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.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | 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: Group Vice President and Chief Accounting Officer |
Exhibit | ||
No. | Description | |
99.1 | Press Release of Avon Products, Inc. dated August 2, 2016 | |
Avon Reports Second-Quarter 2016 Results |
• | Second-Quarter Revenue declined 8% to $1.4 Billion; Increased 5% in Constant Dollars1 excluding the divestiture of Liz Earle2 |
• | Second-Quarter Active Representatives and Ending Representatives, both from Reportable Segments, increased 1% and 2%, respectively |
• | Second-Quarter Operating Profit and Adjusted1 Operating Profit increased 6% to $95 Million and $105 Million, respectively |
• | Second-Quarter Operating Margin increased 90 bps to 6.6%; Adjusted1 Operating Margin increased 100 bps to 7.3% |
• | Second-Quarter Diluted Earnings Per Share From Continuing Operations and Adjusted1 Diluted Earnings Per Share From Continuing Operations of $0.07 |
• | Total revenue for Avon Products, Inc. declined 8% to $1.4 billion, but increased 4% in constant dollars and increased 5% in constant dollars when excluding the impact of the sale of Liz Earle2. |
• | Total revenue from reportable segments declined 7% to $1.4 billion, but increased 5% in constant dollars. |
◦ | Active Representatives were up 1% year-over-year, as increases in Europe, Middle East & Africa and North Latin America were partially offset by declines in Asia Pacific. |
◦ | Average order increased 4% due to growth in all reportable segments as the Company continues to benefit from pricing. |
◦ | Ending Representatives improved 2% due to growth in Europe, Middle East & Africa and South Latin America, partially offset by declines in Asia Pacific. |
• | Gross margin was 60.6%, down 40 basis points while Adjusted gross margin was 60.6%, down 70 basis points. These year-over-year comparisons were negatively impacted by an approximate 290 basis point impact from foreign exchange, partially offset by pricing actions, favorable mix and lower supply chain costs. |
• | Operating margin was 6.6% in the quarter, up 90 basis points while Adjusted operating margin was 7.3%, up 100 basis points. These year-over-year comparisons benefited from the favorable net impact of price/mix, as well as continued benefits from cost savings initiatives, partially offset by approximately 350 basis points of unfavorable impact of foreign exchange. |
• | The effective tax rate from continuing operations in the quarter was 50.2% and on an Adjusted basis was 54.0%. |
• | Income from continuing operations, net of tax was $36 million, or $0.07 per diluted share, compared with $29 million, or $0.06 per diluted share, for the second quarter of 2015. Adjusted income from continuing operations, net of tax was $37 million, or $0.07 per diluted share, compared with $39 million, or $0.09 per diluted share, for the second quarter of 2015. Within the diluted earnings per share calculation, earnings allocated to convertible preferred stock was $5.9 million and this had a negative $0.01 impact on both Diluted earnings per share and Adjusted diluted earnings per share. |
• | Loss from discontinued operations, net of tax was $3 million associated with the previously separated North America business, or a loss of $0.01 per diluted share, compared with income of $1 million, or $0.00 per diluted share, for the second quarter of 2015. |
• | Foreign currency has impacted the Company’s financial results of continuing operations as shown in the table on the following page. |
Approximate Impact of Foreign Currency | |||||||||||||||
Second-Quarter 2016 | First-Half 2016 | ||||||||||||||
Estimated impact ($ in millions) | Estimated impact on diluted EPS | Estimated impact ($ in millions) | Estimated impact on diluted EPS | ||||||||||||
Impact on Reported (GAAP) results: | |||||||||||||||
Total revenue | (12) pts | (15) pts | |||||||||||||
Operating profit - transaction | $ | (45 | ) | $ | (0.06 | ) | $ | (115 | ) | $ | (0.17 | ) | |||
Operating profit - translation | (25 | ) | (0.04 | ) | (50 | ) | (0.07 | ) | |||||||
Total operating profit | (70 | ) | (0.10 | ) | (165 | ) | (0.24 | ) | |||||||
