NEW YORK,
Nov. 4, 2015 /PRNewswire/ -- Avon
Products, Inc. (NYSE: AVP) today reported third-quarter 2015
results. "This was a difficult quarter impacted by currency and
other macro pressures, and our financial results were not where we
would like them to be," said Sheri
McCoy, Chief Executive Officer of Avon Products, Inc. "Given
the challenging environment, I'm proud of the progress our teams
are making, driving solid top-line performance at the local level
and continuing to make improvements in Representative
engagement."
Third-Quarter 2015 Income Statement Review (compared with
third-quarter 2014)
- Total revenue for Avon Products, Inc. declined 22% to
$1.7 billion, and declined 2% in
constant dollars. Certain tax items in Brazil and the divestiture of Liz Earle
impacted the year-over-year comparison in the third quarter.
Excluding the impacts of these items, constant-dollar revenue would
have grown approximately 3%2. Specifically, in
Brazil, the recognition of Value
Added Tax ("VAT") credits in 2014 that did not recur in 2015, and a
new Industrial Production Tax ("IPI") on cosmetics in 2015
negatively impacted constant-dollar revenue by approximately 4
points. The divestiture of Liz Earle also negatively impacted
constant-dollar revenue by approximately 1 point.
- Active Representatives were down 1% year-over-year, led by a
continued decline in North America
as well as in the Latin America
markets experiencing high inflation (Venezuela and Argentina), partially offset by strong growth
in Russia and solid growth in
Brazil. Average order declined 1%,
negatively impacted by approximately 4 points due to the VAT
credits in 2014 and the IPI tax in 2015, as well as by
approximately 1 point from the divestiture of Liz Earle discussed
above. These negative impacts were partially offset by the benefit
from price increases in Russia and
Brazil, as well as by pricing
actions taken in the Latin America
markets experiencing high inflation.
- Total units decreased 6%, driven by declines in Latin America and North America. Price/mix was up 4% during the
quarter, driven by increases across all regions.
- Beauty sales declined 23%, or 1% in constant dollars,
negatively impacted by the IPI tax in 2015 discussed above as well
as the divestiture of Liz Earle. Fashion & Home sales declined
15%, but increased 3% in constant dollars.
- Gross margin was 60.8%, down 110 basis points. Adjusted
gross margin was 61.2%, down 80 basis points. These results were
negatively impacted by approximately 100 basis points due to the
VAT credits in 2014 and the IPI tax in 2015 discussed above.
Excluding the impacts of these items, Adjusted gross margin would
have increased 20 basis points2, as the benefits from
price/mix and lower supply chain costs more than offset the
negative impact of foreign exchange.
- Operating margin was 1.4% in the quarter, down 740 basis
points. Adjusted operating margin was 3.2%, down 610 basis points.
The results were negatively impacted by approximately 300 basis
points due to the VAT credits in 2014 and the IPI tax in 2015
discussed above. Excluding the impacts of these items, Adjusted
operating margin would have decreased 310 basis points2,
which was primarily driven by approximately 410 basis points of
unfavorable impact of foreign exchange. In addition, Adjusted
operating margin was negatively impacted by 160 basis points due to
higher expenses associated with employee incentive compensation
plans, primarily due to the prior-year period, which included a
benefit for the reversal of accruals. These unfavorable impacts
were partially offset by continued benefits from cost savings
initiatives as well as the favorable net impact of price/mix.
- The effective tax rate was negatively impacted by
additional valuation allowances for deferred tax assets of
approximately $665 million, which
caused income taxes to be significantly in excess of income
before taxes. The Adjusted effective tax rate in 2015 was
negatively impacted by the country mix of earnings and the
inability to recognize additional deferred tax assets in various
jurisdictions related to our current-year operating results. The
year-over-year difference in the Adjusted effective tax rate caused
an estimated $0.11 per share negative
impact on Adjusted earnings per share. The Adjusted effective tax
rate is expected to be volatile on a quarterly basis due to the
country mix of quarterly earnings.
- Net loss was $697 million,
or a loss of $1.58 per diluted share,
compared with net income of $92
million, or $0.21 per diluted
share, for the third quarter of 2014. Adjusted net loss was
$50 million, or a loss of
$0.11 per diluted share, compared
with adjusted net income of $99
million, or $0.23 per diluted
share, for the third quarter of 2014.
- Foreign currency has impacted the Company's financial
results as shown in the table below:
Approximate Impact
of Foreign Currency
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Third-Quarter
2015
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YTD
2015
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Estimated
impact
($ in millions)
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Estimated
impact
on diluted EPS
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Estimated
impact
($ in millions)
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Estimated
impact
on diluted EPS
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Total
revenue
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(20) pts
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(19) pts
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Adjusted operating
profit - transaction
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$
(50)
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$
(0.07)
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$
(150)
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$
(0.22)
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Adjusted operating
profit - translation
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(55)
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(0.08)
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(200)
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(0.29)
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Total Adjusted
operating profit
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$
(105)
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$
(0.15)
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$
(350)
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$
(0.51)
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Adjusted operating
margin
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(410)
bps
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(420)
bps
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Revaluation of
working capital
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$
(10)
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$
(0.01)
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$
(15)
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$
(0.02)
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Adjusted diluted
EPS
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$
(0.16)
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$
(0.53)
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Third-Quarter 2015 Cash Flow Review
- Net cash used by operating activities was $97 million for the nine months ended
September 30, 2015, compared with net
cash provided of $126 million for the
same period in 2014. Operating cash flow during 2015 was
unfavorably impacted by lower cash-related earnings (including the
unfavorable impact of foreign currency translation) and the
$67 million payment to the SEC in
connection with the FCPA settlement in the first quarter of 2015.
These items were partially offset by lower operating tax (such as
VAT and IPI) net payments, lower contributions to the U.S. pension
plan and lower payments for employee incentive compensation.
- For the nine months ended September 30,
2015, there was $136 million
of net cash provided by investing activities, a $222 million improvement over the prior year,
primarily due to the Company's sale of the Liz Earle business.
- Net cash used by financing activities was $358 million for the nine months ended
September 30, 2015, or $190 million higher than the prior year,
primarily due to the prepayment of $250
million principal amount of notes that were due in
2016.
Adjustments to Third-Quarter 2015 GAAP Results to Arrive at
Adjusted Results
During the third quarter of 2015, the following items had an
aggregate impact of $1.47 per diluted
share on the financial results:
- The Company recorded costs to implement restructuring within
operating profit of less than $1
million before tax, primarily related to cost savings
initiatives.
- Effective February 12, 2015, the
Company began utilizing the SIMADI rate to remeasure its Venezuelan
operations. The change to the SIMADI rate resulted in an
approximate $6 million negative
impact on operating profit.
- In July 2015, the Company sold
Liz Earle and recorded a gain on sale of approximately $46 million before tax within income before
taxes, and approximately $53 million
after tax.
- As a result of the lump-sum payments made in 2015 to former
employees who were vested and participated in the U.S. pension
plan, the Company recorded a settlement charge within operating
profit of $24 million before
tax.
- In August 2015, the Company
incurred a loss on extinguishment of debt of approximately
$6 million before tax related to the
prepayment of its notes that were due in 2016.
