FORM 8-K |
Avon Products, Inc. | ||||
(Exact name of registrant as specified in charter) | ||||
New York | 1-4881 | 13-0544597 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
AVON PRODUCTS, INC. | |||||||||||||||
(Registrant) | |||||||||||||||
By | /s/ Robert Loughran | ||||||||||||||
Name: Robert Loughran | |||||||||||||||
Title: Vice President and Corporate Controller |
Exhibit | ||
No. | Description | |
99.1 | Press Release of Avon Products, Inc. dated February 12, 2013 |
Avon Reports Fourth-Quarter and Full-Year 2012 Results | ||||
Fourth-Quarter Revenue Down 1% (Up 1% in Constant Dollars) | ||||
Fourth-Quarter Operating Profit was $11 Million; Adjusted1 Non-GAAP $277 Million | ||||
Full-Year Cash from Operations $556 Million | ||||
• | CTI restructuring initiatives related to previously announced cost savings initiatives of $125 million pre-tax, or $0.19 per share |
• | China non-cash impairment charge of $44 million pre-tax, or $0.10 per share |
• | Silpada non-cash impairment charge of $209 million pre-tax, or $0.30 per share |
• | Benefit from release of a provision of $24 million, or $0.04 per share, associated with the excess cost of acquiring U.S. dollars in Venezuela at the regulated market rate as compared to the official exchange rate |
• | Additional provision for income taxes of $168 million, or $0.39 per share, associated with the potential repatriation of foreign earnings |
• | One time after tax loss estimated to be approximately $50 million in the first quarter of 2013, primarily reflecting the write-down of monetary net assets and deferred taxes; |
• | Estimated charges of approximately $50 million associated with the historical cost in U.S. dollars of non-monetary assets, such as inventory, primarily during the first half of 2013. |
Latin America | |||||||
$ in millions | Fourth-Quarter 2012 | FY 2012 | |||||
% var. vs 4Q11 | % var. vs 12M11 | ||||||
Total revenue | $1,330.5 | 2% | $4,993.7 | (3)% | |||
C$ | 7% | 5% | |||||
Active Representatives | 6% | 3% | |||||
Units sold | 6% | 2% | |||||
Operating profit | 136.0 | 6% | 443.9 | (30)% | |||
Adjusted Non-GAAP operating profit | 143.7 | 7% | 463.5 | (27)% | |||
Operating margin | 10.2% | 40 bps | 8.9% | (340) bps | |||
Adjusted Non-GAAP operating margin | 10.8% | 50 bps | 9.3% | (300) bps | |||
• | Fourth-quarter constant-dollar revenue increased, primarily due to an increase in Active Representatives. Units sold increased 6%, primarily attributable to Brazil. |
• | Brazil revenue was down 3%, or up 10% in constant dollars, primarily due to an increase in Active Representatives. |
• | Mexico revenue was up 9%, or 4% in constant dollars, driven primarily by an increase in Active Representatives partially offset by a decline in average order. |
• | Venezuela revenue was up 2% in both reported and constant dollars, as average order benefited from the inflationary impact on pricing, but was partially offset by a decrease in Active Representatives. |
• | The increase in adjusted Non-GAAP operating margin was due to lower net brochure costs and improved bad debt and distribution expenses. This was partially offset by a decline in gross margin, primarily due to the unfavorable net impact of pricing and mix partially due to a planned initiative to flow excess inventory, primarily in Brazil. Foreign exchange and higher investments in Representative Value Proposition² (“RVP”) also negatively impacted operating margin. |
Europe, Middle East & Africa | |||||||
$ in millions | Fourth-Quarter 2012 | FY 2012 | |||||
% var. vs 4Q11 | % var. vs 12M11 | ||||||
Total revenue | $905.8 | 1% | $2,914.2 | (7)% | |||
C$ | 2% | (1)% | |||||
Active Representatives | 1% | —% | |||||
Units sold | 5% | —% | |||||
Operating profit | 131.4 | (4)% | 312.8 | (35)% | |||
Adjusted Non-GAAP operating profit | 131.5 | (5)% | 324.6 | (33)% | |||
Operating margin | 14.5% | (80) bps | 10.7% | (460) bps | |||
Adjusted Non-GAAP operating margin | 14.5% | (100) bps | 11.1% | (440) bps | |||
• | Fourth-quarter constant-dollar revenue increased primarily due to an increase in Active Representatives and unit growth. |
• | Revenue in Russia was up 3% in both reported and constant dollars, primarily due to higher average order and an increase in Active Representatives. |
• | Revenue in the U.K. was flat, or down 2% in constant dollars, primarily due to a decrease in Active Representatives, partially offset by higher average order. |
• | Revenue in Turkey was up 1%, or down 1% in constant dollars, primarily due to lower average order, partially offset by growth in Active Representatives. |
• | Revenue in South Africa was flat, or up 8% in constant dollars, primarily due to growth in average order, partially offset by a decrease in Active Representatives. |