Operating margin | (350) bps | (460) bps | |||||||||||||
Revaluation of working capital | $ | 3 | $ | — | $ | 8 | $ | 0.01 | |||||||
Diluted EPS | $ | (0.10 | ) | $ | (0.23 | ) | |||||||||
Impact on Adjusted (Non-GAAP) results: | |||||||||||||||
Adjusted operating profit - transaction | $ | (45 | ) | $ | (0.06 | ) | $ | (115 | ) | $ | (0.17 | ) | |||
Adjusted operating profit - translation | (25 | ) | (0.04 | ) | (55 | ) | (0.08 | ) | |||||||
Total Adjusted operating profit | $ | (70 | ) | $ | (0.10 | ) | $ | (170 | ) | $ | (0.25 | ) | |||
Adjusted operating margin | (350) bps | (450) bps | |||||||||||||
Revaluation of working capital | $ | 3 | $ | — | $ | 13 | $ | 0.02 | |||||||
Adjusted diluted EPS | $ | (0.10 | ) | $ | (0.23 | ) | |||||||||
• | The Company recorded costs to implement restructuring within operating profit of approximately $9 million before tax, primarily related to contract terminations and employee-related costs as part of the previously announced Transformation Plan. |
• | The Company recorded an income tax benefit of approximately $7 million, which was recognized primarily as a result of the release of a valuation allowance associated with Russia. |
THREE MONTHS ENDED JUNE 30, 2016 | ||||||||||||||||||||||||
SEGMENT RESULTS | ||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
Revenue | Active Representatives | Average Order C$ | Units Sold | Price/ Mix C$ | Ending Representatives | |||||||||||||||||||
US $ | C$ | |||||||||||||||||||||||
Revenue & Drivers | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | |||||||||||||||||
Europe, Middle East & Africa | $ | 520.9 | (2 | )% | 7 | % | 4 | % | 3 | % | 2 | % | 5 | % | 6 | % | ||||||||
South Latin America | 535.7 | (12 | ) | 5 | — | 5 | (2 | ) | 7 | 1 | ||||||||||||||
North Latin America | 224.4 | (5 | ) | 6 | 4 | 2 | (6 | ) | 12 | — | ||||||||||||||
Asia Pacific | 141.9 | (10 | ) | (5 | ) | (8 | ) | 3 | (4 | ) | (1 | ) | (4 | ) | ||||||||||
Total from reportable segments | 1,422.9 | (7 | ) | 5 | 1 | 4 | (2 | ) | 7 | 2 | ||||||||||||||
Other operating segments and business activities | 11.4 | (66 | ) | (61 | ) | (100 | ) | * | (100 | ) | * | (100 | ) | |||||||||||
Total revenue | $ | 1,434.3 | (8 | )% | 4 | % | (2 | )% | 6 | % | (3 | )% | 7 | % | (1 | )% |
Operating Profit/Margin | 2016 Operating Profit US$ | 2016 Operating Margin US$ | Change in US$ vs 2Q15 | Change in C$ vs 2Q15 | ||||||||
Segment profit/margin | ||||||||||||
Europe, Middle East & Africa | $ | 83.4 | 16.0 | % | 220 bps | 250 bps | ||||||
South Latin America | 61.0 | 11.4 | — | 10 | ||||||||
North Latin America | 32.1 | 14.3 | 90 | 110 | ||||||||
Asia Pacific | 14.8 | 10.4 | — | 30 | ||||||||
Total from reportable segments | 191.3 | 13.4 | 100 | 130 | ||||||||
Other operating segments and business activities | 0.7 | 6.1 | * | * | ||||||||
Unallocated global expenses | (87.5 | ) | — | * | * | |||||||
CTI restructuring initiatives | (9.4 | ) | * | * | * | |||||||
Operating profit | $ | 95.1 | 6.6 | % | 90 bps | 160 bps | ||||||
• | Europe, Middle East & Africa revenue was down 2%, or up 7% in constant dollars. Constant-dollar revenue was driven by an increase in Active Representatives as well as higher average order. |
◦ | Russia revenue was down 7%, or up 15% in constant dollars, primarily driven by an increase in Active Representatives and higher average order. |
◦ | U.K. revenue was down 7%, or was relatively unchanged in constant dollars, as a decrease in Active Representatives was offset by higher average order. |
• | South Latin America revenue was down 12%, or up 5% in constant dollars primarily due to higher average order. Constant-dollar revenue was negatively impacted by an estimated 2 points due to MVA taxes in Brazil, which are additional VAT-like state taxes that went into effect in various jurisdictions in Brazil in the latter part of 2015. The Industrial Production Tax ("IPI") in Brazil, levied by the Brazilian government on cosmetics, which began in May 2015, had an estimated 1 point unfavorable impact on this constant-dollar revenue growth. Argentina contributed approximately 3 points to this constant-dollar revenue growth. |