- The Company recorded a non-cash income tax charge of
approximately $650 million as a
result of establishing a valuation allowance for the full amount of
the Company's U.S. deferred tax assets, due to the impact of the
continued strengthening of the U.S. dollar against currencies of
some of its key markets and the associated effect on its tax
planning strategies. In addition, the Company also recorded a
non-cash income tax charge of approximately $15 million associated with valuation allowances
for deferred tax assets outside of the U.S.
Third-Quarter 2015 Regional Highlights (compared with
third-quarter
2014)
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THREE MONTHS ENDED
SEPTEMBER 30, 2015
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REGIONAL
RESULTS
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($ in
millions)
|
Revenue
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Active
Reps
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|
Average
Order C$
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Units
Sold
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Price/Mix
C$
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Revenue &
Performance Drivers
|
US$
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C$
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% var. vs
3Q14
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% var. vs
3Q14
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% var. vs
3Q14
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% var. vs
3Q14
|
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% var. vs
3Q14
|
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% var. vs
3Q14
|
Latin
America
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$
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790.9
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(26)%
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1%
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(2)%
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3%
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(6)%
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7%
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Europe, Middle East
& Africa
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499.2
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(19)
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3
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5
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(2)
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-
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3
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North
America
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230.6
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(17)
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(15)
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(13)
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(2)
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(24)
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9
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Asia
Pacific
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146.2
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(16)
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(8)
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(2)
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(6)
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(10)
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2
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Total
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$
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1,666.9
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(22)%
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(2)%
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(1)%
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(1)%
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(6)%
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4%
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2015
GAAP
|
|
Adjusted Operating
Profit
(Loss) in US$
|
|
Adjusted Operating
Margin
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Operating
Profit/Margin
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Operating
Profit
(Loss) US$
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Operating
Margin US$
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2015
|
|
2014
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2015
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2014
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Change
in US$
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Change
in C$
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Latin
America
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$
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34.7
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4.4%
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$
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39.8
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$
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144.5
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5.0%
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13.5%
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(850) bps
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(600) bps
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Europe, Middle East
& Africa
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48.1
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9.6
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46.5
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55.1
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9.3
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8.9
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40
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190
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North
America
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(27.5)
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(11.9)
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(7.7)
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(12.5)
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(3.3)
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(4.5)
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120
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100
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Asia
Pacific
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9.4
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6.4
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9.6
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9.0
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6.6
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5.2
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140
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200
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Total from
operations
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64.7
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3.9
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88.2
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196.1
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5.3
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9.2
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(390)
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(180)
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Global and
other
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(41.7)
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-
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(35.5)
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1.7
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-
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-
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-
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-
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Total
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$
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23.0
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1.4%
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$
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52.7
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$
|
197.8
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3.2%
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9.3%
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(610) bps
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(390) bps
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|
Third-Quarter 2015 Regional Highlights
- Latin America revenue
was down 26%, but up 1% in constant dollars. Constant-dollar
revenue was negatively impacted by approximately 8 points due to
the VAT credits in 2014 and the IPI tax in 2015 discussed above.
Excluding the impacts of these items, constant-dollar revenue would
have grown approximately 9%2 due to higher average
order, which benefited from the inflationary impact on pricing.
Active Representatives declined, primarily due to declines in
Venezuela and Argentina.
- Brazil revenue was down
42%, or down 10% in constant dollars. Constant-dollar revenue was
negatively impacted by approximately 16 points due to the VAT
credits in 2014 and the IPI tax in 2015 discussed above. Excluding
the impacts of these items, constant-dollar revenue would have
grown approximately 6%2, and was primarily driven by
growth in Active Representatives. This market continues to be
impacted by a difficult macroeconomic environment and high levels
of competition.
- Mexico revenue was down
20%, but relatively unchanged in constant dollars, as higher
average order was offset by a decline in Active
Representatives.
- Europe, Middle East & Africa revenue was down 19%, but up 3% in
constant dollars. Constant-dollar revenue was negatively impacted
by approximately 3 points due to the divestiture of Liz Earle
discussed above. Excluding the impact of this item, constant-dollar
revenue would have grown approximately 6%2, and was
driven by an increase in Active Representatives, led by strength in
Russia.
- Russia revenue was down
29%, but up 22% in constant dollars, primarily driven by an
increase in Active Representatives from sustained momentum in
recruiting and retention.
- U.K. revenue was down 15%, or down 9% in constant
dollars, primarily driven by a decline in Active Representatives,
and to a lesser extent, lower average order.
- North America revenue
was down 17%, or down 15% in constant dollars, primarily driven by
a decline in Active Representatives.
- Asia Pacific revenue
was down 16%, or down 8% in constant dollars, as growth in
the Philippines was more than
offset by declines in other Asia
Pacific markets, led by China.
Full-Year 2015 Outlook
The Company's outlook has been updated. This current outlook now
includes the Company's nine month actual results, an updated
estimate for additional negative impacts from foreign currency
translation and transaction costs due to the continued
strengthening of the U.S. dollar, and an expected negative impact
from recently enacted additional VAT taxes in Brazil. The Company's full-year outlook as
compared with the prior-year results includes:
- Relatively unchanged constant-dollar revenue (which includes
the negative impact of the Liz Earle divestiture);
- An approximate 19 point negative impact on reported revenue due
to foreign currency translation;
- A 100 basis point decline in constant-dollar Adjusted operating
margin; and
- A 300 basis point decline in Adjusted operating margin in
reported dollars.
Additionally, the Company expects free cash flow to be positive,
although less than the Company's previous outlook of approximately
$100 million.
Conference call
Avon will conduct a conference
call at 9 a.m. today to discuss the
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: 52753538). The call will be webcast live at
www.avoninvestor.com and can be accessed or downloaded from that
site for a period of one year. Please refer to our Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2015, for additional information on
Avon's results for the
quarter.
About Avon Products, Inc.
Avon is the Company that for
more than 125 years has stood for beauty, innovation, optimism and,
above all, for women. Avon, with
nearly $9 billion in annual revenue
in 2014, has products that are sold through 6 million active
independent Avon Sales Representatives worldwide. Avon products include color cosmetics,
skincare, fragrance, and fashion and home, featuring such
well-recognized brand names as Avon Color, ANEW, Avon Care,
Skin-So-Soft, and Advance Techniques. Learn more about Avon and its products at
www.avoncompany.com.
Footnotes
1 "Adjusted" items refer to financial measures that
are derived from measures calculated in accordance with generally
accepted accounting principles in the
United States ("GAAP"), but which have been adjusted to
exclude certain items. Other adjusted financial measures that we
refer to include Constant dollar (C$) 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 our "Non-GAAP Financial Measures" description
at the end of this Release and the reconciliations we provide of
these Non-GAAP financial measures to their comparable GAAP
measures.
