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 April 30, 2013 |
Avon Reports First-Quarter 2013 Results | ||||
First-Quarter Revenue Down 4% (Unchanged in Constant Dollars) | ||||
Operating Profit $172 Million; Adjusted1 Operating Profit $206 Million | ||||
Operating Margin 6.9%, up from 2.8% in the First-Quarter 2012 | ||||
Adjusted Operating Margin 8.3%, up from 3.8% in the First-Quarter 2012 |
• | As a result of the 32% devaluation of Venezuelan currency, the Company recorded a one-time charge of $34 million in other expense, net and $17 million in income taxes, primarily reflecting the write-down of monetary net assets and deferred tax benefits, respectively. In addition, as a result of using the U.S. historic dollar cost basis of non-monetary assets, such as inventory, first-quarter 2013 operating profit was negatively impacted by approximately $13 million. These items had a negative impact of $.15 per share. |
• | The Company recorded a loss on extinguishment of debt of approximately $73 million pre-tax, or $.11 per share, associated with the prepayment of the $535 million outstanding principal of the Company's private notes, including a make-whole premium, and the repayment of $380 million of the outstanding term loan principal. |
• | The Company also recorded CTI restructuring charges, within operating profit, of $20 million pre-tax, or $.03 per share. |
Latin America | |||||
$ in millions | First-Quarter 2013 | ||||
% var. vs 1Q12 | |||||
Total revenue | $ | 1,144.4 | —% | ||
C$ | 7% | ||||
Active Representatives | 4% | ||||
Units sold | (2)% | ||||
Operating profit | 101.4 | 100% | |||
Adjusted operating profit | 112.8 | 103% | |||
Operating margin | 8.9 | % | 450 bps | ||
Adjusted operating margin | 9.9 | % | 510 bps | ||
• | First-quarter constant-dollar revenue growth was primarily due to an increase in Active Representatives as well as higher average order. |
• | Brazil revenue was down 2%, or up 11% in constant dollars, primarily driven by increases in both average order and Active Representatives. Brazil's revenue included an approximate two point benefit, which had an approximate one point benefit to the region's revenue growth, from the initial realization of a government incentive that was recognized in the first quarter of 2013, associated with activity in prior years. |
• | Mexico revenue was up 6%, or 3% in constant dollars, primarily driven by an increase in Active Representatives, partially offset by the negative impact of the timing of the Easter holiday. |
• | Venezuela revenue was down 15%, or up 3% in constant dollars, as average order benefited from the year-over-year inflationary impact on pricing. This growth was substantially offset by a decrease in Active Representatives, which was driven by continued economic and political instability. |
• | The increase in Adjusted operating margin was primarily due to lower advertising, primarily in Brazil, the favorable impact of revenue leverage, and lower net brochure costs, partially offset by increased incentives and field compensation. |
Europe, Middle East & Africa | |||||
$ in millions | First-Quarter 2013 | ||||
% var. vs 1Q12 | |||||
Total revenue | $ | 733.1 | 1% | ||
C$ | 3% | ||||
Active Representatives | 4% | ||||
Units sold | 4% | ||||
Operating profit | 111.4 | 97% | |||
Adjusted operating profit | 120.7 | 98% | |||
Operating margin | 15.2 | % | 740 bps | ||
Adjusted operating margin | 16.5 | % | 810 bps | ||
• | First-quarter constant-dollar revenue growth was primarily due to an increase in Active Representatives. |
• | Russia revenue was up 3%, or up 4% in constant dollars, primarily due to an increase in Active Representatives, partially offset by lower average order. |
• | U.K. revenue was down 9%, or down 8% in constant dollars, primarily due to a decrease in Active Representatives. |
