LONDON, Aug. 3, 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 June 30, 2017.
"Second-quarter performance fell below our expectations as we
cycled a strong quarter last year. As previously guided, we
expect the second half to yield a stronger performance based on our
exciting product innovation plans and other initiatives to increase
Representative activity," said Sheri
McCoy, Chief Executive Officer, Avon Products, Inc. "We
continue to implement the strategies defined in our Transformation
Plan to better meet the needs of our Representatives and continue
progress towards delivering sustainable profitable growth in the
longer term."
Highlights for Second Quarter of 2017:
- Revenue decreased 3% to $1.4
Billion; Decreased 4% in constant dollars1
- Active Representatives and Ending Representatives, both from
Reportable Segments, declined 3% and 2%, respectively
- Operating Margin decreased 430 bps to 2.3%;
Adjusted1 Operating Margin decreased 230 bps to
5.0%
- Diluted Loss Per Share From Continuing Operations of
$0.12; Adjusted Diluted Loss Per
Share From Continuing Operations of $0.03
- Foreign currency favorably impacted both Diluted Loss Per Share
and Adjusted Diluted Loss Per Share by an estimated $0.02 per share
- The Company is on track to achieve its 2017 cost savings target
of $230 million
Second-Quarter 2017 Income Statement Review (compared with
second-quarter 2016)
- Total revenue for Avon Products, Inc. decreased 3% to
$1.4 billion and decreased 4% in
constant dollars.
- From reportable segments:
-
- Total revenue decreased 3% to $1.4
billion and decreased 4% in constant dollars.
- Active Representatives declined 3% with decreases in all
segments.
- Average order decreased 1% with growth in South Latin America offset by declines in
North Latin America and
Europe, Middle East & Africa.
- Ending Representatives declined 2% primarily due to declines in
Asia Pacific and South Latin America.
- Gross margin and Adjusted gross margin each increased
180 basis points to 62.4%, primarily due to the favorable net
impact of price/mix and the net favorable impact of foreign
currency transaction gains and foreign currency translation.
- Operating margin was 2.3% in the quarter, down 430 basis
points, while Adjusted operating margin was 5.0%, down 230 basis
points. The operating margin comparison was unfavorably impacted by
a loss contingency related to a non-U.S. pension plan and higher
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 the net
impact of the constant-dollar revenue decline causing deleverage
of the Company's fixed expenses; higher bad debt expense,
primarily in Brazil; higher
Representative, sales leader and field expenses; higher
transportation costs, primarily in Russia; and planned investments in advertising
related to product launches. These factors were partially offset by
approximately 140 basis points of benefit from foreign exchange on
operating margin and approximately 130 basis points of benefit
from foreign exchange on Adjusted operating margin, the favorable
net impact of price/mix, and lower incentive compensation plan
expenses.
- The provision for income taxes was $34 million, compared with $36 million for the second quarter of 2016. On an
Adjusted basis, the provision for income taxes was $34 million, compared with $44 million for the second quarter of 2016.
- Loss from continuing operations, net of tax was
$46 million, or a loss of
$0.12 per diluted share, compared
with income of $36 million, or income
of $0.07 per diluted share, for the
second quarter of 2016. Adjusted loss from continuing operations,
net of tax was $8 million, or a loss
of $0.03 per diluted share, compared
with income of $37 million, or income
of $0.07 per diluted share, for the
second quarter of 2016. Earnings allocated to convertible preferred
stock had a negative $0.01 impact on
Diluted earnings per share and Adjusted diluted earnings per share,
in the second quarter of both 2017 and 2016.
- Loss from discontinued operations, net of tax in the
prior year of $3 million, or a loss
of $0.01 per diluted share, was
associated with the previously separated North America business.
Adjustments to Second-Quarter 2017 GAAP Results to Arrive at
Adjusted Results
During the second quarter of 2017, the following adjustments
were made to GAAP results to arrive at Adjusted results and, in
total, increased Diluted earnings per share from continuing
operations by $0.09:
- The Company recorded costs to implement restructuring within
operating profit of approximately $20
million before and after tax, primarily related to the
Transformation Plan.
- The Company recorded an approximate $18
million charge for a loss contingency related to a non-U.S.
pension plan, for which an amendment to the plan that occurred in a
prior year may not have been appropriately implemented.
THREE MONTHS ENDED
JUNE 30, 2017
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SEGMENT
RESULTS
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($ 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 2Q16
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% var.
vs 2Q16
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% var.
vs 2Q16
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% var.
vs 2Q16
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% var.
vs 2Q16
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% var.
vs 2Q16
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% var.