2 To supplement our financial results presented in
accordance with GAAP and the Non-GAAP Financial Measures discussed
above, we have included additional analysis, "Non-GAAP Impact of
Special Revenue Items Affecting Year-Over-Year Comparisons," which
presents the change in three Non-GAAP financial measures –
constant-dollar revenue, Adjusted gross margin and Adjusted
operating margin – in each case, excluding certain revenue items
which impact the comparability of our results. These special
revenue items include the impacts of 1) the recognition of tax
credits in 2014 in Brazil for
expected VAT recoveries which did not recur in 2015 ("2014 Brazil
VAT credits"), 2) a new IPI tax law on cosmetics in Brazil which went into effect in May 2015 ("2015 Brazil IPI tax"), and 3) lower
constant-dollar revenue in the third quarter of 2015 as
compared with the third quarter of 2014 as a result of the
sale of Liz Earle in July 2015 ("Liz
Earle divestiture"). We believe this additional analysis helps
investors to understand the underlying business results. All of
these additional adjustments to those three Non-GAAP financial
measures are themselves Non-GAAP financial measures and 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 reconciliations in the last schedule of this Release that we
provide of these Non-GAAP financial measures to our other, related
Non-GAAP Financial Measures and then 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 Securities and Exchange Commission,
including Forms 8-K, 10-Q, and 10-K. Some forward-looking
statements in this release include and concern our outlook and
expected results, pricing and cost reduction actions, and the
impact of foreign currency, taxes and tax rates. 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, our ability to
improve our financial and operational performance and the impact of
a continued decline in our business results, the possibility of
business disruption, competitive uncertainties and general economic
and business conditions in our markets, including fluctuations in
foreign currency exchange rates. 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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|
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|
|
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|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Percent
|
|
Nine Months
Ended
|
|
Percent
|
|
|
|
|
September
30
|
|
Change
|
|
September
30
|
|
Change
|
|
|
|
|
2015
|
|
2014
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
|
1,631.2
|
|
$
|
2,059.0
|
|
(21)%
|
|
$
|
5,183.5
|
|
$
|
6,340.5
|
|
(18)%
|
Other
revenue
|
|
|
|
35.7
|
|
|
79.2
|
|
|
|
|
101.0
|
|
|
169.9
|
|
|
Total
revenue
|
|
|
|
1,666.9
|
|
|
2,138.2
|
|
(22)%
|
|
|
5,284.5
|
|
|
6,510.4
|
|
(19)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
652.7
|
|
|
813.9
|
|
|
|
|
2,073.4
|
|
|
2,580.0
|
|
|
Selling, general and
administrative expenses
|
|
|
991.2
|
|
|
1,136.4
|
|
|
|
|
3,133.9
|
|
|
3,700.2
|
|
|
Operating
profit
|
|
|
|
23.0
|
|
|
187.9
|
|
(88)%
|
|
|
77.2
|
|
|
230.2
|
|
(66)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
30.1
|
|
|
27.5
|
|
|
|
|
89.7
|
|
|
83.7
|
|
|
Loss on
extinguishment of debt
|
|
|
5.5
|
|
|
-
|
|
|
|
|
5.5
|
|
|
-
|
|
|
Interest
income
|
|
|
|
(3.6)
|
|
|
(3.8)
|
|
|
|
|
(9.7)
|
|
|
(11.4)
|
|
|
Other expense,
net
|
|
|
|
29.4
|
|
|
19.8
|
|
|
|
|
48.3
|
|
|
88.8
|
|
|
Gain on sale of
business
|
|
|
(46.2)
|
|
|
-
|
|
|
|
|
(44.9)
|
|
|
-
|
|
|
Total other
expenses
|
|
|
15.2
|
|
|
43.5
|
|
|
|
|
88.9
|
|
|
161.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
taxes
|
|
|
7.8
|
|
|
144.4
|
|
*
|
|
|
(11.7)
|
|
|
69.1
|
|
*
|
Income
taxes
|
|
|
|
(704.8)
|
|
|
(52.4)
|
|
|
|
|
(802.0)
|
|
|
(124.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
|
(697.0)
|
|
|
92.0
|
|
*
|
|
|
(813.7)
|
|
|
(55.3)
|
|
*
|
Net income
attributable to noncontrolling interests
|
|
|
-
|
|
|
(0.6)
|
|
|
|
|
(1.8)
|
|
|
(2.6)
|
|
|
Net (loss) income
attributable to Avon
|
|
$
|
(697.0)
|
|
$
|
91.4
|
|
*
|
|
$
|
(815.5)
|
|
$
|
(57.9)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per share:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(1.58)
|
|
$
|
0.21
|
|
*
|
|
$
|
(1.84)
|
|
$
|
(0.13)
|
|
*
|
Diluted
|
|
|
|
|
(1.58)
|
|
|
0.21
|
|
*
|
|
|
(1.84)
|
|
|
(0.13)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
435.4
|
|
|
434.6
|
|
|
|
|
435.1
|
|
|
434.4
|
|
|
Diluted
|
|
|
|
|
435.4
|
|
|
434.6
|
|
|
|
|
435.1
|
|
|
434.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
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 income (loss)
allocable to participating securities. Net (loss) income allocable
to common shares used in the basic and diluted (loss) earnings per
share calculation was $(685.9) and $90.6 for the three months ended
September 30, 2015 and 2014, respectively. Net loss allocable to
common shares used in the basic and diluted loss per share
calculation was $(802.7) and $(56.3) for the nine months ended
September 30, 2015 and 2014, respectively.
|
AVON PRODUCTS,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
December
31
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
587.4
|
|
$
|
960.5
|
Accounts receivable,
net
|
|
|
|
470.3
|
|
|
563.5
|
Inventories
|
|
|
|
|
847.2
|
|
|
822.2
|
Prepaid expenses and
other
|
|
|
|
480.7
|
|
|
618.3
|
Total current
assets
|
|
|
|
2,385.6
|
|
|
2,964.5
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, at cost
|
|
|
1,917.5
|
|
|
2,292.6
|
Less accumulated
depreciation
|
|
|
|
(969.2)
|
|
|
(1,061.6)
|
Property, plant and
equipment, net
|
|
|
948.3
|
|
|
1,231.0