• | Turkey revenue was down 2%, both in reported and constant dollars, as lower average order was partially offset by an increase in Active Representatives. |
• | South Africa revenue was down 11%, or up 2% in constant dollars, primarily due to higher average order, partially offset by a decrease in Active Representatives. |
• | Adjusted operating margin increased, primarily due to higher gross margin largely due to lower material and overhead costs, including the benefits from productivity initiatives. Adjusted operating margin was also favorably impacted by lower bad debt expense, primarily in South Africa, and lower net brochure costs. |
North America | |||||
$ in millions | First-Quarter 2013 | ||||
% var. vs 1Q12 | |||||
Total revenue | $ | 406.2 | (15)% | ||
C$ | (15)% | ||||
Active Representatives | (13)% | ||||
Units sold | (13)% | ||||
Operating loss | (11.2 | ) | * | ||
Adjusted operating loss | (5.4 | ) | * | ||
Operating margin | (2.8 | )% | (360) bps | ||
Adjusted operating margin | (1.3 | )% | (300) bps | ||
• | First-quarter North America revenue declined 15%, primarily due to a decrease in Active Representatives and, to a lesser extent, lower average order. |
• | The North America Avon business revenue declined 15%, as it continues to be challenged by disruption in the field due to redistricting in the U.S., as well as other operational challenges. |
• | North America Silpada revenue declined 21%. |
• | The decline in Adjusted operating margin was primarily due to revenue deleverage on fixed expenses, partially offset by lower expenses resulting from our cost-savings initiatives. Adjusted operating margin was also negatively impacted by lower gross margin in the Silpada business, primarily due to a Representative cash incentive program, which reduced revenue, and higher obsolescence costs. |
Asia Pacific | |||||
$ in millions | First-Quarter 2013 | ||||
% var. vs 1Q12 | |||||
Total revenue | $ | 200.0 | (10)% | ||
C$ | (12)% | ||||
Active Representatives2 | (4)% | ||||
Units sold | (11)% | ||||
Operating profit | 11.1 | (28)% | |||
Adjusted operating profit | 15.9 | (1)% | |||
Operating margin | 5.6 | % | (130) bps | ||
Adjusted operating margin | 8.0 | % | 70 bps | ||
• | First-quarter constant-dollar revenue decreased due to lower average order and a decrease in Active Representatives. |
• | Revenue in China declined 30%, or 31% in constant dollars, primarily due to declines in unit sales and the transition to a retail incentive model. |
• | Revenue in the Philippines was down 1%, or 6% in constant dollars, as the market has experienced operational challenges, including weaker service levels. |
• | The region's adjusted operating margin increase was primarily driven by benefits from restructuring savings and lower incentive compensation, as well as lower selling expenses, primarily in China, due to the transition to a retail compensation model in that market. Partially offsetting these items was lower gross margin, caused primarily by product mix. |
Global Expenses | ||||||
$ in millions | First-Quarter 2013 | |||||
% var. vs 1Q12 | ||||||
Total global expenses | $ | 140.7 | (15 | )% | ||
Allocated to segments | (100.1 | ) | (9 | )% | ||
Net global expenses | 40.6 | (26 | )% | |||
Adjusted net global expenses | 38.3 | (9 | )% | |||
• | Adjusted net global expenses decreased, compared with the prior-year period, primarily due to lower professional fees associated with the FCPA investigation and compliance reviews. |
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: 34621200). The call will be webcast live at www.avoninvestor.com and can be accessed or downloaded from that site for a period of one year. Please refer to the Form 10-Q for additional information on Avon's results for the quarter. |
Contacts: | |
INVESTORS: | MEDIA: |
Amy Low Chasen | Kenny Juarez, |
Natalija Jovasevic | Burson-Marsteller |
(212) 282-5320 | (212) 614-4356 |
