EARNINGS PER SHARE AND SHARE REPURCHASES

We compute earnings (loss) per share ("EPS") using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and participating securities. Our participating securities are our grants of restricted stock and restricted stock units, which contain non-forfeitable rights to dividend equivalents. We compute basic EPS by dividing net income allocated to common shareholders by the weighted-average number of shares outstanding during the year. Diluted EPS is calculated to give effect to all potentially dilutive common shares that were outstanding during the period.



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Shares in millions)	2013			2012			2013			2012
Numerator from continuing operations:
(Loss) income from continuing operations, less amounts attributable to noncontrolling interests	$	(6.1	)	$	35.2		$	63.6		$	126.3
Less: Loss (earnings) allocated to participating securities	.1			(.9		)	(.6		)	(2.8		)
(Loss) income from continuing operations allocated to common shareholders	(6.0		)	34.3			63.0			123.5
Numerator from discontinued operations:
Earnings (loss) from discontinued operations	$	.6		$	(3.6	)	$	(50.9	)	$	(6.6	)
Less: (Earnings) loss allocated to participating securities	—			(.6		)	.5			(1.7		)
Earnings (loss) allocated to common shareholders	.6			(4.2		)	(50.4		)	(8.3		)
Numerator attributable to Avon:
Net (loss) income attributable to Avon	$	(5.5	)	$	31.6		$	12.7		$	119.7
Less: Loss (earnings) allocated to participating securities	.1			(.8		)	(.1		)	(2.7		)
(Loss) income allocated to common shareholders	(5.4		)	30.8			12.6			117.0
Denominator:
Basic EPS weighted-average shares outstanding	433.5			432.1			433.3			431.8
Diluted effect of assumed conversion of stock options	—			.4			.9			.7
Diluted EPS adjusted weighted-average shares outstanding	433.5			432.5			434.2			432.5
(Loss) Earnings per Common Share from continuing operations:
Basic	$	(.01	)	$	.08		$	.15		$	.29
Diluted	$	(.01	)	$	.08		$	.15		$	.29
Loss per Common Share from discontinued operations:
Basic	$	—		$	(.01	)	$	(.12	)	$	(.02	)
Diluted	$	—		$	(.01	)	$	(.12	)	$	(.02	)
(Loss) Earnings per Common Share attributable to Avon:
Basic	$	(.01	)	$	.07		$	.03		$	.27
Diluted	$	(.01	)	$	.07		$	.03		$	.27

Amounts in the table above may not necessarily sum due to rounding.

At September 30, 2013 and 2012, we did not include stock options to purchase 17.8 million shares and 22.1 million shares of Avon common stock, respectively, in the calculations of diluted EPS because the exercise prices of those options were greater than the average market price, and therefore, their inclusion would have been anti-dilutive. We also did not include stock options to purchase .9 million shares for the three months ended September 30, 2013, as we had a loss from continuing operations, net of tax and the inclusion of these shares would decrease the net loss per share. Since the inclusion of such shares would be anti-dilutive, these are excluded from the calculation.

We purchased approximately .4 million shares of Avon common stock for $8.4 during the first nine months of 2013, as compared to approximately .4 million shares of Avon common stock for $8.5 during the first nine months of 2012, through acquisition of stock from employees in connection with tax payments upon vesting of restricted stock units and private transactions with a broker in connection with stock based obligations under our Deferred Compensation Plan.