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
99.9
|
|
|
249.3
|
Other
assets
|
|
|
|
|
340.9
|
|
|
1,052.0
|
Total
assets
|
|
|
|
$
|
3,774.7
|
|
$
|
5,496.8
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' (Deficit) Equity
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Debt maturing within
one year
|
|
|
$
|
117.2
|
|
$
|
137.1
|
Accounts
payable
|
|
|
|
|
815.2
|
|
|
895.4
|
Accrued
compensation
|
|
|
|
189.9
|
|
|
210.5
|
Other accrued
liabilities
|
|
|
|
424.6
|
|
|
598.8
|
Sales and taxes other
than income
|
|
|
149.4
|
|
|
168.6
|
Income
taxes
|
|
|
|
|
29.2
|
|
|
36.8
|
Total current
liabilities
|
|
|
|
1,725.5
|
|
|
2,047.2
|
Long-term
debt
|
|
|
|
|
2,196.3
|
|
|
2,463.9
|
Employee benefit
plans
|
|
|
|
473.5
|
|
|
501.8
|
Long-term income
taxes
|
|
|
|
62.3
|
|
|
77.8
|
Other
liabilities
|
|
|
|
|
85.5
|
|
|
100.8
|
Total
liabilities
|
|
|
|
|
4,543.1
|
|
|
5,191.5
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
(Deficit) Equity
|
|
|
|
|
|
|
|
Common
stock
|
|
|
|
|
187.9
|
|
|
187.6
|
Additional
paid-in-capital
|
|
|
|
2,233.4
|
|
|
2,207.9
|
Retained
earnings
|
|
|
|
|
2,808.6
|
|
|
3,702.9
|
Accumulated other
comprehensive loss
|
|
|
(1,417.4)
|
|
|
(1,217.6)
|
Treasury stock, at
cost
|
|
|
|
(4,594.0)
|
|
|
(4,591.0)
|
Total Avon
shareholders' (deficit) equity
|
|
(781.5)
|
|
|
289.8
|
Noncontrolling
interests
|
|
|
|
13.1
|
|
|
15.5
|
Total shareholders'
(deficit) equity
|
|
|
(768.4)
|
|
|
305.3
|
Total liabilities
and shareholders' (deficit) equity
|
$
|
3,774.7
|
|
$
|
5,496.8
|
|
|
|
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended
|
|
|
|
|
|
|
|
September
30
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
$
|
(813.7)
|
|
$
|
(55.3)
|
Adjustments to
reconcile net loss to net cash (used) provided by operating
activities:
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
87.7
|
|
|
106.1
|
Amortization
|
|
|
|
|
|
27.3
|
|
|
38.7
|
Provision for
doubtful accounts
|
|
|
|
114.2
|
|
|
146.9
|
Provision for
obsolescence
|
|
|
|
|
44.7
|
|
|
67.6
|
Share-based
compensation
|
|
|
|
|
28.9
|
|
|
28.4
|
Foreign exchange
losses
|
|
|
|
|
28.2
|
|
|
21.1
|
Deferred income
taxes
|
|
|
|
|
674.9
|
|
|
(87.9)
|
Charge for Venezuelan
monetary assets and liabilities
|
|
|
(4.2)
|
|
|
53.7
|
Charge for Venezuelan
non-monetary assets
|
|
|
101.7
|
|
|
115.7
|
Pre-tax gain on sale
of business
|
|
|
|
(44.9)
|
|
|
-
|
Other
|
|
|
|
|
|
|
56.2
|
|
|
55.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
|
(118.4)
|
|
|
(120.0)
|
Inventories
|
|
|
|
|
|
(198.9)
|
|
|
(229.7)
|
Prepaid expenses and
other
|
|
|
|
|
(1.6)
|
|
|
(56.3)
|
Accounts payable and
accrued liabilities
|
|
|
|
(47.9)
|
|
|
100.0
|
Income and other
taxes
|
|
|
|
|
17.6
|
|
|
23.8
|
Noncurrent assets and
liabilities
|
|
|
|
(48.5)
|
|
|
(82.8)
|
Net cash (used)
provided by operating activities
|
|
|
(96.7)
|
|
|
125.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
|
|
|
(61.8)
|
|
|
(88.2)
|
Disposal of
assets
|
|
|
|
|
|
5.7
|
|
|
7.0
|
Net proceeds from
sale of business
|
|
|
|
|
208.3
|
|
|
-
|
Purchases of
investments
|
|
|
|
|
(25.0)
|
|
|
(22.9)
|
Proceeds from sale of
investments
|
|
|
|
|
9.0
|
|
|
18.4
|
Net cash provided
(used) by investing activities
|
|
|
136.2
|
|
|
(85.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
Cash
dividends
|
|
|
|
|
|
(80.7)
|
|
|
(81.9)
|
Debt, net (maturities
of three months or less)
|
|
|
|
(10.3)
|
|
|
(6.4)
|
Proceeds from
debt
|
|
|
|
|
|
7.6
|
|
|
-
|
Repayment of
debt
|
|
|
|
|
|
(265.6)
|
|
|
(70.0)
|
Net proceeds from
exercise of stock options
|
|
|
|
-
|
|
|
0.2
|
Repurchase of common
stock
|
|
|
|
|
(3.0)
|
|
|
(9.4)
|
Other financing
activities
|
|
|
|
|
|
(5.9)
|
|
|
-
|
Net cash used by
financing activities
|
|
|
|
(357.9)
|
|
|
(167.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(54.7)
|
|
|
(154.5)
|
Net decrease in cash
and cash equivalents
|
|
|
|
(373.1)
|
|
|
(281.9)
|
Cash and cash
equivalents at beginning of year
|
|
|
960.5
|
|
|
1,107.9
|
Cash and cash
equivalents at end of period
|
|
|
$
|
587.4
|
|
$
|
826.0
|
|
|
|
|
|
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
SEGMENT
PERFORMANCE METRICS
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
SEPTEMBER 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REGIONAL
RESULTS
|
|
|
Revenue
|
|
Active
Reps
|
|
Average
Order C$
|
|
Units
Sold
|
|
Price/Mix
C$
|
Revenue &
Performance Drivers
|
US$
|
|
C$
|
|
|
|
|
|
|
|
% var. vs
3Q14
|
|
% var. vs
3Q14
|
|
% var. vs
3Q14
|
|
% var. vs
3Q14
|
|
% var. vs
3Q14
|
|
% var. vs
3Q14
|
Latin
America
|
$
|
790.9
|
|
(26)%
|
|
1%
|
|
(2)%
|
|
3%
|
|
(6)%
|
|
7%
|
Europe, Middle East
& Africa
|
|
499.2
|
|
(19)
|
|
3
|
|
5
|
|
(2)
|
|
-
|
|
3
|
North
America
|
|
230.6
|
|
(17)
|
|
(15)
|
|
(13)
|
|
(2)
|
|
(24)
|
|
9
|
Asia
Pacific
|
|
146.2
|
|
(16)
|
|
(8)
|
|
(2)
|
|
(6)
|
|
(10)
|
|
2
|
Total
|
|
$
|
1,666.9
|
|
(22)%
|
|
(2)%
|
|
(1)%
|
|
(1)%
|
|
(6)%
|
|
4%
|
|
|
|
|
2015
GAAP
|
|
Adjusted Operating
Profit
(Loss) in US$
|
|
Adjusted Operating
Margin
|
Operating
Profit/Margin
|
Operating
Profit
(Loss) US$
|
|
Operating
Margin US$
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Change
in US$
|
|
Change
in C$
|
Latin
America
|
$
|
34.7
|
|
4.4%
|
|
$
|
39.8
|
|
$
|
144.5
|
|
5.0%
|
|
13.5%
|
|
(850) bps
|
|
(600) bps
|
Europe, Middle East
& Africa
|
|
48.1
|
|
9.6
|
|
|
46.5
|
|
|
55.1
|
|
9.3
|
|
8.9
|
|
40
|
|
190
|
North
America
|
|
(27.5)
|
|
(11.9)
|
|
|
(7.7)
|
|
|
(12.5)
|
|
(3.3)
|
|
(4.5)
|
|
120
|
|
100
|
Asia
Pacific
|
|
9.4
|
|
6.4
|
|
|
9.6
|
|
|
9.0
|
|
6.6
|
|
5.2
|
|
140
|
|
200
|
Total from
operations
|
|
64.7
|
|
3.9
|
|
|
88.2
|
|
|
196.1
|
|
5.3
|
|
9.2
|