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 In the first quarter of 2013, we renamed our "Growth in Active Representatives" performance metric to be referred to as "Change in Active Representatives." In addition, we revised the definition of this metric to exclude China. As previously disclosed, our business in China is predominantly retail, and as a result, we do not believe including China within the Change in Active Representatives calculation provides for a relevant indicator of underlying business trends. There were no changes to the underlying calculation other than the exclusion of China. |
• | our ability to improve our financial and operational performance and execute fully our global business strategy, including our ability to implement the key initiatives of, and realize the projected benefits (in the amounts and time schedules we expect) 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 improve our business in North America, including enhancing our Leadership model; |
• | 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 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; |
• | our ability to reverse declining margins and net income; |
• | general economic and business conditions in our markets, including social, economic and political uncertainties in the international markets in our portfolio; |
• | our ability to achieve profitable growth, particularly in our largest markets, such as Brazil and the United States ("U.S."), and developing and emerging markets, such as Mexico and Russia, and our ability to realize sustainable growth from our investments in our brand and the direct-selling channel; |
• | 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 and the devaluation of its currency, foreign exchange restrictions and the potential effect of such factors on our business, results of operations and financial condition; |
• | any developments in or consequences of investigations and compliance reviews, and any litigation related thereto, including the ongoing investigations and compliance reviews of FCPA 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; |
• | 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 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; |
• | 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.; |
• | our access to cash, short-term financing, and ability to secure financing or financing at attractive rates; |
• | any changes to our credit ratings and the impact of such changes on our financing costs, rates, terms, debt service obligations and access to lending sources; |
• | the impact of any significant restructuring charges or significant legal or regulatory settlements on our ability to comply with certain covenants in our debt instruments; |
• | 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; |
• | 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; |
• | 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; |
• | key information technology systems, process or site outages and disruptions; |
• | the risk of product or ingredient shortages resulting from our concentration of sourcing in fewer suppliers; |
• | 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; |
• | 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 outcome of 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; |
• | disruption in our supply chain or manufacturing and distribution operations; |
• | the quality, safety and efficacy of our products; |
• | the success of our research and development activities; |
• | our ability to protect our intellectual property rights; and |
• | the risk of an adverse outcome in any material pending and future litigations or with respect to the legal status of Representatives. |
Three Months Ended | Percent Change | |||||||||||
March 31 | ||||||||||||
2013 | 2012 | |||||||||||
Net sales | $ | 2,432.0 | $ | 2,532.8 | (4 | )% | ||||||
Other revenue | 51.7 | 42.6 | ||||||||||
Total revenue | 2,483.7 | 2,575.4 | (4 | )% | ||||||||