◦ | Brazil revenue was down 10%, or up 2% in constant dollars, primarily due to higher average order, which was partially offset by a slight decline in Active Representatives. MVA taxes (discussed above) negatively impacted Brazil’s constant-dollar revenue growth by an estimated 4 points. Constant-dollar revenue growth was also negatively impacted by an estimated 2 points due to IPI taxes (discussed above). |
• | North Latin America revenue was down 5%, or up 6% in constant dollars. Constant-dollar revenue benefited from an increase in Active Representatives and higher average order. |
◦ | Mexico revenue was down 8%, or up 7% in constant dollars, primarily driven by higher average order and an increase in Active Representatives. |
• | Asia Pacific revenue was down 10%, or 5% in constant dollars as growth in the Philippines was not enough to offset declines in other markets. The region's constant-dollar revenue decline was driven by a decrease in Active Representatives, partially offset by higher average order. |
◦ | Philippines revenue was up 1% and up 6% in constant dollars driven by higher average order, partially offset by declines in Active Representatives. |
• | Net cash used by operating activities of continuing operations was $130 million for the six months ended June 30, 2016, compared with $107 million for the same period in 2015. Cash used by operating activities during 2016 was unfavorably impacted by lower cash-related earnings (including the unfavorable impact of foreign currency), and a contribution to the U.S. pension plan. When comparing the year-over-year use of cash from operations, the comparison benefits from the $67 million payment made during the first quarter of 2015 to the U.S. Securities and Exchange Commission in connection with the FCPA settlement in 2015, which did not recur in 2016. |
• | For the six months ended June 30, 2016, there was $44 million of net cash used by investing activities of continuing operations, a $4 million decrease from the prior year. |
• | Net cash provided by financing activities of continuing operations was $413 million for the six months ended June 30, 2016, a $472 million increase over the prior year, primarily due to the proceeds from the issuance of Series C Convertible Preferred Stock and the suspension of the common stock dividend. |
1. | The Company deconsolidated its Venezuela business as of March 31, 2016 due to the continued lack of exchangeability of the Venezuelan currency and its impact on the Company's ability to exercise sufficient control over the operations of the business in Venezuela. For reporting purposes, this means that the operating results (revenue and |
2. | The Company has changed its segment reporting: |
a. | To align with the revised operating model, the Company has changed its reportable segments to now be: Europe, Middle East & Africa; South Latin America; North Latin America; and Asia Pacific; |
b. | Avon is including the items below in Other operating segments and business activities: |
i. | Venezuela operating results, which have been deconsolidated as of March 31, 2016; |
ii. | The historical results of the Liz Earle business, which was sold in July 2015; |
iii. | Royalties for the use of the Company's name and products in various countries; and |
iv. | Product sales to the recently separated North America business. |
c. | Avon has changed the methodology of allocating global expenses to the segments. Segment profit excludes any allocation of global expenses other than global marketing expenses. The Company has allocated global marketing expenses to the reportable segments to ensure comparability between periods; and |
d. | Avon has changed the measure of profit disclosed for segments and refers to it as Segment profit and Segment margin, which is similar to what the Company previously used in its segment reporting as Adjusted operating profit and Adjusted operating margin, which will simplify the disclosure of segment profit. |
3. | The Company has begun disclosing the Change in Ending Representatives, which the Company believes can be a useful indicator of potential revenue performance; and |
4. | In the Form 10-Q filed for the quarter ended June 30, 2016, the Company has included a discussion of the Series C Convertible Preferred Stock that was issued to an affiliate of Cerberus Capital Management for $435 million during the first quarter of 2016. |