|
(390)
|
|
(180)
|
Global and
other
|
|
(41.7)
|
|
-
|
|
|
(35.5)
|
|
|
1.7
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
$
|
23.0
|
|
1.4%
|
|
$
|
52.7
|
|
$
|
197.8
|
|
3.2%
|
|
9.3%
|
|
(610) bps
|
|
(390) bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NINE MONTHS ENDED
SEPTEMBER 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REGIONAL
RESULTS
|
|
|
Revenue
|
|
Active
Reps
|
|
Average
Order C$
|
|
Units
Sold
|
|
Price/Mix
C$
|
Revenue &
Performance Drivers
|
|
US$
|
|
C$
|
|
|
|
|
|
|
|
% var. vs
9M14
|
|
% var. vs
9M14
|
|
% var. vs
9M14
|
|
% var. vs
9M14
|
|
% var. vs
9M14
|
|
% var. vs
9M14
|
Latin
America
|
$
|
2,481.2
|
|
(22)%
|
|
2%
|
|
(2)%
|
|
4%
|
|
(4)%
|
|
6%
|
Europe, Middle East
& Africa
|
|
1,602.8
|
|
(17)
|
|
6
|
|
6
|
|
-
|
|
4
|
|
2
|
North
America
|
|
731.3
|
|
(17)
|
|
(15)
|
|
(15)
|
|
-
|
|
(23)
|
|
8
|
Asia
Pacific
|
|
469.2
|
|
(9)
|
|
(3)
|
|
(3)
|
|
-
|
|
(6)
|
|
3
|
Total
|
|
$
|
5,284.5
|
|
(19)%
|
|
- %
|
|
(1)%
|
|
1%
|
|
(4)%
|
|
4%
|
|
|
|
|
2015
GAAP
|
|
Adjusted Operating
Profit
(Loss) in US$
|
|
Adjusted Operating
Margin
|
Operating
Profit/Margin
|
Operating
Profit
(Loss) US$
|
|
Operating
Margin US$
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Change
in US$
|
|
Change
in C$
|
Latin
America
|
$
|
55.6
|
|
2.2%
|
|
$
|
175.9
|
|
$
|
350.6
|
|
7.1%
|
|
11.0%
|
|
(390) bps
|
|
(220) bps
|
Europe, Middle East
& Africa
|
|
139.6
|
|
8.7
|
|
|
143.8
|
|
|
216.9
|
|
9.0
|
|
11.2
|
|
(220)
|
|
(70)
|
North
America
|
|
(46.9)
|
|
(6.4)
|
|
|
(12.3)
|
|
|
(15.3)
|
|
(1.7)
|
|
(1.7)
|
|
-
|
|
-
|
Asia
Pacific
|
|
26.8
|
|
5.7
|
|
|
37.0
|
|
|
18.5
|
|
7.9
|
|
3.6
|
|
430
|
|
450
|
Total from
operations
|
|
175.1
|
|
3.3
|
|
|
344.4
|
|
|
570.7
|
|
6.5
|
|
8.8
|
|
(230)
|
|
(60)
|
Global and
other
|
|
(97.9)
|
|
-
|
|
|
(80.3)
|
|
|
(53.5)
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
$
|
77.2
|
|
1.5%
|
|
$
|
264.1
|
|
$
|
517.2
|
|
5.0%
|
|
7.9%
|
|
(290) bps
|
|
(110) bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
CATEGORY
SALES
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30
|
|
US$
|
|
C$
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
% var. vs
3Q14
|
|
% var. vs
3Q14
|
Beauty:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Skincare
|
|
|
|
|
|
|
$
|
470.5
|
|
$
|
638.8
|
|
(26)%
|
|
(6)%
|
Fragrance
|
|
|
|
|
|
|
|
412.3
|
|
|
507.2
|
|
(19)
|
|
4
|
Color
|
|
|
|
|
|
|
|
289.0
|
|
|
371.5
|
|
(22)
|
|
-
|
Total
Beauty
|
|
|
|
|
|
|
|
1,171.8
|
|
|
1,517.5
|
|
(23)
|
|
(1)
|
Fashion &
Home:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
|
|
|
285.0
|
|
|
331.4
|
|
(14)
|
|
2
|
Home (gift &
decorative products/housewares/entertainment &
leisure/children's/nutrition)
|
|
174.4
|
|
|
210.1
|
|
(17)
|
|
5
|
Total Fashion &
Home
|
|
|
|
|
|
|
|
459.4
|
|
|
541.5
|
|
(15)
|
|
3
|
Net sales
|
|
|
|
|
|
|
|
1,631.2
|
|
|
2,059.0
|
|
(21)
|
|
-
|
Other
revenue
|
|
|
|
|
|
|
|
35.7
|
|
|
79.2
|
|
(55)
|
|
(44)
|
Total
revenue
|
|
|
|
|
|
|
$
|
1,666.9
|
|
$
|
2,138.2
|
|
(22)
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30
|
|
US$
|
|
C$
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
% var. vs
9M14
|
|
% var. vs
9M14
|
Beauty:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Skincare
|
|
|
|
|
|
|
$
|
1,552.0
|
|
$
|
1,946.1
|
|
(20)%
|
|
(1)%
|
Fragrance
|
|
|
|
|
|
|
|
1,264.4
|
|
|
1,524.4
|
|
(17)
|
|
5
|
Color
|
|
|
|
|
|
|
|
939.3
|
|
|
1,167.9
|
|
(20)
|
|
-
|
Total
Beauty
|
|
|
|
|
|
|
|
3,755.7
|
|
|
4,638.4
|
|
(19)
|
|
1
|
Fashion &
Home:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
|
|
|
881.6
|
|
|
1,035.2
|
|
(15)
|
|
(1)
|
Home (gift &
decorative products/housewares/entertainment &
leisure/children's/nutrition)
|
|
546.2
|
|
|
666.9
|
|
(18)
|
|
2
|
Total Fashion &
Home
|
|
|
|
|
|
|
|
1,427.8
|
|
|
1,702.1
|
|
(16)
|
|
-
|
Net sales
|
|
|
|
|
|
|
|
5,183.5
|
|
|
6,340.5
|
|
(18)
|
|
1
|
Other
revenue
|
|
|
|
|
|
|
|
101.0
|
|
|
169.9
|
|
(41)
|
|
(31)
|
Total
revenue
|
|
|
|
|
|
|
$
|
5,284.5
|
|
$
|
6,510.4
|
|
(19)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2015
|
|
|
|
|
|
|
CTI
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
Liz Earle
|
|
settlement
|
|
Debt-related
|
|
Special
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
gain on
sale
|
|
charge
|
|
items
|
|
tax items
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
$
|
1,666.9
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,666.9
|
Cost of
sales
|
|
|
|
652.7
|
|
|
-
|
|
|
5.7
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
647.0
|
Selling, general and
administrative expenses
|
|
|
991.2
|
|
|
0.2
|
|
|
-
|
|
|
-
|
|
|
23.8
|
|
|
-
|
|
|
-
|
|
|
967.2
|
Operating
profit
|
|
|
|
23.0
|
|
|
0.2
|
|
|
5.7
|
|
|
-
|
|
|
23.8
|
|
|
-
|
|
|
-
|
|
|
52.7
|
Income (loss) before
taxes
|
|
|
7.8
|
|
|
0.2
|
|
|
5.7
|
|
|
(46.2)
|
|
|
23.8
|
|
|
5.5
|
|
|
-
|
|
|
(3.2)
|
Income
taxes
|
|
|
|
(704.8)
|
|
|
0.1
|
|
|
-
|
|
|
(6.7)
|
|
|
-
|
|
|
-
|
|
|
664.9
|
|
|
(46.5)
|
Net (loss)
income
|
|
|
$
|
(697.0)
|
|
$
|
0.3
|
|
$
|
5.7
|
|
$
|
(52.9)
|
|
$
|
23.8
|
|
$
|
5.5
|
|
$
|
664.9
|
|
$
|
(49.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
(1.58)
|
|
$
|
-
|
|
$
|
0.01
|
|
$
|
(0.12)
|
|
$
|
0.05
|
|
$
|
0.01
|
|
$
|
1.50
|
|
$
|
(0.11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.8%
|
|
|
-
|
|
|
0.3
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
61.2%
|
SG&A as a % of
revenues
|
|
|
59.5%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1.4)
|
|
|
-
|
|
|
-
|
|
|
58.0%
|
Operating
margin
|
|
1.4%
|
|
|
-
|
|
|
0.3
|
|
|
-
|
|
|
1.4
|
|
|
-
|
|
|
-
|
|
|
3.2%
|
Effective tax
rate