Cost of sales | 941.6 | 1,009.8 | ||||||||||
Selling, general and administrative expenses | 1,370.0 | 1,494.1 | ||||||||||
Operating profit | 172.1 | 71.5 | 141 | % | ||||||||
Interest expense | 29.4 | 24.6 | ||||||||||
Loss on extinguishment of debt | 73.0 | — | ||||||||||
Interest income | (2.0 | ) | (3.9 | ) | ||||||||
Other expense, net | 44.4 | 10.0 | ||||||||||
Total other expenses | 144.8 | 30.7 | ||||||||||
Income before taxes | 27.3 | 40.8 | (33 | )% | ||||||||
Income taxes | (39.9 | ) | (13.2 | ) | ||||||||
Net (loss) income | (12.6 | ) | 27.6 | |||||||||
Net income attributable to noncontrolling interests | (1.1 | ) | (1.1 | ) | ||||||||
Net (loss) income attributable to Avon | $ | (13.7 | ) | $ | 26.5 | (152 | )% | |||||
(Loss) Earnings per share:(1) | ||||||||||||
Basic EPS | $ | (0.03 | ) | $ | 0.06 | (150 | )% | |||||
Diluted EPS | $ | (0.03 | ) | $ | 0.06 | (150 | )% | |||||
Weighted-average shares outstanding: | ||||||||||||
Basic | 432.5 | 431.3 | ||||||||||
Diluted | 432.5 | 432.1 | ||||||||||
(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 ($13.6) and 25.7 for the three months ended March 31, 2013 and 2012, respectively. | ||||||||||||
March 31 | December 31 | |||||||
2013 | 2012 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 1,488.4 | $ | 1,209.6 | ||||
Accounts receivable, net | 742.9 | 751.9 | ||||||
Inventories | 1,214.2 | 1,135.4 | ||||||
Prepaid expenses and other | 787.1 | 832.0 | ||||||
Total current assets | 4,232.6 | 3,928.9 | ||||||
Property, plant and equipment, at cost | 2,618.0 | 2,711.8 | ||||||
Less accumulated depreciation | (1,116.9 | ) | (1,161.6 | ) | ||||
Property, plant and equipment, net | 1,501.1 | 1,550.2 | ||||||
Goodwill | 361.2 | 374.9 | ||||||
Other intangible assets, net | 115.8 | 120.3 | ||||||
Other assets | 1,363.0 | 1,408.2 | ||||||
Total assets | $ | 7,573.7 | $ | 7,382.5 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 949.4 | $ | 572.0 | ||||
Accounts payable | 890.3 | 920.0 | ||||||
Accrued compensation | 222.3 | 266.6 | ||||||
Other accrued liabilities | 585.7 | 661.0 | ||||||
Sales and taxes other than income | 215.9 | 211.4 | ||||||
Income taxes | 43.8 | 73.6 | ||||||
Total current liabilities | 2,907.4 | 2,704.6 | ||||||
Long-term debt | 2,685.5 | 2,623.9 | ||||||
Employee benefit plans | 616.0 | 637.6 | ||||||
Long-term income taxes | 51.9 | 52.0 | ||||||
Other liabilities | 117.9 | 131.1 | ||||||
Total liabilities | $ | 6,378.7 | $ | 6,149.2 | ||||
Shareholders’ Equity | ||||||||
Common stock | $ | 189.3 | $ | 188.3 | ||||
Additional paid-in-capital | 2,138.3 | 2,119.6 | ||||||
Retained earnings | 4,318.1 | 4,357.8 | ||||||
Accumulated other comprehensive loss | (889.2 | ) | (876.7 | ) | ||||
Treasury stock, at cost | (4,578.6 | ) | (4,571.9 | ) | ||||
Total Avon shareholders’ equity | 1,177.9 | 1,217.1 | ||||||
Noncontrolling interests | 17.1 | 16.2 | ||||||
Total shareholders’ equity | $ | 1,195.0 | $ | 1,233.3 | ||||
Total liabilities and shareholders’ equity | $ | 7,573.7 | $ | 7,382.5 | ||||
Three Months Ended | ||||||||
March 31 | ||||||||
2013 | 2012 | |||||||
Cash Flows from Operating Activities | ||||||||
Net (loss) income | $ | (12.6 | ) | $ | 27.6 | |||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 57.0 | 60.5 | ||||||
Provision for doubtful accounts | 52.0 | 74.0 | ||||||
Provision for obsolescence | 29.6 | 28.3 | ||||||
Share-based compensation | 11.8 | 10.7 | ||||||
Deferred income taxes | (2.8 | ) | (26.2 | ) | ||||
Charge for Venezuelan monetary assets and liabilities | 34.1 | — | ||||||
Other | 21.6 | 13.4 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (62.9 | ) | (44.0 | ) | ||||
Inventories | (111.3 | ) | (80.1 | ) | ||||
Prepaid expenses and other | (0.5 | ) | 37.2 | |||||
Accounts payable and accrued liabilities | (98.8 | ) | (60.7 | ) | ||||
Income and other taxes | (15.3 | ) | (46.6 | ) | ||||
Noncurrent assets and liabilities | (20.8 | ) | (27.1 | ) | ||||