• | The decline in adjusted Non-GAAP operating margin was due to lower gross margin, caused by the unfavorable impact of pricing and mix due to planned investments in unit-driving offers across all price tiers. This decline was also partially offset by improved bad debt expense and lower net brochure costs, primarily in Russia. |
North America | |||||||
$ in millions | Fourth-Quarter 2012 | FY 2012 | |||||
% var. vs 4Q11 | % var. vs 12M11 | ||||||
Total revenue | $516.2 | (12)% | $1,906.8 | (8)% | |||
C$ | (12)% | (8)% | |||||
Active Representatives | (13)% | (12)% | |||||
Units sold | (11)% | (6)% | |||||
Operating loss | (201.4) | 17% | (214.9) | (14)% | |||
Adjusted Non-GAAP operating profit | 26.6 | 25% | 24.6 | (75)% | |||
Operating margin | (39.0)% | 230 bps | (11.3)% | (220) bps | |||
Adjusted Non-GAAP operating margin | 5.2% | 160 bps | 1.3% | (350) bps | |||
• | Fourth-quarter North America revenue declined 12%, primarily due to a decrease in Active Representatives. |
• | The North America Avon business revenue declined 11%, primarily due to a decrease in Active Representatives, partially offset by higher average order. |
• | Silpada revenue declined 18%, primarily due to a decline in average order as well as a decrease in Active Representatives. |
• | The increase in adjusted Non-GAAP operating margin was due to lower overhead expenses, which include compensation costs, and lower advertising costs, which were partially offset by increased investments in RVP primarily related to the One Simple Sales Model implementation. The increase in operating margin was also impacted by higher gross margin at Silpada, which was partially due to the decrease in silver prices and favorable net impact of pricing and mix. |
Asia Pacific | |||||||
$ in millions | Fourth-Quarter 2012 | FY 2012 | |||||
% var. vs 4Q11 | % var. vs 12M11 | ||||||
Total revenue | $246.6 | (3)% | $902.4 | (4)% | |||
C$ | (6)% | (5)% | |||||
Active Representatives | (8)% | (9)% | |||||
Units sold | (9)% | (7)% | |||||
Operating profit | 8.8 | (64)% | 5.1 | (94)% | |||
Adjusted Non-GAAP operating profit | 21.8 | (11)% | 67.3 | (17)% | |||
Operating margin | 3.6% | (590) bps | 0.6% | (800) bps | |||
Adjusted Non-GAAP operating margin | 8.8% | (80) bps | 7.5% | (110) bps | |||
• | Fourth-quarter constant-dollar revenue decreased primarily due to continued weakness in China. |
• | Revenue in China declined 23%, or 24% in constant dollars, primarily as a result of a decline in units sold. We continue to focus on independently owned retail locations (Beauty Boutiques). |
• | Revenue in the Philippines grew 7%, or 2% in constant dollars, primarily due to growth in Active Representatives and higher average order, due to an increase in Fashion and Home sales. |
• | The region's adjusted Non-GAAP operating margin decline was largely driven by lower gross margin, which was caused primarily by the unfavorable net impact of pricing and mix, primarily due to the flow of excess inventory as well as the negative impact of foreign exchange. Sales deleverage was also a factor. Partially offsetting these items was lower investment in RVP, primarily in China. |
Global Expenses | |||||||
$ in millions | Fourth-Quarter 2012 | FY 2012 | |||||
% var. vs 4Q11 | % var. vs 12M11 | ||||||
Total global expenses | $191.1 | 13% | $706.3 | 8% | |||
Allocated to segments | (127.0) | (5)% | (474.2) | (5)% | |||
Net global expenses | 64.1 | 83% | 232.1 | 53% | |||
Adjusted Non-GAAP net global expenses | 46.3 | 34% | 187.5 | 30% | |||
Avon will conduct a conference call at 9:00 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: 89451727). 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. |
Contacts: | |
INVESTORS: | MEDIA: |
Amy Low Chasen | Jennifer Vargas |
Natalija Jovasevic | (212) 282-5404 |
(212) 282-5320 |
Footnotes |
1 “Adjusted” items refer to financial results presented in accordance with U.S. GAAP that have been adjusted to exclude certain costs as described below, under “Non-GAAP Financial Measures.” |
2 “RVP” - In the first quarter of 2012, we revised the definition of Representative Value Proposition to represent the expenses of activities directly associated with Representatives and independent leaders including the cost of incentives and sales aids (net of any fees charged). RVP no longer includes strategic investments such as the Service Model Transformation and Web enablement, and it no longer adjusts for the impact of volume. |
• | our ability to implement the key initiatives of, and realize the gross and operating margins and projected benefits (in the amounts and time schedules we expect, and including any financial projections concerning, for example, future revenue, profit, cash flow and operating margin increases) from, our stabilization strategies, cost savings initiative, multi-year restructuring programs and other initiatives, product mix and pricing strategies, Enterprise Resource Planning, customer service initiatives, sales and operation planning process, outsourcing strategies, Internet platform and technology strategies, information technology and related system enhancements and cash management, tax, foreign currency hedging and risk management strategies, and any plans to invest these projected benefits ahead of future growth; |