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
34.7
|
|
$
|
(0.6)
|
|
$
|
5.7
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
39.8
|
Europe, Middle East
& Africa
|
|
|
48.1
|
|
|
(1.6)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
46.5
|
North
America
|
|
(27.5)
|
|
|
2.2
|
|
|
-
|
|
|
-
|
|
|
17.6
|
|
|
-
|
|
|
-
|
|
|
(7.7)
|
Asia
Pacific
|
|
9.4
|
|
|
0.2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9.6
|
Global and
other
|
|
(41.7)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6.2
|
|
|
-
|
|
|
-
|
|
|
(35.5)
|
Total
|
|
|
$
|
23.0
|
|
$
|
0.2
|
|
$
|
5.7
|
|
$
|
-
|
|
$
|
23.8
|
|
$
|
-
|
|
$
|
-
|
|
$
|
52.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
4.4%
|
|
|
(0.1)
|
|
|
0.7
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5.0%
|
Europe, Middle East
& Africa
|
|
|
9.6%
|
|
|
(0.3)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9.3%
|
North
America
|
|
(11.9)%
|
|
|
1.0
|
|
|
-
|
|
|
-
|
|
|
7.6
|
|
|
-
|
|
|
-
|
|
|
(3.3)%
|
Asia
Pacific
|
|
6.4%
|
|
|
0.1
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6.6%
|
Global and
other
|
|
-%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-%
|
Total
|
|
|
|
1.4%
|
|
|
-
|
|
|
0.3
|
|
|
-
|
|
|
1.4
|
|
|
-
|
|
|
-
|
|
|
3.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2015
|
|
|
|
|
|
CTI
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
Liz Earle
|
|
settlement
|
|
Debt-related
|
|
Special
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
gain on
sale
|
|
charge
|
|
items
|
|
tax items
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
$
|
5,284.5
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
5,284.5
|
Cost of
sales
|
|
|
|
2,073.4
|
|
|
-
|
|
|
26.6
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,046.8
|
Selling, general and
administrative expenses
|
|
3,133.9
|
|
|
44.8
|
|
|
91.7
|
|
|
-
|
|
|
23.8
|
|
|
-
|
|
|
-
|
|
|
2,973.6
|
Operating
profit
|
|
|
|
77.2
|
|
|
44.8
|
|
|
118.3
|
|
|
-
|
|
|
23.8
|
|
|
-
|
|
|
-
|
|
|
264.1
|
(Loss) income before
taxes
|
|
|
(11.7)
|
|
|
44.8
|
|
|
114.1
|
|
|
(44.9)
|
|
|
23.8
|
|
|
8.0
|
|
|
-
|
|
|
134.1
|
Income
taxes
|
|
|
|
(802.0)
|
|
|
(3.8)
|
|
|
0.8
|
|
|
(6.7)
|
|
|
-
|
|
|
-
|
|
|
693.0
|
|
|
(118.7)
|
Net (loss)
income
|
|
|
$
|
(813.7)
|
|
$
|
41.0
|
|
$
|
114.9
|
|
$
|
(51.6)
|
|
$
|
23.8
|
|
$
|
8.0
|
|
$
|
693.0
|
|
$
|
15.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
(1.84)
|
|
$
|
0.10
|
|
$
|
0.26
|
|
$
|
(0.11)
|
|
$
|
0.06
|
|
$
|
0.02
|
|
$
|
1.57
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.8%
|
|
|
-
|
|
|
0.5
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
61.3%
|
SG&A as a % of
revenues
|
|
|
59.3%
|
|
|
(0.8)
|
|
|
(1.7)
|
|
|
-
|
|
|
(0.5)
|
|
|
-
|
|
|
-
|
|
|
56.3%
|
Operating
margin
|
|
1.5%
|
|
|
0.8
|
|
|
2.2
|
|
|
-
|
|
|
0.5
|
|
|
-
|
|
|
-
|
|
|
5.0%
|
Effective tax
rate
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
55.6
|
|
$
|
2.0
|
|
$
|
118.3
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
175.9
|
Europe, Middle East
& Africa
|
|
|
139.6
|
|
|
4.2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
143.8
|
North
America
|
|
(46.9)
|
|
|
17.0
|
|
|
-
|
|
|
-
|
|
|
17.6
|
|
|
-
|
|
|
-
|
|
|
(12.3)
|
Asia
Pacific
|
|
26.8
|
|
|
10.2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
37.0
|
Global and
other
|
|
(97.9)
|
|
|
11.4
|
|
|
-
|
|
|
-
|
|
|
6.2
|
|
|
-
|
|
|
-
|
|
|
(80.3)
|
Total
|
|
|
$
|
77.2
|
|
$
|
44.8
|
|
$
|
118.3
|
|
$
|
-
|
|
$
|
23.8
|
|
$
|
-
|
|
$
|
-
|
|
$
|
264.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
2.2%
|
|
|
0.1
|
|
|
4.8
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7.1%
|
Europe, Middle East
& Africa
|
|
|
8.7%
|
|
|
0.3
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9.0%
|
North
America
|
|
(6.4)%
|
|
|
2.3
|
|
|
-
|
|
|
-
|
|
|
2.4
|
|
|
-
|
|
|
-
|
|
|
(1.7)%
|
Asia
Pacific
|
|
5.7%
|
|
|
2.2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7.9%
|
Global and
other
|
|
-%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-%
|
Total
|
|
|
|
1.5%
|
|
|
0.8
|
|
|
2.2
|
|
|
-
|
|
|
0.5
|
|
|
-
|
|
|
-
|
|
|
5.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2014
|
|
|
|
|
|
CTI
|
|
|
|
Pension
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
settlement
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
charge
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
$
|
2,138.2
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2,138.2
|
Cost of
sales
|
|
|
|
813.9
|
|
|
-
|
|
|
2.0
|
|
|
-
|
|
|
811.9
|
Selling, general and
administrative expenses
|
|
1,136.4
|
|
|
2.5
|
|
|
-
|
|
|
5.4
|
|
|
1,128.5
|
Operating
profit
|
|
|
|
187.9
|
|
|
2.5
|
|
|
2.0
|
|
|
5.4
|
|
|
197.8
|
Income before
taxes
|
|
|
|
144.4
|
|
|
2.5
|
|
|
2.0
|
|
|
5.4
|
|
|
154.3
|
Income
taxes
|
|
|
|
(52.4)
|
|
|
(0.5)
|
|
|
-
|
|
|
(2.0)
|
|
|
(54.9)
|
Net income
|
|
|
$
|
92.0
|
|
$
|
2.0
|
|
$
|
2.0
|
|
$
|
3.4
|
|
$
|
99.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
0.21
|
|
$
|
0.01
|
|
$
|
0.01
|
|
$
|
0.01
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
61.9%
|
|
|
-
|
|
|
0.1
|
|
|
-
|
|
|
62.0%
|
SG&A as a % of
revenues
|
|
|
53.1%
|
|
|
(0.1)
|
|
|
-
|
|
|
(0.3)
|
|
|
52.8%
|
Operating
margin
|
|
8.8%
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
9.3%
|
Effective tax
rate
|
|
|
|
36.3%
|
|
|
|
|
|
|
|
|
|
|
|
35.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
142.3
|
|
$
|
0.2
|
|
$
|
2.0
|
|
$
|
-
|
|
$
|
144.5
|
Europe, Middle East
& Africa
|
|
|
55.5
|
|
|
(0.4)
|
|
|
-
|
|
|
-
|
|
|
55.1
|
North
America
|
|
(18.3)
|
|
|
1.8
|
|
|
-
|
|
|
4.0
|
|
|
(12.5)
|
Asia
Pacific
|
|
9.0
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9.0
|