vs 2Q16
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Europe, Middle East
&
Africa
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$
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494.6
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(5)
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%
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(6)
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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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(8)
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%
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2
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%
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(1)
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%
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South Latin
America
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558.1
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4
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—
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(2)
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2
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(5)
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5
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(2)
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North Latin
America
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207.8
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(7)
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(5)
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(2)
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(3)
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(3)
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(2)
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1
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Asia
Pacific
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124.7
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(11)
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(7)
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(7)
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—
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(3)
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(4)
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(7)
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Total from
reportable
segments
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1,385.2
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(3)
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(4)
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(3)
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(1)
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(5)
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1
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(2)
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Other operating
segments and
business activities
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10.7
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(17)
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(17)
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(100)
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*
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(78)
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*
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(100)
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Total
revenue
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$
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1,395.9
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(3)
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%
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(4)
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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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(6)
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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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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
2Q16
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Change in
C$ vs
2Q16
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Segment
profit/margin
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Europe, Middle East
& Africa
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$
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82.0
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16.6
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%
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60 bps
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30 bps
|
South Latin
America
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45.2
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8.1
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(330)
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(310)
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North Latin
America
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17.8
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8.6
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(570)
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(560)
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Asia
Pacific
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8.2
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6.6
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(440)
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(390)
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Total from
reportable segments
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153.2
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11.1
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(240)
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(240)
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Other operating
segments and business
activities
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1.6
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Unallocated global
expenses
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(84.7)
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CTI restructuring
initiatives
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(20.3)
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Loss
contingency
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(18.2)
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Operating
profit
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$
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31.6
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2.3
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%
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(430)
bps
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(450)
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.
Second-Quarter 2017 Segment Review (compared with
second-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.
- Europe, Middle East & Africa revenue was down 5%, or 6% in
constant dollars, impacted by declines in Active Representatives
and average order.
-
- Russia revenue was up
7%, or down 7% in constant dollars, driven by declines in average
order and Active Representatives.
- U.K. revenue was down 20%, or 10% in constant dollars,
due to declines in Active Representatives and average order.
- South Latin America
revenue was up 4%, or relatively flat in constant dollars, driven
by higher average order, offset by a decrease in Active
Representatives.
-
- Brazil revenue was up
7%, or down 2% in constant dollars, primarily driven by a decrease
in Active Representatives.
- North Latin America
revenue was down 7%, or 5% in constant dollars, driven by lower
average order and a decline in Active Representatives.
-
- Mexico revenue was down
9%, or 6% in constant dollars, driven by declines in Active
Representatives and average order.
- Asia Pacific revenue
was down 11%, or 7% in constant dollars, primarily driven by a
decrease in Active Representatives.
-
- Philippines revenue was
down 10%, or 3% in constant dollars, primarily driven by a decline
in Active Representatives.
Second-Quarter 2017 Cash Flow Review
- Net cash provided by operating activities of continuing
operations was $11 million for
the six months ended June 30, 2017,
compared with $130 million net cash
used in the same period in 2016. The $141
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) and the 2016 contribution to
the U.S. pension plan of $20
million.
- Net cash used by investing activities of continuing
operations was $40 million for
the six months ended June 30, 2017,
compared with $44 million in the same
period in 2016.
- Net cash used by financing activities of continuing
operations was $13 million for
the six months ended June 30, 2017,
as compared to net cash provided of $413
million in the same period in 2016. The $426 million decrease was primarily due to the
net proceeds related to the issuance of Series C Preferred Stock
received in the prior year.
Transformation Plan
The Company is in year two of its three-year transformation plan
focused on three pillars:
- Reduce costs;
- Improve financial resilience; and
- Invest in growth
The Company expects this plan to deliver on its long-term goals
of mid-single-digit constant-dollar revenue growth and low
double-digit operating margin.
Halfway through the plan period, the Company has seen solid
progress against its first two pillars. In 2016, the Company
generated approximately $120 million
of cost savings and improved financial resilience by significantly
strengthening the balance sheet as it lowered debt by approximately
$260 million and extended its
maturity profile.
In 2017, the Company's cost savings target is $230 million, which includes both run-rate
savings from 2016, along with in-year savings from current year
initiatives. Based on savings realized through the first half of
2017, the Company believes it is on track to achieve this target.
These savings have helped offset the impact of inflation.
With that work well underway, the Company is now firmly focused
on the third pillar, to invest in growth, implementing the
strategies that position it to maximize the power of Avon and drive profitable growth. The Company
has defined the focus areas, evaluated detailed plans, and has
started putting in place the key enablers to drive the roadmap for
growth, enabling Avon to become
the leading social beauty company. The key enablers
include:
- Delivering a competitive, seamless experience for the
Representative;
- Ensuring she has the right product to sell;
- Ensuring that the Company is playing and winning in the right
geographies.
The investment in growth includes spending related to media and
social selling as well as spending related to service model
evolution and information technology, primarily capital
expenditures, which will be aimed at improving the overall
Representative experience.
Full-Year 2017 Outlook
The following guidance is given on a Non-GAAP basis. The Company
is not able to provide a reconciliation of the Non-GAAP financial
measures to GAAP because certain items that impact these measures,
such as the timing and amount of charges related to our
Transformation Plan and the impact of foreign currency
fluctuations, which could have a material impact on GAAP results
for the guidance period, have not yet occurred and are not possible
to estimate at this time.