• | the possibility of business disruption in connection with our stabilization strategies, cost savings initiative, multi-year restructuring programs or other initiatives; |
• | our ability to reverse declining margins and net income; |
• | our substantial indebtedness and debt service obligations, our ability to access and generate cash to repay debt and cover debt service obligations, our access to short- and long-term financing, our ability to refinance upcoming maturities of our current indebtedness or to secure such refinancing at attractive rates and terms, our ability to secure other financing or to secure such other financing at attractive rates and terms, and our credit ratings and the impact of any changes on our financing costs and debt service obligations and access to lending sources; |
• | our ability to realize sustainable growth from our investments in our brand and the direct-selling channel; |
• | our ability to improve our business in North America, including enhancing our Leadership model; |
• | a general economic downturn, a recession globally or in one or more of our geographic regions, or sudden disruption in business conditions, and the ability of our broad-based geographic portfolio to withstand an economic downturn, recession, cost inflation, commodity cost pressures, economic or political instability, competitive or other market pressures or conditions; |
• | the effect of political, legal, tax and regulatory risks imposed on us in the United States (“U.S.”) and abroad, our operations or our Representatives, including foreign exchange or other restrictions, adoption, interpretation and enforcement of foreign laws, including in non-U.S. jurisdictions such as Brazil, Russia, Venezuela and Argentina, and any changes thereto, as well as reviews and investigations by government regulators that have occurred or may occur from time to time, including, for example, local regulatory scrutiny in China; |
• | our ability to improve working capital and effectively manage doubtful accounts and inventory and implement initiatives to reduce inventory levels, including the potential impact on cash flows and obsolescence; |
• | our ability to achieve growth objectives, particularly in our largest markets, such as Brazil and the U.S., and developing and emerging markets, such as Mexico or Russia; |
• | our ability to successfully identify new business opportunities and strategic alternatives and identify and analyze acquisition candidates, secure financing on favorable terms and negotiate and consummate acquisitions, as well as to successfully integrate or manage any acquired business; |
• | the challenges to our businesses, such as Silpada and China, including the effects of rising costs, macro-economic pressures, competition, any potential strategic decisions, including the review of strategic alternatives for Silpada, and the impact of declines in expected future cash flows and growth rates, and a change in the discount rate used to determine the fair value of expected future cash flows, which have impacted, and may continue to impact, the estimated fair value of the recorded goodwill and intangible assets; |
• | the effect of economic factors, including inflation and fluctuations in interest rates and currency exchange rates, as well as the designation of Venezuela as a highly inflationary economy, foreign exchange restrictions and the potential effect of such factors on our business, results of operations and financial condition; |
• | general economic and business conditions in our markets, including social, economic and political uncertainties in the international markets in our portfolio; |
• | any developments in or consequences of investigations and compliance reviews, and any litigation related thereto, including the ongoing investigations and compliance reviews of Foreign Corrupt Practices Act and related U.S. and foreign law matters in China and additional countries, as well as any disruption or adverse consequences resulting from such investigations, reviews, related actions or litigation; |
• | key information technology systems, process or site outages and disruptions; |
• | disruption in our supply chain or manufacturing and distribution operations; |
• | other sudden disruption in business operations beyond our control as a result of events such as acts of terrorism or war, natural disasters, pandemic situations, large-scale power outages and similar events; |
• | the risk of product or ingredient shortages resulting from our concentration of sourcing in fewer suppliers; |