a. | The Series C Convertible Preferred Stock has cumulative dividends that accrue daily and are payable at a rate of 1.25% per quarter. These dividends are not presented on the Consolidated Statements of Operations; however, these preferred dividends and shares are considered when determining earnings per share through a series of calculations. |
b. | If a loss is reported in a period, the preferred dividends increase the loss allocated to common shareholders. The preferred shares do not impact the number of shares used in the basic or diluted EPS calculation as doing so would be antidilutive to the loss per share. |
c. | If income is reported for the period, the following two calculations are performed and the calculation with the lower result is presented: |
i. | Reported income is reduced by the larger of the preferred dividends accrued in the period or the percentage of earnings allocable to the preferred stock as if they had been converted to common stock, and the resulting amount is divided by the basic or diluted weighted shares outstanding; or |
ii. | The amount of shares that would be issued if the preferred shares had been converted are added to the weighted average basic or diluted shares outstanding and this total is divided into the reported income. |
Contacts: | |
INVESTORS: | MEDIA: |
Avon Investor Relations | Brunswick Group |
Gina Grant | Claudia Gray |
(212) 282-5320 | (212) 333-3810 |
ICR, Inc. | |
Allison Malkin/Caitlin Morahan | |
(203) 682-8200 |
Three Months Ended | Percent Change | Six Months Ended | Percent Change | |||||||||||||||||||
June 30 | June 30 | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Net sales | $ | 1,399.5 | $ | 1,544.5 | (9 | )% | $ | 2,679.5 | $ | 3,077.4 | (13 | )% | ||||||||||
Other revenue | 34.8 | 20.4 | 61.3 | 39.6 | ||||||||||||||||||
Total revenue | 1,434.3 | 1,564.9 | (8 | )% | 2,740.8 | 3,117.0 | (12 | )% | ||||||||||||||
Cost of sales | 565.0 | 611.0 | 1,083.8 | 1,222.7 | ||||||||||||||||||
Selling, general and administrative expenses | 774.2 | 864.2 | 1,554.1 | 1,837.5 | ||||||||||||||||||
Operating profit | 95.1 | 89.7 | 6 | % | 102.9 | 56.8 | 81 | % | ||||||||||||||
Interest expense | 33.2 | 30.5 | 65.9 | 58.6 | ||||||||||||||||||
Interest income | (5.3 | ) | (3.1 | ) | (9.3 | ) | (6.1 | ) | ||||||||||||||
Other (income) expense, net | (4.7 | ) | 1.1 | 132.5 | 19.8 | |||||||||||||||||
Total other expenses | 23.2 | 28.5 | 189.1 | 72.3 | ||||||||||||||||||
Income (loss) from continuing operations, before taxes | 71.9 | 61.2 | 17 | % | (86.2 | ) | (15.5 | ) | * | |||||||||||||
Income taxes | (36.1 | ) | (32.3 | ) | (33.8 | ) | (98.2 | ) | ||||||||||||||
Income (loss) from continuing operations, net of tax | 35.8 | 28.9 | 24 | % | (120.0 | ) | (113.7 | ) | (6 | )% | ||||||||||||
(Loss) income from discontinued operations, net of tax | (2.6 | ) | 0.8 | (12.2 | ) | (3.0 | ) | |||||||||||||||
Net income (loss) | 33.2 | 29.7 | (132.2 | ) | (116.7 | ) | ||||||||||||||||
Net income attributable to noncontrolling interests | (0.2 | ) | (0.9 | ) | (0.7 | ) | (1.8 | ) | ||||||||||||||
Net income (loss) attributable to Avon | $ | 33.0 | $ | 28.8 | 15 | % | $ | (132.9 | ) | $ | (118.5 | ) | (12 | )% | ||||||||
Earnings (loss) per share:(1) | ||||||||||||||||||||||
Basic | ||||||||||||||||||||||
Basic EPS from continuing operations | $ | 0.07 | $ | 0.06 | 17 | % | $ | (0.29 | ) | $ | (0.26 | ) | (12 | )% | ||||||||
Basic EPS from discontinued operations | (0.01 | ) | — | (0.03 | ) | (0.01 | ) | |||||||||||||||
Basic EPS attributable to Avon | $ | 0.06 | $ | 0.07 | (14 | )% | $ | (0.32 | ) | $ | (0.27 | ) | (19 | )% | ||||||||
Diluted | ||||||||||||||||||||||
Diluted EPS from continuing operations | $ | 0.07 | $ | 0.06 | 17 | % | $ | (0.29 | ) | $ | (0.26 | ) | (12 | )% | ||||||||
Diluted EPS from discontinued operations | (0.01 | ) | — | (0.03 | ) | (0.01 | ) | |||||||||||||||
Diluted EPS attributable to Avon | $ | 0.06 | $ | 0.07 | (14 | )% | $ | (0.32 | ) | $ | (0.27 | ) | (19 | )% | ||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||||
Basic | 436.9 | 435.2 | 436.4 | 435.0 | ||||||||||||||||||
Diluted | 436.9 | 435.2 | 436.4 | 435.0 | ||||||||||||||||||