As previously guided in May, for full-year 2017, the Company
expects constant-dollar revenue growth in the low single-digits,
Adjusted operating margin expansion of 100 to 140 bps over the
prior year and free cash flow to be slightly positive including the
expected $65 million in increased
capital expenditures. The Company defines free cash flow as net
cash provided (used) by operating activities of continuing
operations less capital expenditures. These expectations are based
on forward foreign exchange rates, which imply modest tailwinds
from currency and are underpinned by Active Representative growth
in the range of 0% to 1% in the second half of the year.
Based on second-quarter performance, the Company now expects to
be at the low end of the guidance ranges provided. Revenue growth
is expected to be driven by the Company's Active Representative
growth target of 0%-1% in the second half, supported by its
innovation pipeline and the expected impact of ongoing
Transformation Plan initiatives. This growth, along with continued
cost savings initiatives, is expected to support operating margin
expansion. The Company's incremental investments in capital,
previously guided at $65 million, are
now expected to be approximately $20
million lower, which will increase free cash flow.
Conference call
Avon will conduct a conference
call at 9:00 a.m. Eastern Time today
to discuss its quarterly results. The dial-in number for the call
is (800) 843-2086 in the U.S. or (706) 643-1815 from non-U.S.
locations (conference ID number: 43095216). The call and related
slide presentation will be webcast live at
www.avoninvestor.com and can be accessed or downloaded from
that site for a period of one year.
About Avon Products, Inc.
Avon is the Company that for
130 years has proudly stood for beauty, innovation, optimism and,
above all, for women. Avon
products include well-recognized and beloved brands such as ANEW,
Avon Color, Avon Care, Skin-So-Soft, and Advance Techniques sold
through approximately 6 million active independent Avon Sales
Representatives. Learn more about Avon and its products at
www.avoncompany.com.
Footnotes
1 "Adjusted" items refer to financial measures that
are derived from measures calculated in accordance with generally
accepted accounting principles in the
United States ("GAAP"), but which have been adjusted to
exclude certain items. Other Adjusted financial measures that the
Company refers to include Constant dollar ("C$") 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)
|
|
|
|
Three Months
Ended
|
|
Percent
Change
|
|
Six Months
Ended
|
|
Percent
Change
|
|
|
June
30
|
|
|
|
June
30
|
|
|
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|
|
Net sales
|
|
$
|
1,353.5
|
|
|
$
|
1,399.5
|
|
|
(3)
|
%
|
|
$
|
2,651.6
|
|
|
$
|
2,679.5
|
|
|
(1)
|
%
|
Other
revenue
|
|
42.4
|
|
|
34.8
|
|
|
|
|
77.4
|
|
|
61.3
|
|
|
|
Total
revenue
|
|
1,395.9
|
|
|
1,434.3
|
|
|
(3)
|
%
|
|
2,729.0
|
|
|
2,740.8
|
|
|
—
|
%
|
Cost of
sales
|
|
525.0
|
|
|
565.0
|
|
|
|
|
1,042.1
|
|
|
1,083.8
|
|
|
|
Selling, general and
administrative expenses
|
|
839.3
|
|
|
774.2
|
|
|
|
|
1,626.6
|
|
|
1,554.1
|
|
|
|
Operating
profit
|
|
31.6
|
|
|
95.1
|
|
|
(67)
|
%
|
|
60.3
|
|
|
102.9
|
|
|
(41)
|
%
|
Interest
expense
|
|
36.1
|
|
|
33.2
|
|
|
|
|
71.2
|
|
|
65.9
|
|
|
|
Interest
income
|
|
(3.1)
|
|
|
(5.3)
|
|
|
|
|
(7.8)
|
|
|
(9.3)
|
|
|
|
Other expense
(income), net
|
|
10.8
|
|
|
(4.7)
|
|
|
|
|
15.8
|
|
|
132.5
|
|
|
|
Total other
expenses
|
|
43.8
|
|
|
23.2
|
|
|
|
|
79.2
|
|
|
189.1
|
|
|
|
Income (loss) from
continuing operations, before taxes
|
|
(12.2)
|
|
|
71.9
|
|
|
*
|
|
(18.9)
|
|
|
(86.2)
|
|
|
78
|
%
|
Income
taxes
|
|
(33.6)
|
|
|
(36.1)
|