• | the quality, safety and efficacy of our products; |
• | the success of our research and development activities; |
• | our ability to attract and retain key personnel; |
• | competitive uncertainties in our markets, including competition from companies in the cosmetics, fragrances, skincare and toiletries industry, some of which are larger than we are and have greater resources; |
• | our ability to reverse declines in Active Representatives, to implement our Leadership program globally, to generate Representative activity, to increase the number of consumers served per Representative and their engagement online, to enhance the Representative and consumer experience and increase Representative productivity through field activation programs and technology tools and enablers, execution of Service Model Transformation and other investments in the direct-selling channel, and to compete with other direct-selling organizations to recruit, retain and service Representatives and to continue to innovate the direct-selling model; |
• | the impact of the typically seasonal nature of our business, adverse effect of rising energy, commodity and raw material prices, changes in market trends, purchasing habits of our consumers and changes in consumer preferences, particularly given the global nature of our business and the conduct of our business in primarily one channel; |
• | our ability to protect our intellectual property rights; |
• | the risk of an adverse outcome in any material pending and future litigations or with respect to the legal status of Representatives; |
• | our ability to comply with certain covenants in our debt instruments, including the impact of any significant non-cash impairments, significant currency devaluations, or significant legal or regulatory settlements, or obtain necessary waivers from compliance with, or necessary amendments to, such covenants, and the impact any non-compliance may have on our ability to secure financing; |
• | the impact of possible pension funding obligations, increased pension expense and any changes in pension regulations or interpretations thereof on our cash flow and results of operations; and |
• | the impact of changes in tax rates on the value of our deferred tax assets and declining earnings on our ability to realize foreign tax credits in the U.S. |
Three Months Ended | Percent Change | Twelve Months Ended | Percent Change | |||||||||||||||||||
December 31 | December 31 | |||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Net sales | $ | 2,955.7 | $ | 2,997.9 | (1 | )% | $ | 10,546.1 | $ | 11,112.0 | (5)% | |||||||||||
Other revenue | 43.4 | 45.8 | 171.0 | 179.6 | ||||||||||||||||||
Total revenue | 2,999.1 | 3,043.7 | (1 | )% | 10,717.1 | 11,291.6 | (5)% | |||||||||||||||
Cost of sales | 1,204.5 | 1,182.5 | 4,169.3 | 4,148.6 | ||||||||||||||||||
Selling, general and administrative expenses | 1,574.9 | 1,585.3 | 5,980.0 | 6,025.4 | ||||||||||||||||||
Impairment of goodwill and intangible asset | 209.0 | 263.0 | 253.0 | 263.0 | ||||||||||||||||||
Operating profit | 10.7 | 12.9 | (17 | )% | 314.8 | 854.6 | (63)% | |||||||||||||||
Interest expense | 27.5 | 23.4 | 104.3 | 92.9 | ||||||||||||||||||
Interest income | (4.6 | ) | (3.2 | ) | (15.1 | ) | (16.5 | ) | ||||||||||||||
Other (income) expense, net | (21.4 | ) | 10.0 | 7.0 | 35.6 | |||||||||||||||||
Total other expenses | 1.5 | 30.2 | 96.2 | 112.0 | ||||||||||||||||||
Income (loss) from continuing operations, before tax | 9.2 | (17.3 | ) | (153 | )% | 218.6 | 742.6 | (71)% | ||||||||||||||
Income taxes | (170.3 | ) | 17.6 | (256.8 | ) | (216.2 | ) | |||||||||||||||
(Loss) income from continuing operations, net of tax | (161.1 | ) | 0.3 | * | (38.2 | ) | 526.4 | (107)% | ||||||||||||||
Discontinued operations, net of tax | — | — | — | (8.6 | ) | |||||||||||||||||
Net (loss) income | (161.1 | ) | 0.3 | (38.2 | ) | 517.8 | ||||||||||||||||
Net income attributable to noncontrolling interests | (1.1 | ) | (0.7 | ) | (4.3 | ) | (4.2 | ) | ||||||||||||||
Net (loss) income attributable to Avon | $ | (162.2 | ) | $ | (0.4 | ) | * | $ | (42.5 | ) | $ | 513.6 | (108)% | |||||||||
(Loss) earnings per share:(1) | ||||||||||||||||||||||
Basic | ||||||||||||||||||||||
Basic EPS from continuing operations | $ | (.37 | ) | $ | — | * | (.10 | ) | 1.20 | (108)% | ||||||||||||
Basic EPS from discontinued operations | $ | — | $ | — | — | (.02 | ) | |||||||||||||||
Basic EPS attributable to Avon | $ | (.37 | ) | $ | — | * | (.10 | ) | 1.18 | (108)% | ||||||||||||
Diluted | ||||||||||||||||||||||
Diluted EPS from continuing operations | $ | (.37 | ) | $ | — | * | (.10 | ) | 1.20 | (108)% | ||||||||||||
Diluted EPS from discontinued operations | $ | — | $ | — | — | (.02 | ) | |||||||||||||||
Diluted EPS attributable to Avon | $ | (.37 | ) | $ | — | * | (.10 | ) | 1.18 | (108)% | ||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||||
