|
50 bps
|
|
|
|
Revaluation of
working capital
|
$
|
4
|
|
|
$
|
0.01
|
|
|
$
|
9
|
|
|
$
|
0.01
|
|
|
Adjusted diluted
EPS
|
|
|
$
|
—
|
|
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
Non-GAAP Financial Measures
To supplement the Company's financial results presented in
accordance with generally accepted accounting principles in
the United States ("GAAP"), the
Company discloses operating results that have been adjusted to
exclude the impact of changes due to the translation of foreign
currencies into U.S. dollars, including changes in: revenue,
operating profit, Adjusted operating profit, operating margin and
Adjusted operating margin. The Company also refers to these
adjusted financial measures as constant dollar items, which are
Non-GAAP financial measures. The Company believes these measures
provide investors an additional perspective on trends and
underlying business results. To exclude the impact of changes due
to the translation of foreign currencies into U.S. dollars, the
Company calculates current-year results and prior-year results at
constant exchange rates, which are updated on an annual basis as
part of the Company's budgeting process. Foreign currency impact is
determined as the difference between actual growth rates and
constant-dollar growth rates.
The Company also presents cost of sales, gross margin, selling,
general and administrative expenses, selling, general and
administrative expenses as a percentage of revenue, operating
profit, operating margin, income (loss) from continuing operations,
before taxes, income taxes, income (loss) from continuing
operations, net of tax, diluted earnings (loss) per share from
continuing operations and effective tax rate on a Non-GAAP basis.
The Company refers to these Non-GAAP financial measures as
"Adjusted." The Company has provided quantitative reconciliations
of the difference between the Non-GAAP financial measures and the
financial measures calculated and reported in accordance with GAAP.
See "Supplemental Schedules - Non-GAAP Financial Measures"
within this release for these quantitative reconciliations.
In addition, the Company defines free cash flow as net cash
provided (used) by operating activities of continuing operations
less capital expenditures.
The Company uses the Non-GAAP financial measures to
evaluate its operating performance. These Non-GAAP measures should
not be considered in isolation, or as a substitute for, or
superior to, financial measures calculated in accordance with GAAP.
The Company believes investors find the Non-GAAP information
helpful in understanding the ongoing performance of operations
separate from items that may have a disproportionate positive or
negative impact on the Company's financial results in any
particular period. The Company believes that it is meaningful for
investors to be made aware of the impacts of: 1) costs to implement
("CTI") restructuring initiatives; 2) a charge for a loss
contingency related to a non-U.S. pension plan ("Loss
contingency"); 3) the net proceeds recognized as a result of
settling claims relating to professional services ("Legal
settlement"); 4) charges related to the deconsolidation of the
Company's Venezuela operations as
of March 31, 2016 ("Venezuelan
special items"); 5) a net gain related to the extinguishment of
debt ("Gain on extinguishment of debt"); and 6) income tax benefits
realized in the first quarter of 2016 as a result of tax planning
strategies and in the second quarter of 2016 primarily due to the
release of a valuation allowance associated with Russia ("Special tax items").
The Loss contingency includes the impact on the Consolidated
Statements of Operations during the second quarter of 2017 caused
by a charge of approximately $18
million for a loss contingency related to a non-U.S.
pension plan, for which an amendment to the plan that occurred in a
prior year may not have been appropriately implemented.
The Legal settlement includes the impact on the Consolidated
Statements of Operations during the third quarter of 2016
associated with the net proceeds of approximately $27 million recognized as a result of settling
claims relating to professional services that had been provided to
the Company prior to 2013 in connection with a previously disclosed
legal matter.
The Venezuelan special items include the impact on the
Consolidated Statements of Operations during the first quarter of
2016 caused by the deconsolidation of the Company's Venezuelan
operations for which the Company recorded a loss of approximately
$120 million in other expense, net.
The loss was comprised of approximately $39
million in net assets of the Venezuelan business and
approximately $81 million in
accumulated foreign currency translation adjustments within
accumulated other comprehensive loss associated with foreign
currency changes before Venezuela
was accounted for as a highly inflationary economy.
The Gain on extinguishment of debt includes the impact on the
Consolidated Statements of Operations during the third quarter of
2016 due to a net gain on extinguishment of debt caused by the
deferred gain associated with interest-rate swap agreement
terminations, partially offset by the early tender premium paid,
the deferred loss associated with treasury lock agreements, deal
costs and the write-off of debt issuance costs and discounts
associated with the cash tender offers in August 2016.
The Special tax items include the impact on the provision for
income taxes in the Consolidated Statements of Operations during
the second quarter of 2016 primarily due to the release of a
valuation allowance associated with Russia of approximately $7 million. Special tax items also include the
impact on the provision for income taxes in the Consolidated
Statements of Operations during the first quarter of 2016 due to an
income tax benefit of approximately $29
million recognized as the result of the implementation of
foreign tax planning strategies.
View original
content:http://www.prnewswire.com/news-releases/avon-reports-third-quarter-2017-results-300548148.html
SOURCE Avon Products, Inc.