|
|
|
|
(63.4)
|
|
|
(33.8)
|
|
|
|
(Loss) income from
continuing operations, net of tax
|
|
(45.8)
|
|
|
35.8
|
|
|
*
|
|
(82.3)
|
|
|
(120.0)
|
|
|
31
|
%
|
Loss from
discontinued operations, net of tax
|
|
—
|
|
|
(2.6)
|
|
|
|
|
—
|
|
|
(12.2)
|
|
|
|
Net (loss)
income
|
|
(45.8)
|
|
|
33.2
|
|
|
|
|
(82.3)
|
|
|
(132.2)
|
|
|
|
Net loss (income)
attributable to noncontrolling interests
|
|
0.3
|
|
|
(0.2)
|
|
|
|
|
0.3
|
|
|
(0.7)
|
|
|
|
Net (loss) income
attributable to Avon
|
|
$
|
(45.5)
|
|
|
$
|
33.0
|
|
|
*
|
|
$
|
(82.0)
|
|
|
$
|
(132.9)
|
|
|
38
|
%
|
(Loss) earnings per
share:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from
continuing operations
|
|
$
|
(0.12)
|
|
|
$
|
0.07
|
|
|
*
|
|
$
|
(0.21)
|
|
|
$
|
(0.29)
|
|
|
28
|
%
|
Basic EPS from
discontinued operations
|
|
—
|
|
|
(0.01)
|
|
|
|
|
—
|
|
|
(0.03)
|
|
|
|
Basic EPS
attributable to Avon
|
|
$
|
(0.12)
|
|
|
$
|
0.06
|
|
|
*
|
|
$
|
(0.21)
|
|
|
$
|
(0.32)
|
|
|
34
|
%
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(0.12)
|
|
|
$
|
0.07
|
|
|
*
|
|
$
|
(0.21)
|
|
|
$
|
(0.29)
|
|
|
28
|
%
|
Diluted EPS from
discontinued operations
|
|
—
|
|
|
(0.01)
|
|
|
|
|
—
|
|
|
(0.03)
|
|
|
|
Diluted EPS
attributable to Avon
|
|
$
|
(0.12)
|
|
|
$
|
0.06
|
|
|
*
|
|
$
|
(0.21)
|
|
|
$
|
(0.32)
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
439.9
|
|
|
436.9
|
|
|
|
|
439.3
|
|
|
436.4
|
|
|
|
Diluted
|
|
439.9
|
|
|
436.9
|
|
|
|
|
439.3
|
|
|
436.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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 (loss) allocable to common shares used
in the basic and diluted earnings (loss) per share calculation was
($50.6) and $26.7 for the three months ended June 30, 2017 and
2016, respectively. Net loss allocable to common shares used in the
basic and diluted loss per share calculation was ($92.4) and
($138.4) for the six months ended June 30, 2017 and 2016,
respectively.
|
AVON PRODUCTS,
INC.
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
(In
millions)
|
|
|
|
June
30
|
|
December
31
|
|
|
2017
|
|
2016
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
633.8
|
|
|
$
|
654.4
|
|
Accounts receivable,
net
|
|
450.0
|
|
|
458.9
|
|
Inventories
|
|
636.9
|
|
|
586.4
|
|
Prepaid expenses and
other
|
|
294.0
|
|
|
291.3
|
|
Current assets of
discontinued operations
|
|
0.5
|
|
|
1.3
|
|
Total current
assets
|
|
2,015.2
|
|
|
1,992.3
|
|
Property, plant and
equipment, at cost
|
|
1,491.7
|
|
|
1,424.1
|
|
Less accumulated
depreciation
|
|
(770.0)
|
|
|
(712.8)
|
|
Property, plant and
equipment, net
|
|
721.7
|
|
|
711.3
|
|
Goodwill
|
|
94.6
|
|
|
93.6
|
|
Other
assets
|
|
636.0
|
|
|
621.7
|
|
Total
assets
|
|
$
|
3,467.5
|
|
|
$
|
3,418.9
|
|
Liabilities,
Series C Convertible Preferred Stock and Shareholders'
Deficit
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Debt maturing within
one year
|
|
$
|
13.0
|
|
|
$
|
18.1
|
|
Accounts
payable
|
|
752.4
|
|
|
768.1
|
|
Accrued
compensation
|
|
134.5
|
|
|
129.2
|
|
Other accrued
liabilities
|
|
415.5
|
|
|
401.9
|
|
Sales and taxes other
than income
|
|
152.5
|
|
|
147.0
|
|
Income
taxes
|
|
15.8
|
|
|
10.7
|
|
Current liabilities
of discontinued operations
|
|
3.8
|
|
|
10.7
|
|
Total current
liabilities
|
|
1,487.5
|
|
|
1,485.7
|
|
Long-term
debt
|
|
1,873.8
|
|
|
1,875.8
|
|
Employee benefit
plans
|
|
172.6
|
|
|
164.5
|
|
Long-term income
taxes
|
|
75.3
|
|
|
78.6
|
|
Other
liabilities
|
|
243.6
|
|
|
205.8
|
|
Total
liabilities
|
|
3,852.8
|
|
|
3,810.4
|
|
|
|
|
|
|
Series C convertible
preferred stock
|
|
456.1
|
|
|
444.7
|
|
|
|
|
|
|
Shareholders'
Deficit
|
|
|
|
|
Common
stock
|
|
189.6
|
|
|
188.8
|
|
Additional paid-in
capital
|
|
2,289.2
|
|