Basic | 432.1 | 430.9 | 431.9 | 430.5 | ||||||||||||||||||
Diluted | 432.1 | 431.8 | 431.9 | 432.1 | ||||||||||||||||||
* Calculation not meaningful | ||||||||||||||||||||||
(1) Under the two-class method, (loss) earnings per share is calculated using net (loss) earnings allocable to common shares, which is derived by reducing net (loss) earnings by the (loss) earnings allocable to participating securities. Net (loss) earnings allocable to common shares used in the basic and diluted (loss) earnings per share calculation were ($159.2) and ($0.1) for the three months ended December 31, 2012 and 2011, respectively. Net (loss) earnings allocable to common shares used in the basic and diluted (loss) earnings per share calculation were ($42.2) and $508.1 for the twelve months ended December 31, 2012 and 2011, respectively. | ||||||||||||||||||||||
December 31 | December 31 | |||||||
2012 | 2011 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 1,209.6 | $ | 1,245.1 | ||||
Accounts receivable, net | 751.9 | 761.5 | ||||||
Inventories | 1,135.4 | 1,161.3 | ||||||
Prepaid expenses and other | 832.0 | 930.9 | ||||||
Total current assets | 3,928.9 | 4,098.8 | ||||||
Property, plant and equipment, at cost | 2,711.8 | 2,708.8 | ||||||
Less accumulated depreciation | (1,161.6 | ) | (1,137.3 | ) | ||||
Property, plant and equipment, net | 1,550.2 | 1,571.5 | ||||||
Goodwill | 374.9 | 473.1 | ||||||
Other intangible assets, net | 120.3 | 279.9 | ||||||
Other assets | 1,408.2 | 1,311.7 | ||||||
Total assets | $ | 7,382.5 | $ | 7,735.0 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 572.0 | $ | 849.3 | ||||
Accounts payable | 920.0 | 850.2 | ||||||
Accrued compensation | 266.6 | 217.1 | ||||||
Other accrued liabilities | 661.0 | 663.6 | ||||||
Sales and taxes other than income | 211.4 | 212.4 | ||||||
Income taxes | 73.6 | 98.4 | ||||||
Total current liabilities | 2,704.6 | 2,891.0 | ||||||
Long-term debt | 2,623.9 | 2,459.1 | ||||||
Employee benefit plans | 637.6 | 603.0 | ||||||
Long-term income taxes | 52.0 | 67.0 | ||||||
Other liabilities | 131.1 | 129.7 | ||||||
Total liabilities | $ | 6,149.2 | $ | 6,149.8 | ||||
Shareholders’ Equity | ||||||||
Common stock | $ | 188.3 | $ | 187.3 | ||||
Additional paid-in-capital | 2,119.6 | 2,077.7 | ||||||
Retained earnings | 4,357.8 | 4,726.1 | ||||||
Accumulated other comprehensive loss | (876.7 | ) | (854.4 | ) | ||||
Treasury stock, at cost | (4,571.9 | ) | (4,566.3 | ) | ||||
Total Avon shareholders’ equity | 1,217.1 | 1,570.4 | ||||||
Noncontrolling interests | 16.2 | 14.8 | ||||||
Total shareholders’ equity | $ | 1,233.3 | $ | 1,585.2 | ||||
Total liabilities and shareholders’ equity | $ | 7,382.5 | $ | 7,735.0 | ||||
Twelve Months Ended | ||||||||
December 31 | ||||||||
2012 | 2011 | |||||||
Cash Flows from Operating Activities | ||||||||
(Loss) income from continuing operations, net of tax | $ | (38.2 | ) | $ | 526.4 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 229.6 | 239.6 | ||||||
Provision for doubtful accounts | 251.1 | 247.2 | ||||||
Provision for obsolescence | 122.1 | 128.1 | ||||||
Share-based compensation | 41.1 | 36.6 | ||||||
Deferred income taxes | (49.2 | ) | (196.6 | ) | ||||
Impairment of goodwill and intangible asset | 253.0 | 263.0 | ||||||
Other | 35.5 | 52.7 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (241.1 | ) | (241.5 | ) | ||||
Inventories | (89.7 | ) | (210.3 | ) | ||||
Prepaid expenses and other | 58.5 | 24.6 | ||||||
Accounts payable and accrued liabilities | 84.5 | (55.7 | ) | |||||
Income and other taxes | (28.7 | ) | (50.7 | ) | ||||
Noncurrent assets and liabilities | (72.4 | ) | (107.6 | ) | ||||
Net cash provided by operating activities of continuing operations | 556.1 | 655.8 | ||||||
Cash Flows from Investing Activities | ||||||||
Capital expenditures | (228.8 | ) | (276.7 | ) | ||||
Disposal of assets | 15.4 | 17.1 | ||||||
Purchases of investments | (1.5 | ) | (28.8 | ) | ||||
Proceeds from sale of investments | 1.2 | 33.7 | ||||||
Acquisitions and other investing activities | — | (13.0 | ) | |||||
Net cash used by investing activities of continuing operations | (213.7 | ) | (267.7 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Cash dividends | (329.3 | ) | (403.4 | ) | ||||
Debt, net (maturities of three months or less) | (710.5 | ) | 635.7 | |||||
Proceeds from debt | 735.8 | 88.9 | ||||||
Repayment of debt | (138.3 | ) | (614.6 | ) | ||||
Interest rate swap termination | 43.6 | — | ||||||
Proceeds from exercise of stock options | 8.6 | 16.8 | ||||||
Excess tax benefit realized from share-based compensation | (2.4 | ) | (0.2 | ) | ||||
Repurchase of common stock | (8.8 | ) | (7.7 | ) | ||||
Net cash used by financing activities of continuing operations | (401.3 | ) | (284.5 | ) | ||||
Net cash used by investing activities of discontinued operations | — | (1.2 | ) | |||||