Global and
other
|
|
(0.6)
|
|
|
0.9
|
|
|
-
|
|
|
1.4
|
|
|
1.7
|
Total
|
|
|
$
|
187.9
|
|
$
|
2.5
|
|
$
|
2.0
|
|
$
|
5.4
|
|
$
|
197.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
13.3%
|
|
|
-
|
|
|
0.2
|
|
|
-
|
|
|
13.5%
|
Europe, Middle East
& Africa
|
|
|
9.0%
|
|
|
(0.1)
|
|
|
-
|
|
|
-
|
|
|
8.9%
|
North
America
|
|
(6.6)%
|
|
|
0.7
|
|
|
-
|
|
|
1.4
|
|
|
(4.5%)
|
Asia
Pacific
|
|
5.2%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5.2%
|
Global and
other
|
|
-%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-%
|
Total
|
|
|
|
8.8%
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
9.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
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, 2014
|
|
|
|
|
|
CTI
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
FCPA
|
|
settlement
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
accrual
|
|
charge
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
$
|
6,510.4
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
6,510.4
|
Cost of
sales
|
|
|
|
2,580.0
|
|
|
-
|
|
|
119.7
|
|
|
-
|
|
|
-
|
|
|
2,460.3
|
Selling, general and
administrative expenses
|
|
3,700.2
|
|
|
76.4
|
|
|
16.0
|
|
|
46.0
|
|
|
28.9
|
|
|
3,532.9
|
Operating
profit
|
|
|
|
230.2
|
|
|
76.4
|
|
|
135.7
|
|
|
46.0
|
|
|
28.9
|
|
|
517.2
|
Income before
taxes
|
|
|
|
69.1
|
|
|
76.4
|
|
|
189.4
|
|
|
46.0
|
|
|
28.9
|
|
|
409.8
|
Income
taxes
|
|
|
|
(124.4)
|
|
|
(20.8)
|
|
|
(11.9)
|
|
|
-
|
|
|
(10.4)
|
|
|
(167.5)
|
Net (loss)
income
|
|
|
$
|
(55.3)
|
|
$
|
55.6
|
|
$
|
177.5
|
|
$
|
46.0
|
|
$
|
18.5
|
|
$
|
242.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
(0.13)
|
|
$
|
0.13
|
|
|
0.41
|
|
$
|
0.11
|
|
$
|
0.04
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.4%
|
|
|
-
|
|
|
1.8
|
|
|
-
|
|
|
-
|
|
|
62.2%
|
SG&A as a % of
revenues
|
|
|
56.8%
|
|
|
(1.2)
|
|
|
(0.2)
|
|
|
(0.7)
|
|
|
(0.4)
|
|
|
54.3%
|
Operating
margin
|
|
3.5%
|
|
|
1.2
|
|
|
2.1
|
|
|
0.7
|
|
|
0.4
|
|
|
7.9%
|
Effective tax
rate
|
|
|
|
180.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
196.9
|
|
$
|
18.0
|
|
$
|
135.7
|
|
$
|
-
|
|
$
|
-
|
|
$
|
350.6
|
Europe, Middle East
& Africa
|
|
|
199.7
|
|
|
17.2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
216.9
|
North
America
|
|
(54.1)
|
|
|
17.4
|
|
|
-
|
|
|
-
|
|
|
21.4
|
|
|
(15.3)
|
Asia
Pacific
|
|
15.6
|
|
|
2.9
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
18.5
|
Global and
other
|
|
(127.9)
|
|
|
20.9
|
|
|
-
|
|
|
46.0
|
|
|
7.5
|
|
|
(53.5)
|
Total
|
|
|
$
|
230.2
|
|
$
|
76.4
|
|
$
|
135.7
|
|
$
|
46.0
|
|
$
|
28.9
|
|
$
|
517.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
6.2%
|
|
|
0.6
|
|
|
4.3
|
|
|
-
|
|
|
-
|
|
|
11.0%
|
Europe, Middle East
& Africa
|
|
|
10.3%
|
|
|
0.9
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11.2%
|
North
America
|
|
(6.2)%
|
|
|
2.0
|
|
|
-
|
|
|
-
|
|
|
2.4
|
|
|
(1.7)%
|
Asia
Pacific
|
|
3.0%
|
|
|
0.6
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3.6%
|
Global and
other
|
|
-%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-%
|
Total
|
|
|
|
3.5%
|
|
|
1.2
|
|
|
2.1
|
|
|
0.7
|
|
|
0.4
|
|
|
7.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
NON-GAAP IMPACT OF
SPECIAL REVENUE ITEMS AFFECTING YEAR-OVER-YEAR
COMPARISONS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial
|
measures shown, other
related Non-GAAP financial measures we present elsewhere and the
financial measures calculated and reported in accordance with
GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
SEPTEMBER 30, 2015
|
|
|
|
|
|
|
|
Constant $
revenue
|
|
|
|
|
|
|
Year-over-Year
Impacts of:
|
|
|
|
|
Revenue %
change
|
|
C$ revenue %
change
|
|
2014
Brazil
|
|
2015
Brazil
|
|
Liz Earle
|
|
C$ revenue %
change, excluding
special revenue items
|
|
|
|
|
VAT
credits
|
|
IPI tax
|
|
divestiture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Avon
|
|
(22)%
|
|
(2)%
|
|
2 pts
|
|
2 pts
|
|
1 pt
|
|
3%
|
Latin
America
|
|
(26)%
|
|
1%
|
|
4 pts
|
|
4 pts
|
|
-
|
|
9%
|
Brazil
|
|
(42)%
|
|
(10)%
|
|
8 pts
|
|
8 pts
|
|
-
|
|
6%
|
Europe, Middle East
& Africa
|
|
(19)%
|
|
3%
|
|
-
|
|
-
|
|
3 pts
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Margin
|
|
Operating
Margin
|
Total Avon
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Reported
(GAAP)
|
|
60.8%
|
|
61.9%
|
|
(110) bps
|
|
1.4%
|
|
8.8%
|
|
(740) bps
|
Adjusted
(Non-GAAP)
|
|
61.2%
|
|
62.0%
|
|
(80) bps
|
|
3.2%
|
|
9.3%
|
|
(610) bps
|
Impacts
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Brazil IPI
tax
|
|
30 bps
|
|
-
|
|
|
|
120 bps
|
|
-
|
|
|
2014 Brazil VAT
credits
|
|
-
|
|
(70) bps
|
|
|
|
-
|
|
(180) bps
|
|
|
Adjusted, excluding
special revenue items
|
|
61.5%
|
|
61.3%
|
|
20 bps
|
|
4.4%
|
|
7.5%
|
|
(310) bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Margin
|
Latin
America
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
Change
|
Reported
(GAAP)
|
|
|
|
|
|
|
|
4.4%
|
|
13.3%
|
|
(890) bps
|
Adjusted
(Non-GAAP)
|
|
|
|
|
|
|
|
5.0%
|
|
13.5%
|
|
(850) bps
|
Impacts
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Brazil IPI
tax
|
|
|
|
|
|
|
|
220 bps
|
|
-
|
|
|
2014 Brazil VAT
credits
|
|
|
|
|
|
|
|
-
|
|
(350) bps
|
|
|
Adjusted, excluding
special revenue items
|
|
|
|
|
|
|
|
7.2%
|
|
10.0%
|
|
(280) bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Liz Earle has
an immaterial impact on the Adjusted gross margin and Adjusted
operating margin change of Total Avon and Europe, Middle East &
Africa.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refer to the Non-GAAP
Financial Measures schedules for the reconciliation of the Adjusted
Non-GAAP financial measures.