|
2,273.9
|
|
Retained
earnings
|
|
2,228.8
|
|
|
2,322.2
|
|
Accumulated other
comprehensive loss
|
|
(954.6)
|
|
|
(1,033.2)
|
|
Treasury stock, at
cost
|
|
(4,606.1)
|
|
|
(4,599.7)
|
|
Total Avon
shareholders' deficit
|
|
(853.1)
|
|
|
(848.0)
|
|
Noncontrolling
interests
|
|
11.7
|
|
|
11.8
|
|
Total shareholders'
deficit
|
|
(841.4)
|
|
|
(836.2)
|
|
Total liabilities,
series C convertible preferred stock and shareholders'
deficit
|
|
$
|
3,467.5
|
|
|
$
|
3,418.9
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In
millions)
|
|
|
|
Six Months
Ended
|
|
|
June
30
|
|
|
2017
|
|
2016
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net loss
|
|
$
|
(82.3)
|
|
|
$
|
(132.2)
|
|
Loss from
discontinued operations, net of tax
|
|
—
|
|
|
12.2
|
|
Loss from continuing
operations, net of tax
|
|
$
|
(82.3)
|
|
|
$
|
(120.0)
|
|
Adjustments to
reconcile net loss to net cash provided (used) by operating
activities:
|
|
|
|
|
Depreciation
|
|
41.7
|
|
|
41.7
|
|
Amortization
|
|
15.0
|
|
|
14.7
|
|
Provision for
doubtful accounts
|
|
113.0
|
|
|
73.8
|
|
Provision for
obsolescence
|
|
16.5
|
|
|
18.5
|
|
Share-based
compensation
|
|
16.2
|
|
|
16.0
|
|
Foreign exchange
losses
|
|
8.5
|
|
|
—
|
|
Deferred income
taxes
|
|
12.0
|
|
|
(15.0)
|
|
Loss on
deconsolidation of Venezuela
|
|
—
|
|
|
120.5
|
|
Other
|
|
16.1
|
|
|
1.7
|
|
Changes in assets and
liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(92.0)
|
|
|
(90.4)
|
|
Inventories
|
|
(36.1)
|
|
|
(69.6)
|
|
Prepaid expenses and
other
|
|
14.2
|
|
|
2.3
|
|
Accounts payable and
accrued liabilities
|
|
(53.2)
|
|
|
(65.5)
|
|
Income and other
taxes
|
|
(5.0)
|
|
|
(24.2)
|
|
Noncurrent assets and
liabilities
|
|
26.6
|
|
|
(34.7)
|
|
Net cash provided
(used) by operating activities of continuing
operations
|
|
11.2
|
|
|
(130.2)
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
Capital
expenditures
|
|
(43.0)
|
|
|
(42.7)
|
|
Disposal of
assets
|
|
2.7
|
|
|
1.9
|
|
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
|
|
(40.4)
|
|
|
(43.7)
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
Debt, net (maturities
of three months or less)
|
|
(4.4)
|
|
|
(11.6)
|
|
Proceeds from
debt
|
|
—
|
|
|
8.8
|
|
Repayment of
debt
|
|
(2.0)
|
|
|
(6.2)
|
|
Repurchase of common
stock
|
|
(6.4)
|
|
|
(3.7)
|
|
Net proceeds from the
sale of series C convertible preferred stock
|
|
—
|
|
|
426.3
|
|
Other financing
activities
|
|
(0.2)
|
|
|
(1.0)
|
|
Net cash (used)
provided by financing activities of continuing
operations
|
|
(13.0)
|
|
|
412.6
|
|
Cash Flows from
Discontinued Operations
|
|
|
|
|
Net cash used by
operating activities of discontinued operations
|
|
(6.4)
|
|
|
(65.9)
|
|
Net cash used by
investing activities of discontinued operations
|
|
—
|
|
|
(96.7)
|
|
Net cash used by
discontinued operations
|
|
(6.4)
|
|
|
(162.6)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
28.0
|
|
|
(19.3)
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(20.6)
|
|
|
56.8
|
|
Cash and cash
equivalents at beginning of year(1)
|
|
654.4
|
|
|
684.7
|
|
Cash and cash
equivalents at end of period
|
|
$
|
633.8
|
|
|
$
|
741.5
|
|
|
(1) Includes cash and cash
equivalents of discontinued operations of $(2.2) at the beginning
of the year in 2016.
|
AVON PRODUCTS,
INC.
SUPPLEMENTAL
SCHEDULE
SEGMENT
PERFORMANCE METRICS
(Unaudited)
(In
millions)
|
|
SIX MONTHS ENDED JUNE
30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Active
Representatives
|
|
Average
Order
C$
|
|
Units
Sold
|
|
Price/
Mix C$
|
|
Ending
Representatives
|
|
US$
|
|
C$
|
|
|
|
|
|
Revenue &
Drivers
|
|
|
% var.
vs 1H16
|
|
% var.
vs 1H16
|
|
% var.
vs 1H16
|
|
% var.
vs 1H16
|
|
% var.
vs 1H16
|
|
% var.
vs 1H16
|
|
% var.