Net cash used by discontinued operations | — | (1.2 | ) | |||||
Effect of exchange rate changes on cash and equivalents | 23.4 | (37.2 | ) | |||||
Net change in cash and equivalents | (35.5 | ) | 65.2 | |||||
Cash and equivalents at beginning of year | $ | 1,245.1 | $ | 1,179.9 | ||||
Cash and equivalents at end of period | $ | 1,209.6 | $ | 1,245.1 |
THREE MONTHS ENDED 12/31/12 |
REGIONAL RESULTS | ||||||||||||||||||||||
$ in Millions | Total Revenue US$ | C$ | Units Sold | Price/Mix C$ | Active Reps (1) | Average Order C$ (1) | ||||||||||||||||
% var. vs 4Q11 | % var. vs 4Q11 | % var. vs 4Q11 | % var. vs 4Q11 | % var. vs 4Q11 | % var. vs 4Q11 | |||||||||||||||||
Latin America | $ | 1,330.5 | 2 | % | 7 | % | 6 | % | 1 | % | 6 | % | 1 | % | ||||||||
Europe, Middle East & Africa | 905.8 | 1 | 2 | 5 | (3 | ) | 1 | 1 | ||||||||||||||
North America | 516.2 | (12 | ) | (12 | ) | (11 | ) | (1 | ) | (13 | ) | 1 | ||||||||||
Asia Pacific (1) | 246.6 | (3 | ) | (6 | ) | (9 | ) | 3 | (8 | ) | 2 | |||||||||||
Total from operations | 2,999.1 | (1 | ) | 1 | 2 | (1 | ) | 1 | — | |||||||||||||
Global and other | — | — | — | — | — | — | — | |||||||||||||||
Total | $ | 2,999.1 | (1 | )% | 1 | % | 2 | % | (1 | )% | 1 | % | — | % | ||||||||
2012 GAAP Operating Profit (Loss)US$ | % var. vs 4Q11 | 2012 GAAP Operating Margin US$ | 2012 Non-GAAP Operating Profit US$ (2) | 2011 Non-GAAP Operating Profit US$ (2) | 2012 Non-GAAP Operating Margin (2) | 2011 Non-GAAP Operating Margin (2) | ||||||||||||||||
Latin America | $ | 136.0 | 6 | % | 10.2 | % | $ | 143.7 | $ | 134.8 | 10.8 | % | 10.3 | % | ||||||||
Europe, Middle East & Africa | 131.4 | (4 | ) | 14.5 | 131.5 | 138.7 | 14.5 | 15.5 | ||||||||||||||
North America | (201.4 | ) | 17 | (39.0 | ) | 26.6 | 21.3 | 5.2 | 3.6 | |||||||||||||
Asia Pacific | 8.8 | (64 | ) | 3.6 | 21.8 | 24.4 | 8.8 | 9.6 | ||||||||||||||
Total from operations | 74.8 | 57 | (2.5 | ) | 323.6 | 319.2 | 10.8 | 10.5 | ||||||||||||||
Global and other | (64.1 | ) | (84 | ) | — | (46.3 | ) | (34.6 | ) | — | — | |||||||||||
Total | $ | 10.7 | (17 | )% | 0.4 | % | $ | 277.3 | $ | 284.6 | 9.2 | % | 9.4 | % |
CATEGORY SALES (US$) |
Consolidated | ||||||||||
US$ | C$ | |||||||||
% var. vs 4Q11 | % var. vs 4Q11 | |||||||||
Beauty (color cosmetics/fragrances/skincare/personal care) | $ | 2,109.2 | (2 | )% | 1 | % | ||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 538.3 | (1 | ) | — | ||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 308.2 | — | 2 | |||||||
Net sales | $ | 2,955.7 | (1 | )% | 1 | % | ||||
Other revenue | 43.4 | (5 | ) | (6 | ) | |||||
Total revenue | $ | 2,999.1 | (1 | )% | 1 | % | ||||
Beauty Category: | ||||||||||
Fragrance | — | % | 2 | % | ||||||
Color | (1 | ) | 2 | |||||||
Skincare | (5 | ) | (2 | ) | ||||||
Personal care | (1 | ) | 1 | |||||||
(1) Asia Pacific's decline in Active Representatives and increase in average order are impacted by the transition to a retail compensation model in China. Due to this transition, the Active Representative and average order performance metrics are not a relevant indicator of the underlying business trends. | ||||||||||
(2) For a further discussion on our Non-GAAP financial measures, please refer to our discussion of Non-GAAP financial measures in this release and reconciliations of our Non-GAAP financial measures to the related GAAP financial measure in the following supplemental schedules. |
TWELVE MONTHS ENDED 12/31/12 |
REGIONAL RESULTS | ||||||||||||||||||||||
$ in Millions | Total Revenue US$ | C$ | Units Sold | Price/Mix C$ | Active Reps (1) | Average Order C$ (1) | ||||||||||||||||
% var. vs 12M11 | % var. vs 12M11 | % var. vs 12M11 | % var. vs 12M11 | % var. vs 12M11 | % var. vs 12M11 | |||||||||||||||||
Latin America | $ | 4,993.7 | (3 | )% | 5 | % | 2 | % | 3 | % | 3 | % | 2 | % | ||||||||
Europe, Middle East & Africa | 2,914.2 | (7 | ) | (1 | ) | — | (1 | ) | — | (1 | ) | |||||||||||
North America | 1,906.8 | (8 | ) | (8 | ) | (6 | ) | (2 | ) | (12 | ) | 4 | ||||||||||
Asia Pacific (1) | 902.4 | (4 | ) | (5 | ) | (7 | ) | 2 | (9 | ) | 4 | |||||||||||
Total from operations | 10,717.1 | (5 | ) | — | — | — | (1 | ) | 1 | |||||||||||||
Global and other | — | — | — | — | — | — | — | |||||||||||||||
Total | $ | 10,717.1 | (5 | )% | — | % | — | % | — | % | (1 | )% | 1 | % | ||||||||
2012 GAAP Operating Profit (Loss) US$ | % var. vs 12M11 | 2012 GAAP Operating Margin US$ | 2012 Non-GAAP Operating Profit US$ (2) | 2011 Non-GAAP Operating Profit US$ (2) | 2012 Non-GAAP Operating Margin (2) | 2011 Non-GAAP Operating Margin (2) | ||||||||||||||||
Latin America | $ | 443.9 | (30 | )% | 8.9 | % | $ | 463.5 | $ | 637.1 | 9.3 | % | 12.3 | % | ||||||||
Europe, Middle East & Africa | 312.8 | (35 | ) | 10.7 | 324.6 | 484.2 | 11.1 | 15.5 | ||||||||||||||
North America | (214.9 | ) | (14 | ) | (11.3 | ) | 24.6 | 99.7 | 1.3 | 4.8 | ||||||||||||