Net cash used by operating activities of continuing operations | (118.9 | ) | (33.0 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Capital expenditures | (43.5 | ) | (45.7 | ) | ||||
Disposal of assets | 9.3 | 4.5 | ||||||
Purchases of investments | (4.2 | ) | (0.1 | ) | ||||
Proceeds from sale of investments | 2.5 | — | ||||||
Net cash used by investing activities | (35.9 | ) | (41.3 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Cash dividends | (26.2 | ) | (100.0 | ) | ||||
Debt, net (maturities of three months or less) | 118.7 | 50.2 | ||||||
Proceeds from debt | 1,485.3 | 66.4 | ||||||
Repayment of debt | (1,173.3 | ) | (41.1 | ) | ||||
Interest rate swap termination | 88.1 | 43.6 | ||||||
Proceeds from exercise of stock options | 9.5 | 4.2 | ||||||
Excess tax benefit realized from share-based compensation | (0.1 | ) | (2.2 | ) | ||||
Repurchase of common stock | (6.8 | ) | (7.4 | ) | ||||
Net cash provided by financing activities | 495.2 | 13.7 | ||||||
Effect of exchange rate changes on cash and equivalents | (61.6 | ) | 30.7 | |||||
Net increase (decrease) in cash and equivalents | 278.8 | (29.9 | ) | |||||
Cash and equivalents at beginning of year | $ | 1,209.6 | $ | 1,245.1 | ||||
Cash and equivalents at end of period | $ | 1,488.4 | $ | 1,215.2 |
THREE MONTHS ENDED 3/31/13 |
REGIONAL RESULTS | ||||||||||||||||||||||
$ in Millions | Total Revenue US$ | C$ | Units Sold | Price/Mix C$ | Active Reps (1) | Average Order C$ | ||||||||||||||||
% var. vs 1Q12 | % var. vs 1Q12 | % var. vs 1Q12 | % var. vs 1Q12 | % var. vs 1Q12 | % var. vs 1Q12 | |||||||||||||||||
Latin America | $ | 1,144.4 | — | % | 7 | % | (2 | )% | 9 | % | 4 | % | 3 | % | ||||||||
Europe, Middle East & Africa | 733.1 | 1 | 3 | 4 | (1 | ) | 4 | (1 | ) | |||||||||||||
North America | 406.2 | (15 | ) | (15 | ) | (13 | ) | (2 | ) | (13 | ) | (2 | ) | |||||||||
Asia Pacific (1) | 200.0 | (10 | ) | (12 | ) | (11 | ) | (1 | ) | (4 | ) | (8 | ) | |||||||||
Total from operations | 2,483.7 | (4 | ) | — | (3 | ) | 3 | 1 | (1 | ) | ||||||||||||
Global and other | — | — | — | — | — | — | — | |||||||||||||||
Total | $ | 2,483.7 | (4 | )% | — | % | (3 | )% | 3 | % | 1 | % | (1 | )% | ||||||||
2013 GAAP Operating Profit (Loss)US$ | % var. vs 1Q12 | 2013 GAAP Operating Margin US$ | 2013 Adjusted Operating Profit US$ (2) | 2012 Adjusted Operating Profit US$ (2) | 2013 Adjusted Operating Margin (2) | 2012 Adjusted Operating Margin (2) | ||||||||||||||||
Latin America | $ | 101.4 | 100 | % | 8.9 | % | $ | 112.8 | $ | 55.5 | 9.9 | % | 4.8 | % | ||||||||
Europe, Middle East & Africa | 111.4 | 97 | 15.2 | 120.7 | 61.1 | 16.5 | 8.4 | |||||||||||||||
North America | (11.2 | ) | * | (2.8 | ) | (5.4 | ) | 8.2 | (1.3 | ) | 1.7 | |||||||||||
Asia Pacific | 11.1 | (28 | ) | 5.6 | 15.9 | 16.1 | 8.0 | 7.3 | ||||||||||||||
Total from operations | 212.7 | 68 | 8.6 | 244.0 | 140.9 | 9.8 | 5.5 | |||||||||||||||
Global and other | (40.6 | ) | 26 | — | (38.3 | ) | (42.1 | ) | — | — | ||||||||||||
Total | $ | 172.1 | 141 | % | 6.9 | % | $ | 205.7 | $ | 98.8 | 8.3 | % | 3.8 | % |
CATEGORY SALES (US$) |
Consolidated | ||||||||||
US$ | C$ | |||||||||
% var. vs 1Q12 | % var. vs 1Q12 | |||||||||
Beauty (color cosmetics/fragrances/skincare/personal care) | $ | 1,768.2 | (5 | )% | (1 | )% | ||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 429.8 | (4 | ) | (3 | ) | |||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 234.0 | 4 | 8 | |||||||
Net sales | $ | 2,432.0 | (4 | )% | — | % | ||||
Other revenue | 51.7 | 21 | 20 | |||||||
Total revenue | $ | 2,483.7 | (4 | )% | — | % | ||||
Beauty Category: | ||||||||||
Fragrance | 1 | % | 6 | % | ||||||
Color | (6 | ) | (2 | ) | ||||||
Skincare | (12 | ) | (9 | ) | ||||||
Personal care | (3 | ) | — | |||||||
* Calculation not meaningful | ||||||||||