vs 1H16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe, Middle East
&
Africa
|
$
|
1,002.1
|
|
|
(4)
|
%
|
|
(5)
|
%
|
|
(3)
|
%
|
|
(2)
|
%
|
|
(11)
|
%
|
|
6
|
%
|
|
(1)
|
%
|
South Latin
America
|
1,057.3
|
|
|
10
|
|
|
1
|
|
|
(2)
|
|
|
3
|
|
|
(3)
|
|
|
4
|
|
|
(2)
|
|
North Latin
America
|
401.0
|
|
|
(7)
|
|
|
(1)
|
|
|
(1)
|
|
|
—
|
|
|
(2)
|
|
|
1
|
|
|
1
|
|
Asia
Pacific
|
248.9
|
|
|
(9)
|
|
|
(6)
|
|
|
(8)
|
|
|
2
|
|
|
(3)
|
|
|
(3)
|
|
|
(7)
|
|
Total from
reportable
segments
|
2,709.3
|
|
|
—
|
|
|
(2)
|
|
|
(3)
|
|
|
1
|
|
|
(6)
|
|
|
4
|
|
|
(2)
|
|
Other operating
segments and
business activities
|
19.7
|
|
|
(41)
|
|
|
(19)
|
|
|
(100)
|
|
|
*
|
|
(95)
|
|
*
|
|
(100)
|
|
Total
revenue
|
$
|
2,729.0
|
|
|
—
|
%
|
|
(3)
|
%
|
|
(4)
|
%
|
|
1
|
%
|
|
(6)
|
%
|
|
3
|
%
|
|
(2)
|
%
|
Operating
Profit/Margin
|
|
2017 Operating
Profit US$
|
|
2017 Operating
Margin US$
|
|
Change in
US$ vs
1H16
|
|
Change in
C$ vs
1H16
|
|
|
|
|
|
|
|
|
|
Segment
profit/margin
|
|
|
|
|
|
|
|
|
Europe, Middle East
& Africa
|
|
$
|
156.6
|
|
|
15.6
|
%
|
|
100 bps
|
|
80 bps
|
South Latin
America
|
|
58.5
|
|
|
5.5
|
|
|
(320)
|
|
(290)
|
North Latin
America
|
|
38.8
|
|
|
9.7
|
|
|
(440)
|
|
(430)
|
Asia
Pacific
|
|
21.1
|
|
|
8.5
|
|
|
(250)
|
|
(210)
|
Total from
reportable segments
|
|
275.0
|
|
|
10.2
|
|
|
(190)
|
|
(170)
|
Other operating
segments and business
activities
|
|
2.8
|
|
|
|
|
|
|
|
Unallocated global
expenses
|
|
(169.0)
|
|
|
|
|
|
|
|
CTI restructuring
initiatives
|
|
(30.3)
|
|
|
|
|
|
|
|
Loss
contingency
|
|
(18.2)
|
|
|
|
|
|
|
|
Operating
profit
|
|
$
|
60.3
|
|
|
2.2
|
%
|
|
(160)
bps
|
|
(150)
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$)
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
Three Months
Ended
June 30
|
|
US$
|
|
C$
|
|
|
2017
|
|
2016
|
|
% var. vs
2Q16
|
|
% var. vs
2Q16
|
Beauty:
|
|
|
|
|
|
|
|
|
Skincare
|
|
$
|
399.8
|
|
|
$
|
417.2
|
|
|
(4)%
|
|
(6)%
|
Fragrance
|
|
368.2
|
|
|
360.8
|
|
|
2
|
|
1
|
Color
|
|
236.3
|
|
|
254.1
|
|
|
(7)
|
|
(8)
|
Total
Beauty
|
|
1,004.3
|
|
|
1,032.1
|
|
|
(3)
|
|
(4)
|
Fashion &
Home:
|
|
|
|
|
|
|
|
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
202.8
|
|
|
216.8
|
|
|
(6)
|
|
(6)
|
Home (gift & decorative products/housewares/entertainment & leisure/
children's/nutrition)
|
|
146.4
|
|
|
149.0
|
|
|
(2)
|
|
(2)
|
Total Fashion &
Home
|
|
349.2
|
|
|
365.8
|
|
|
(5)
|
|
(5)
|
Net sales from
reportable segments
|
|
1,353.5
|
|
|
1,397.9
|
|
|
(3)
|
|
(4)
|
Other revenue from
reportable segments
|
|
31.7
|
|
|
23.4
|
|
|
35
|
|
34
|
Total revenue from
reportable segments
|
|
1,385.2
|
|
|
1,421.3
|
|
|
(3)
|
|
(4)
|
Total revenue from
Other operating segments and business activities
|
|
10.7
|
|
|
13.0
|
|
|
(18)
|
|
(18)
|
Total
revenue
|
|
$
|
1,395.9
|
|
|
$
|
1,434.3
|
|
|
(3)
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CATEGORY SALES
FROM REPORTABLE SEGMENTS (US$)
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
Six Months
Ended
June 30
|
|
US$
|
|
C$
|
|
|
2017
|
|
2016
|
|
% var. vs
1H16
|
|
% var. vs
1H16
|
Beauty:
|
|
|
|
|
|
|
|
|
Skincare
|
|
$
|
784.9
|
|
|
$
|
779.2
|
|
|
1%
|
|
(3)%
|
Fragrance
|
|
711.5
|
|
|
692.0
|
|
|
3
|
|
1
|
Color
|
|
478.0
|
|
|
499.8
|
|
|
(4)
|
|
(7)
|
Total
Beauty
|
|
1,974.4
|
|
|
1,971.0
|
|
|
—
|
|
(3)
|
Fashion &
Home:
|
|
|
|
|
|
|
|
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
396.6
|
|
|
413.1
|
|
|
(4)
|
|
(5)
|
Home (gift & decorative products/housewares/entertainment & leisure/
children's/nutrition)
|
|
280.5
|
|
|
278.2
|
|
|
1
|
|
(1)
|
Total Fashion &
Home
|
|
677.1
|
|
|
691.3
|
|
|
(2)
|
|
(3)