Asia Pacific | 5.1 | (94 | ) | 0.6 | 67.3 | 81.1 | 7.5 | 8.6 | ||||||||||||||
Total from operations | 546.9 | (46 | ) | 5.1 | 880.0 | 1,302.1 | 8.2 | 11.5 | ||||||||||||||
Global and other | (232.1 | ) | (53 | ) | — | (187.5 | ) | (144.5 | ) | — | — | |||||||||||
Total | $ | 314.8 | (63 | )% | 2.9 | % | $ | 692.5 | $ | 1,157.6 | 6.5 | % | 10.3 | % |
CATEGORY SALES (US$) |
Consolidated | ||||||||||
US$ | C$ | |||||||||
% var. vs 12M11 | % var. vs 12M11 | |||||||||
Beauty (color cosmetics/fragrances/skincare/personal care) | $ | 7,642.7 | (5 | )% | 1 | % | ||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 1,891.7 | (5 | ) | (2 | ) | |||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 1,011.7 | (4 | ) | 2 | ||||||
Net sales | $ | 10,546.1 | (5 | )% | — | % | ||||
Other revenue | 171.0 | (5 | ) | (3 | ) | |||||
Total revenue | $ | 10,717.1 | (5 | )% | — | % | ||||
Beauty Category: | ||||||||||
Fragrance | (4 | )% | 2 | % | ||||||
Color | (6 | ) | 1 | |||||||
Skincare | (7 | ) | (1 | ) | ||||||
Personal care | (6 | ) | — | |||||||
(1) Asia Pacific's decline in Active Representatives and increase in average order are impacted by the transition to a retail compensation model in China during the latter half of 2012. Due to this transition, the Active Representative and average order performance metrics are not a relevant indicator of the underlying business trends. | ||||||||||
(2) For a further discussion on our Non-GAAP financial measures, please refer to our discussion of Non-GAAP financial measures in this release and reconciliations of our Non-GAAP financial measures to the related GAAP financial measure in the following supplemental schedules. |
$ in Millions (except per share data) | THREE MONTHS ENDED 12/31/12 | |||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Impairment charge | Venezuelan special items | Special tax items | Adjusted (Non-GAAP) | |||||||||||||||||||
Cost of sales | $ | 1,204.5 | $ | 1.3 | $ | — | $ | — | $ | — | $ | 1,203.2 | ||||||||||||
Selling, general and administrative expenses | 1,574.9 | 56.3 | — | — | — | 1,518.6 | ||||||||||||||||||
Operating profit | 10.7 | 57.6 | 209.0 | — | — | 277.3 | ||||||||||||||||||
Income from continuing operations before taxes | 9.2 | 57.6 | 209.0 | (23.8 | ) | — | 252.0 | |||||||||||||||||
Income taxes | (170.3 | ) | (19.9 | ) | (76.7 | ) | 8.1 | 168.3 | (90.5 | ) | ||||||||||||||
(Loss) income from continuing operations | $ | (161.1 | ) | $ | 37.7 | $ | 132.3 | $ | (15.7 | ) | $ | 168.3 | $ | 161.5 | ||||||||||
Diluted EPS from continuing operations | (0.37 | ) | 0.09 | 0.31 | (0.03 | ) | 0.39 | 0.37 | ||||||||||||||||
Gross margin | 59.8 | % | — | — | — | — | 59.9 | % | ||||||||||||||||
SG&A as a % of revenues | 52.5 | % | (1.9 | ) | — | — | — | 50.6 | % | |||||||||||||||
Operating margin | 0.4 | % | 1.9 | 7.0 | — | — | 9.2 | % | ||||||||||||||||
Effective tax rate | 1,845.3 | % | (0.4 | ) | 14.1 | 0.3 | (1,823.3 | ) | 35.9 | % | ||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) | ||||||||||||||||||||||||
Latin America | $ | 136.0 | $ | 7.7 | $ | — | $ | 143.7 | ||||||||||||||||
Europe, Middle East & Africa | 131.4 | 0.1 | — | 131.5 | ||||||||||||||||||||
North America | (201.4 | ) | 19.0 | 209.0 | 26.6 | |||||||||||||||||||
Asia Pacific | 8.8 | 13.0 | — | 21.8 | ||||||||||||||||||||
Global and other | (64.1 | ) | 17.8 | — | (46.3 | ) | ||||||||||||||||||
Total | $ | 10.7 | $ | 57.6 | $ | 209.0 | $ | 277.3 | ||||||||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||||||
Latin America | 10.2 | % | 0.6 | — | 10.8 | % | ||||||||||||||||||
Europe, Middle East & Africa | 14.5 | % | — | — | 14.5 | % | ||||||||||||||||||
North America | (39.0 | )% | 3.7 | 40.5 | 5.2 | % | ||||||||||||||||||
Asia Pacific | 3.6 | % | 5.3 | — | 8.8 | % | ||||||||||||||||||
Global and other | — | — | — | — | ||||||||||||||||||||
Total | 0.4 | % | 1.9 | 7.0 | 9.2 | % |
$ in Millions (except per share data) | TWELVE MONTHS ENDED 12/31/12 | |||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Impairment charges | Venezuelan special items | Special tax items | Adjusted (Non-GAAP) | |||||||||||||||||||
Cost of sales | $ | 4,169.3 | $ | 4.5 | $ | — | $ | — | $ | — | $ | 4,164.8 | ||||||||||||
Selling, general and administrative expenses | 5,980.0 | 120.2 | — | — | — | 5,859.8 | ||||||||||||||||||
Operating profit | 314.8 | 124.7 | 253.0 | — | — | 692.5 | ||||||||||||||||||
Income from continuing operations before taxes | 218.6 | 124.7 | 253.0 | (23.8 | ) | — | 572.5 | |||||||||||||||||
Income taxes | (256.8 | ) | (42.0 | ) | (76.7 | ) | 8.1 | 168.3 | (199.1 | ) | ||||||||||||||
(Loss) income from continuing operations | $ | (38.2 | ) | $ | 82.7 | $ | 176.3 | $ | (15.7 | ) | $ | 168.3 | $ | 373.4 | ||||||||||
Diluted EPS from continuing operations | (0.10 | ) | 0.19 | 0.40 | (0.04 | ) | 0.39 | 0.85 | ||||||||||||||||
Gross margin | 61.1 | % | — | — | — | — | 61.1 | % | ||||||||||||||||