|
Non-GAAP Financial Measures
To supplement our financial results presented in accordance with
GAAP, we disclose 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. We also refer to these adjusted
financial measures as Constant $ items, which are Non-GAAP
financial measures. We believe these measures provide investors an
additional perspective on trends. To exclude the impact of changes
due to the translation of foreign currencies into U.S. dollars, we
calculate current-year results and prior-year results at a constant
exchange rate. Foreign currency impact is determined as the
difference between actual growth rates and constant-currency growth
rates.
We also present gross margin, selling, general and
administrative expenses as a percentage of revenue, total and net
global expenses, operating profit, operating margin, net income,
diluted earnings per share and effective tax rate on a Non-GAAP
basis. The discussion of our segments presents operating profit and
operating margin on a Non-GAAP basis. We refer to these Non-GAAP
financial measures as "Adjusted." We have provided a quantitative
reconciliation of the difference between the Non-GAAP financial
measures and the financial measures calculated and reported in
accordance with GAAP. The Company uses the Non-GAAP financial
measures to evaluate its operating performance and believes that it
is meaningful for investors to be made aware of, on a
period-to-period basis, the impacts of 1) costs to implement
("CTI") restructuring initiatives, 2) costs and charges related to
the devaluations of Venezuelan currency in February 2015 and March
2014, combined with being designated as a highly
inflationary economy ("Venezuelan special items"), 3) the
additional $46 million accrual
recorded in the first quarter of 2014 for the settlements related
to the Foreign Corrupt Practices Act ("FCPA") investigations ("FCPA
accrual"), 4) the settlement charges associated with the U.S.
pension plan ("Pension settlement charge"), 5) costs and charges
related to the extinguishment of debt and the termination of the
Company's previous $1 billion
revolving credit facility ("Debt-related items"), 6) the gain on
sale of Liz Earle ("Liz Earle gain on sale") and, 7) the non-cash
income tax adjustments associated with the Company's deferred tax
assets recorded in 2015 ("Special tax items"). 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. 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 Venezuelan special items include the impact on the
Consolidated Statements of Operations in 2015 and 2014 caused by
the devaluations of Venezuelan currency on monetary assets and
liabilities, such as cash, receivables and payables; deferred tax
assets and liabilities; and non-monetary assets, such as
inventories. For non-monetary assets, the Venezuelan special items
include the earnings impact caused by the difference between the
historical U.S. dollar cost of the assets at the previous exchange
rate and the revised exchange rate. In 2015 and 2014, the
Venezuelan special items also include adjustments of approximately
$11 million and approximately
$116 million, respectively, to
reflect certain non-monetary assets at their net realizable value.
In 2015, the Venezuelan special items also include an impairment
charge of approximately $90 million
to reflect the write-down of the long-lived assets to their
estimated fair value. In 2014, the devaluation was caused as a
result of moving from the official exchange rate of 6.30 to the
SICAD II exchange rate of approximately 50, and in 2015, the
devaluation was caused as a result of moving from the SICAD II
exchange rate of approximately 50 to the SIMADI exchange rate of
approximately 170.
The Pension settlement charge includes the impact on the
Consolidated Statements of Operations in the third quarter of 2015
and the second and third quarters of 2014 associated with the
payments made to former employees who were vested and participated
in the U.S. pension plan. Such payments fully settle the Company's
pension plan obligation to those participants who elected to
receive such payment.
The Debt-related items include the impact on the Consolidated
Statements of Operations in the third quarter of 2015 of the loss
on extinguishment of debt caused by the make-whole premium and the
write-off of debt issuance costs and discounts associated with the
prepayment of the Company's 2.375% Notes. The Debt-related items
also include the impact during the second quarter of 2015 on other
expense, net in the Consolidated Statements of Operations of
$2.5 million associated with the
write-off of issuance costs related to the Company's previous
$1 billion revolving credit
facility.
The Liz Earle gain on sale includes the impact during 2015 on
the Consolidated Statements of Operations due to the gain on sale
of Liz Earle.
The Special tax items include the impact during 2015 on income
taxes in the Consolidated Statements of Operations due to a
non-cash income tax charge in the first quarter of 2015 and a
non-cash income tax benefit in the second quarter of 2015, each
associated with valuation allowances, to adjust the Company's U.S.
deferred tax assets to an amount that was "more likely than not" to
be realized. In the first quarter of 2015 the additional valuation
allowance was due to the continued strengthening of the U.S. dollar
against currencies of some of the Company's key markets, and in the
second quarter of 2015 the Company released a portion of its
valuation allowance due to the weakening of the U.S. dollar against
currencies of some of its key markets. The Special tax items also
include the impact during the third quarter of 2015 on income taxes
in the Consolidated Statements of Operations due to a non-cash
income tax charge as a result of establishing a valuation allowance
for the full amount of the Company's U.S. deferred tax assets due
to the impact of the continued strengthening of the U.S. dollar
against currencies of some of its key markets and its associated
effect on the Company's tax planning strategies. Additionally, the
Special tax items includes the impact during the third quarter of
2015 on income taxes in the Consolidated Statements of Operations
due to a non-cash income tax charge associated with valuation
allowances, to adjust certain non-U.S. deferred tax assets to an
amount that is "more likely than not" to be realized. The non-U.S.
valuation allowance included an adjustment associated with
Russia, which was primarily the
result of lower earnings, which were significantly impacted by
foreign exchange losses on working capital balances.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/avon-reports-third-quarter-2015-results-300172125.html
SOURCE Avon Products, Inc.