|
Net sales from
reportable segments
|
|
2,651.5
|
|
|
2,662.3
|
|
|
—
|
|
(3)
|
Net sales from Other
operating segments and business activities
|
|
57.8
|
|
|
45.1
|
|
|
28
|
|
25
|
Net sales
|
|
2,709.3
|
|
|
2,707.4
|
|
|
—
|
|
(2)
|
Other
revenue
|
|
19.7
|
|
|
33.4
|
|
|
(41)
|
|
(19)
|
Total
revenue
|
|
$
|
2,729.0
|
|
|
$
|
2,740.8
|
|
|
—
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
JUNE 30, 2017
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Loss
contingency
|
|
Adjusted
(Non-GAAP)
|
Total
revenue
|
|
$
|
1,395.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,395.9
|
|
Cost of
sales
|
|
525.0
|
|
|
—
|
|
|
—
|
|
|
525.0
|
|
Selling, general and
administrative expenses
|
|
839.3
|
|
|
20.3
|
|
|
18.2
|
|
|
800.8
|
|
Operating
profit
|
|
31.6
|
|
|
20.3
|
|
|
18.2
|
|
|
70.1
|
|
Loss from continuing
operations, before taxes
|
|
(12.2)
|
|
|
20.3
|
|
|
18.2
|
|
|
26.3
|
|
Income
taxes
|
|
(33.6)
|
|
|
(0.8)
|
|
|
—
|
|
|
(34.4)
|
|
Loss from continuing
operations, net of tax
|
|
$
|
(45.8)
|
|
|
$
|
19.5
|
|
|
$
|
18.2
|
|
|
$
|
(8.1)
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(0.12)
|
|
|
|
|
|
|
$
|
(0.03)
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
62.4
|
%
|
|
—
|
|
|
—
|
|
|
62.4
|
%
|
SG&A as a % of
revenues
|
|
60.1
|
%
|
|
(1.5)
|
|
|
(1.3)
|
|
|
57.4
|
%
|
Operating
margin
|
|
2.3
|
%
|
|
1.5
|
|
|
1.3
|
|
|
5.0
|
%
|
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.
|
|
|
|
SIX MONTHS ENDED
JUNE 30, 2017
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Loss
contingency
|
|
Adjusted
(Non-GAAP)
|
Total
revenue
|
|
$
|
2,729.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,729.0
|
|
Cost of
sales
|
|
1,042.1
|
|
|
(0.1)
|
|
|
—
|
|
|
1,042.2
|
|
Selling, general and
administrative expenses
|
|
1,626.6
|
|
|
30.4
|
|
|
18.2
|
|
|
1,578.0
|
|
Operating
profit
|
|
60.3
|
|
|
30.3
|
|
|
18.2
|
|
|
108.8
|
|
(Loss) income from
continuing operations, before taxes
|
|
(18.9)
|
|
|
30.3
|
|
|
18.2
|
|
|
29.6
|
|
Income
taxes
|
|
(63.4)
|
|
|
(1.8)
|
|
|
—
|
|
|
(65.2)
|
|
Loss from continuing
operations, net of tax
|
|
$
|
(82.3)
|
|
|
$
|
28.5
|
|
|
$
|
18.2
|
|
|
$
|
(35.6)
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(0.21)
|
|
|
|
|
|
|
$
|
(0.11)
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
61.8
|
%
|
|
—
|
|
|
—
|
|
|
61.8
|
%
|
SG&A as a % of
revenues
|
|
58.6
|
%
|
|
(1.1)
|
|
|
(0.7)
|
|
|
57.8
|
%
|
Operating
margin
|
|
2.2
|
%
|
|
1.1
|
|
|
0.7
|
|
|
4.0
|
%
|
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
JUNE 30, 2016
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Special tax
items
|
|
Adjusted
(Non-GAAP)
|
Total
revenue
|
|
$
|
1,434.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,434.3
|
|
Cost of
sales
|
|
565.0
|
|
|
0.3
|
|
|
—
|
|
|
564.7
|
|
Selling, general and
administrative expenses
|
|
774.2
|
|
|
9.1
|
|
|
—
|
|
|
765.1
|
|
Operating
profit
|
|
95.1
|
|
|
9.4
|
|
|
—
|
|
|
104.5
|
|
Income from
continuing operations, before taxes
|
|
71.9
|
|
|
9.4
|
|
|
—
|
|
|
81.3
|
|
Income
taxes
|
|
(36.1)
|
|
|
(0.7)
|
|
|
(7.1)
|
|
|
(43.9)
|
|
Income from
continuing operations, net of tax
|
|
$
|
35.8
|
|
|
$
|
8.7
|
|
|
$
|
(7.1)
|
|
|
$
|
37.4
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
0.07
|
|
|
|
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.6
|
%
|
|
—
|
|
|
—
|
|
|
60.6
|
%
|
SG&A as a % of
revenues
|
|
54.0
|
%
|
|
(0.6)
|
|
|
—
|
|
|
53.3
|
%
|
Operating
margin
|
|
6.6
|
%
|
|
0.6
|
|
|
—
|
|
|
7.3
|
%
|
Effective tax
rate
|
|
50.2
|
%
|
|
|
|
|
|
54.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
SIX MONTHS ENDED
JUNE 30, 2016