SG&A as a % of revenues | 55.8 | % | (1.1 | ) | — | — | — | 54.7 | % | |||||||||||||||
Operating margin | 2.9 | % | 1.2 | 2.4 | — | — | 6.5 | % | ||||||||||||||||
Effective tax rate | 117.5 | % | (0.3 | ) | (5.5 | ) | 0.1 | (77.0 | ) | 34.8 | % | |||||||||||||
SEGMENT OPERATING PROFIT (LOSS) | ||||||||||||||||||||||||
Latin America | $ | 443.9 | $ | 19.6 | $ | — | $ | 463.5 | ||||||||||||||||
Europe, Middle East & Africa | 312.8 | 11.8 | — | 324.6 | ||||||||||||||||||||
North America | (214.9 | ) | 30.5 | 209.0 | 24.6 | |||||||||||||||||||
Asia Pacific | 5.1 | 18.2 | 44.0 | 67.3 | ||||||||||||||||||||
Global and other | (232.1 | ) | 44.6 | — | (187.5 | ) | ||||||||||||||||||
Total | $ | 314.8 | $ | 124.7 | $ | 253.0 | $ | 692.5 | ||||||||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||||||
Latin America | 8.9 | % | 0.4 | — | 9.3 | % | ||||||||||||||||||
Europe, Middle East & Africa | 10.7 | % | 0.4 | — | 11.1 | % | ||||||||||||||||||
North America | (11.3 | )% | 1.6 | 11.0 | 1.3 | % | ||||||||||||||||||
Asia Pacific | 0.6 | % | 2.0 | 4.9 | 7.5 | % | ||||||||||||||||||
Global and other | — | — | — | — | ||||||||||||||||||||
Total | 2.9 | % | 1.2 | 2.4 | 6.5 | % |
$ in Millions (except per share data) | THREE MONTHS ENDED 12/31/11 | |||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Impairment charge | Adjusted (Non-GAAP) | |||||||||||||
Cost of sales | $ | 1,182.5 | $ | 3.0 | $ | — | $ | 1,179.5 | ||||||||
Selling, general and administrative expenses | 1,585.3 | 5.7 | — | 1,579.6 | ||||||||||||
Operating profit | 12.9 | 8.7 | 263.0 | 284.6 | ||||||||||||
Income from continuing operations before taxes | (17.3 | ) | 8.7 | 263.0 | 254.4 | |||||||||||
Income taxes | 17.6 | (2.8 | ) | (96.8 | ) | (82.0 | ) | |||||||||
Income from continuing operations | $ | 0.3 | $ | 5.9 | $ | 166.2 | $ | 172.4 | ||||||||
Diluted EPS from continuing operations | — | 0.01 | 0.38 | 0.39 | ||||||||||||
Gross margin | 61.1 | % | 0.1 | — | 61.2 | % | ||||||||||
SG&A as a % of revenues | 52.1 | % | (0.2 | ) | — | 51.9 | % | |||||||||
Operating margin | 0.4 | % | 0.3 | 8.6 | 9.4 | % | ||||||||||
Effective tax rate | 101.7 | % | — | (69.9 | ) | 32.2 | % | |||||||||
SEGMENT OPERATING PROFIT | ||||||||||||||||
Latin America | $ | 128.4 | $ | 6.4 | $ | — | $ | 134.8 | ||||||||
Europe, Middle East & Africa | 137.1 | 1.6 | — | 138.7 | ||||||||||||
North America | (241.7 | ) | — | 263.0 | 21.3 | |||||||||||
Asia Pacific | 24.1 | 0.3 | — | 24.4 | ||||||||||||
Global and other | (35.0 | ) | 0.4 | — | (34.6 | ) | ||||||||||
Total | $ | 12.9 | $ | 8.7 | $ | 263.0 | $ | 284.6 | ||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||
Latin America | 9.8 | % | 0.5 | — | 10.3 | % | ||||||||||
Europe, Middle East & Africa | 15.3 | % | 0.2 | — | 15.5 | % | ||||||||||
North America | (41.3 | )% | — | 45.0 | 3.6 | % | ||||||||||
Asia Pacific | 9.5 | % | 0.1 | — | 9.6 | % | ||||||||||
Global and other | — | — | — | — | ||||||||||||
Total | 0.4 | % | 0.3 | 8.6 | 9.4 | % |
$ in Millions (except per share data) | TWELVE MONTHS ENDED 12/31/11 | |||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Impairment charge | Adjusted (Non-GAAP) | |||||||||||||
Cost of sales | $ | 4,148.6 | $ | 11.2 | $ | — | $ | 4,137.4 | ||||||||
Selling, general and administrative expenses | 6,025.4 | 28.8 | — | 5,996.6 | ||||||||||||
Operating profit | 854.6 | 40.0 | 263.0 | 1,157.6 | ||||||||||||
Income from continuing operations before taxes | 742.6 | 40.0 | 263.0 | 1,045.6 | ||||||||||||
Income taxes | (216.2 | ) | (13.9 | ) | (96.8 | ) | (326.9 | ) | ||||||||
Income from continuing operations | $ | 526.4 | $ | 26.1 | $ | 166.2 | $ | 718.7 | ||||||||
Diluted EPS from continuing operations | 1.20 | 0.06 | 0.38 | 1.64 | ||||||||||||
Gross margin | 63.3 | % | 0.1 | — | 63.4 | % | ||||||||||
SG&A as a % of revenues | 53.4 | % | (0.3 | ) | — | 53.1 | % | |||||||||
Operating margin | 7.6 | % | 0.4 | 2.3 | 10.3 | % | ||||||||||
Effective tax rate | 29.1 | % | 0.1 | 2.0 | 31.3 | % | ||||||||||
SEGMENT OPERATING PROFIT | ||||||||||||||||
Latin America | $ | 634.0 | $ | 3.1 | $ | — | $ | 637.1 | ||||||||
Europe, Middle East & Africa | 478.9 | 5.3 | — | 484.2 | ||||||||||||
North America | (188.0 | ) | 24.7 | 263.0 | 99.7 | |||||||||||
Asia Pacific | 81.4 | (0.3 | ) | — | 81.1 | |||||||||||
Global and other | (151.7 | ) | 7.2 | — | (144.5 | ) | ||||||||||
Total | $ | 854.6 | $ | 40.0 | $ | 263.0 | $ | 1,157.6 | ||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||
Latin America | 12.3 | % | 0.1 | — | 12.3 | % | ||||||||||
Europe, Middle East & Africa | 15.3 | % | 0.2 | — | 15.5 | % | ||||||||||
North America | (9.1 | )% | 1.2 | 12.7 | 4.8 | % | ||||||||||
Asia Pacific | 8.6 | % | — | — | 8.6 | % | ||||||||||
Global and other | — | — | — | — | ||||||||||||
Total | 7.6 | % | 0.4 | 2.3 | 10.3 | % |
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