(1) In the first quarter of 2013, we revised the definition of Active Representatives to exclude China. As previously disclosed, our business in China is predominantly retail, and as a result, we do not believe including China within the Change in Active Representatives calculation provides for a relevant indicator of underlying business trends. We have also adjusted our prior period Active Representatives calculations to be consistent with this updated definition. | ||||||||||
(2) For a further discussion on our Non-GAAP ("Adjusted") 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 3/31/13 | |||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | Loss on extinguishment of debt | Adjusted (Non-GAAP) | ||||||||||||||||
Cost of sales | $ | 941.6 | $ | (0.6 | ) | $ | 9.9 | $ | — | $ | 932.3 | |||||||||
Selling, general and administrative expenses | 1,370.0 | 20.9 | 3.3 | — | 1,345.8 | |||||||||||||||
Operating profit | 172.1 | 20.3 | 13.3 | — | 205.7 | |||||||||||||||
Income before taxes | 27.3 | 20.3 | 47.3 | 73.0 | 167.9 | |||||||||||||||
Income taxes | (39.9 | ) | (6.4 | ) | 16.6 | (26.8 | ) | (56.5 | ) | |||||||||||
Net (loss) income | $ | (12.6 | ) | $ | 13.9 | $ | 64.0 | $ | 46.2 | $ | 111.5 | |||||||||
Diluted EPS | (0.03 | ) | 0.03 | 0.15 | 0.11 | 0.26 | ||||||||||||||
Gross margin | 62.1 | % | — | 0.4 | — | 62.5 | % | |||||||||||||
SG&A as a % of revenues | 55.2 | % | (0.8 | ) | (0.1 | ) | — | 54.2 | % | |||||||||||
Operating margin | 6.9 | % | 0.8 | 0.5 | — | 8.3 | % | |||||||||||||
Effective tax rate | 146.1 | % | (0.3 | ) | (115.0 | ) | 2.7 | 33.6 | % | |||||||||||
SEGMENT OPERATING PROFIT (LOSS) | ||||||||||||||||||||
Latin America | $ | 101.4 | $ | (1.8 | ) | $ | 13.3 | $ | 112.8 | |||||||||||
Europe, Middle East & Africa | 111.4 | 9.2 | — | 120.7 | ||||||||||||||||
North America | (11.2 | ) | 5.8 | — | (5.4 | ) | ||||||||||||||
Asia Pacific | 11.1 | 4.8 | — | 15.9 | ||||||||||||||||
Global and other | (40.6 | ) | 2.3 | — | (38.3 | ) | ||||||||||||||
Total | $ | 172.1 | $ | 20.3 | $ | 13.3 | $ | 205.7 | ||||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||
Latin America | 8.9 | % | (0.2 | ) | 1.2 | % | 9.9 | % | ||||||||||||
Europe, Middle East & Africa | 15.2 | % | 1.3 | — | 16.5 | % | ||||||||||||||
North America | (2.8 | )% | 1.4 | — | (1.3 | )% | ||||||||||||||
Asia Pacific | 5.6 | % | 2.4 | — | 8.0 | % | ||||||||||||||
Global and other | — | — | — | — | ||||||||||||||||
Total | 6.9 | % | 0.8 | 0.5 | % | 8.3 | % |
$ in Millions (except per share data) | THREE MONTHS ENDED 3/31/12 | |||||||||||
Reported (GAAP) | CTI restructuring initiatives | Adjusted (Non-GAAP) | ||||||||||
Cost of sales | $ | 1,009.8 | $ | 2.7 | $ | 1,007.1 | ||||||
Selling, general and administrative expenses | 1,494.1 | 24.6 | 1,469.1 | |||||||||
Operating profit | 71.5 | 27.3 | 98.8 | |||||||||
Income before taxes | 40.8 | 27.3 | 68.1 | |||||||||
Income taxes | (13.2 | ) | (9.2 | ) | (22.4 | ) | ||||||
Net income | $ | 27.6 | $ | 18.1 | $ | 45.7 | ||||||
Diluted EPS | 0.06 | 0.04 | 0.10 | |||||||||
Gross margin | 60.8 | % | 0.1 | 60.9 | % | |||||||
SG&A as a % of revenues | 58.0 | % | (1.0 | ) | 57.1 | % | ||||||
Operating margin | 2.8 | % | 1.1 | 3.8 | % | |||||||
Effective tax rate | 32.3 | % | 0.6 | 32.9 | % | |||||||
SEGMENT OPERATING PROFIT | ||||||||||||
Latin America | $ | 50.8 | $ | 4.7 | $ | 55.5 | ||||||
Europe, Middle East & Africa | 56.5 | 4.6 | 61.1 | |||||||||
North America | 3.8 | 4.4 | 8.2 | |||||||||
Asia Pacific | 15.4 | 0.7 | 16.1 | |||||||||
Global and other | (55.0 | ) | 12.9 | (42.1 | ) | |||||||
Total | $ | 71.5 | $ | 27.3 | $ | 98.8 | ||||||
SEGMENT OPERATING MARGIN | ||||||||||||
Latin America | 4.4 | % | 0.4 | 4.8 | % | |||||||
Europe, Middle East & Africa | 7.8 | % | 0.6 | 8.4 | % | |||||||
North America | 0.8 | % | 0.9 | 1.7 | % | |||||||
Asia Pacific | 6.9 | % | 0.3 | 7.3 | % | |||||||
Global and other | — | — | — | |||||||||
Total | 2.8 | % | 1.1 | 3.8 | % |
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