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Venezuelan
special items
|
|
Special tax
items
|
|
Adjusted
(Non-GAAP)
|
Total
revenue
|
|
$
|
2,740.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,740.8
|
|
Cost of
sales
|
|
1,083.8
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
1,083.5
|
|
Selling, general and
administrative expenses
|
|
1,554.1
|
|
|
55.9
|
|
|
—
|
|
|
—
|
|
|
1,498.2
|
|
Operating
profit
|
|
102.9
|
|
|
56.2
|
|
|
—
|
|
|
—
|
|
|
159.1
|
|
(Loss) income from
continuing operations, before taxes
|
|
(86.2)
|
|
|
56.2
|
|
|
120.5
|
|
|
—
|
|
|
90.5
|
|
Income
taxes
|
|
(33.8)
|
|
|
(10.2)
|
|
|
—
|
|
|
(36.4)
|
|
|
(80.4)
|
|
(Loss) income from
continuing operations, net of tax
|
|
$
|
(120.0)
|
|
|
$
|
46.0
|
|
|
$
|
120.5
|
|
|
$
|
(36.4)
|
|
|
$
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(0.29)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.5
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60.5
|
%
|
SG&A as a % of
revenues
|
|
56.7
|
%
|
|
(2.0)
|
|
|
—
|
|
|
—
|
|
|
54.7
|
%
|
Operating
margin
|
|
3.8
|
%
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
5.8
|
%
|
Effective tax
rate
|
|
*
|
|
|
|
|
|
|
|
88.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
*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
|
|
|
|
|
|
|
Second-Quarter
2017
|
|
Half-Year
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
|
|
|
|
|
3 pts
|
|
|
|
|
Operating profit -
transaction
|
$
|
15
|
|
|
$
|
0.02
|
|
|
$
|
20
|
|
|
$
|
0.02
|
|
|
Operating profit -
translation
|
5
|
|
|
0.01
|
|
|
10
|
|
|
0.02
|
|
|
Total operating
profit
|
$
|
20
|
|
|
$
|
0.03
|
|
|
$
|
30
|
|
|
$
|
0.04
|
|
|
Operating
margin
|
140 bps
|
|
|
|
|
100 bps
|
|
|
|
|
Revaluation of
working capital
|
$
|
(9)
|
|
|
$
|
(0.01)
|
|
|
$
|
5
|
|
|
$
|
0.01
|
|
|
Diluted
EPS
|
|
|
$
|
0.02
|
|
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
Year-on-Year
impact on Adjusted (Non-
GAAP) results:
|
|
|
|
|
|
|
|
|
Adjusted operating
profit - transaction
|
$
|
15
|
|
|
$
|
(0.02)
|
|
|
$
|
20
|
|
|
$
|
0.02
|
|
|
Adjusted operating
profit - translation
|
5
|
|
|
0.01
|
|
|
10
|
|
|
0.02
|
|
|
Total Adjusted
operating profit
|
$
|
20
|
|
|
$
|
0.03
|
|
|
$
|
30
|
|
|
$
|
0.04
|
|
|
Adjusted operating
margin
|
130 bps
|
|
|
|
|
90 bps
|
|
|
|
|
Revaluation of
working capital
|
$
|
(9)
|
|
|
$
|
(0.01)
|
|
|
$
|
5
|
|
|
$
|
0.01
|
|
|
Adjusted diluted
EPS
|
|
|
$
|
0.02
|
|
|
|
|
$
|
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.
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) CTI restructuring
initiatives; 2) a charge for a loss contingency related to a
non-U.S. pension plan ("Loss contingency"); 3) charges related to
the deconsolidation of the Company's Venezuela operations as of March 31, 2016 ("Venezuelan special items"); and
4) 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 Venezuelan special items include the impact on the
Consolidated Statements of Operations in 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 Special tax items include the impact during the second
quarter of 2016 on the provision for income taxes in the
Consolidated Statements of Operations primarily due to the release
of a valuation allowance associated with Russia of approximately $7 million. Special tax items also include the
impact during the first quarter of 2016 on the provision for income
taxes in the Consolidated Statements of Operations due to an income
tax benefit of approximately $29
million recognized as the result of the implementation of
foreign tax planning strategies.
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SOURCE Avon Products, Inc.