* 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 loss per share calculation was $26.7 and $28.7 for the three months ended June 30, 2016 and 2015, respectively. Net loss allocable to common shares used in the basic and diluted loss per share calculation was ($138.4) and ($116.2) for the six months ended June 30, 2016 and 2015, respectively. |
June 30 | December 31 | |||||||
2016 | 2015 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 741.5 | $ | 686.9 | ||||
Accounts receivable, net | 466.2 | 443.0 | ||||||
Inventories | 665.5 | 624.0 | ||||||
Prepaid expenses and other | 314.0 | 296.1 | ||||||
Current assets of discontinued operations | 7.0 | 291.1 | ||||||
Total current assets | 2,194.2 | 2,341.1 | ||||||
Property, plant and equipment, at cost | 1,507.6 | 1,495.7 | ||||||
Less accumulated depreciation | (764.3 | ) | (728.8 | ) | ||||
Property, plant and equipment, net | 743.3 | 766.9 | ||||||
Goodwill | 96.1 | 92.3 | ||||||
Other assets | 604.5 | 490.0 | ||||||
Noncurrent assets of discontinued operations | — | 180.1 | ||||||
Total assets | $ | 3,638.1 | $ | 3,870.4 | ||||
Liabilities and Shareholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 48.8 | $ | 55.2 | ||||
Accounts payable | 723.7 | 774.2 | ||||||
Accrued compensation | 138.8 | 157.6 | ||||||
Other accrued liabilities | 417.9 | 419.6 | ||||||
Sales and taxes other than income | 144.3 | 174.9 | ||||||
Income taxes | 6.6 | 23.9 | ||||||
Payable to discontinued operations | — | 100.0 | ||||||
Current liabilities of discontinued operations | 12.0 | 489.7 | ||||||
Total current liabilities | 1,492.1 | 2,195.1 | ||||||
Long-term debt | 2,139.6 | 2,150.5 | ||||||
Employee benefit plans | 164.9 | 177.5 | ||||||
Long-term income taxes | 76.7 | 65.1 | ||||||
Other liabilities | 162.1 | 78.4 | ||||||
Noncurrent liabilities of discontinued operations | — | 260.2 | ||||||
Total liabilities | 4,035.4 | 4,926.8 | ||||||
Series C convertible preferred stock | 433.6 | — | ||||||
Shareholders’ Deficit | ||||||||
Common stock | 188.5 | 187.9 | ||||||
Additional paid-in capital | 2,266.1 | 2,254.0 | ||||||
Retained earnings | 2,308.0 | 2,448.1 | ||||||
Accumulated other comprehensive loss | (1,009.8 | ) | (1,366.2 | ) | ||||
Treasury stock, at cost | (4,597.8 | ) | (4,594.1 | ) | ||||
Total Avon shareholders’ deficit | (845.0 | ) | (1,070.3 | ) | ||||
Noncontrolling interests | 14.1 | 13.9 | ||||||
Total shareholders’ deficit | (830.9 | ) | (1,056.4 | ) | ||||
Total liabilities, series C convertible preferred stock and shareholders’ deficit | $ | 3,638.1 | $ | 3,870.4 | ||||
Six Months Ended | ||||||||
June 30 | ||||||||
2016 | 2015 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (132.2 | ) | $ | (116.7 | ) | ||
Loss from discontinued operations, net of tax | 12.2 | 3.0 | ||||||
Loss from continuing operations, net of tax | $ | (120.0 | ) | $ | (113.7 | ) | ||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
Depreciation | 41.7 | 49.7 | ||||||
Amortization | 14.7 | 17.4 | ||||||
Provision for doubtful accounts | 73.8 | 68.1 | ||||||
Provision for obsolescence | 18.5 | 22.7 | ||||||
Share-based compensation | 16.0 | 11.9 | ||||||
Foreign exchange losses | — | 6.1 | ||||||
Deferred income taxes | (15.0 | ) | 29.2 | |||||
Charge for Venezuelan monetary assets and liabilities | — | (4.2 | ) | |||||
Charge for Venezuelan non-monetary assets | — | 101.7 | ||||||
Loss on deconsolidation of Venezuela | 120.5 | — | ||||||
Other | 1.7 | 3.7 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (90.4 | ) | (80.1 | ) | ||||
Inventories | (69.6 | ) | (70.5 | ) | ||||
Prepaid expenses and other | 2.3 | (51.4 | ) | |||||
Accounts payable and accrued liabilities | (65.5 | ) | (42.8 | ) | ||||
Income and other taxes | (24.2 | ) | (25.5 | ) | ||||
Noncurrent assets and liabilities | (34.7 | ) | (29.2 | ) | ||||
Net cash used by operating activities of continuing operations | (130.2 | ) | (106.9 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Capital expenditures | (42.7 | ) | (40.4 | ) | ||||
Disposal of assets | 1.9 | 4.3 | ||||||
Purchases of investments | — | (11.9 | ) | |||||
Proceeds from sale of investments | — | 0.6 | ||||||
Reduction of cash due to Venezuela deconsolidation | (4.5 | ) | — | |||||
Other investing activities | 1.6 | — | ||||||
Net cash used by investing activities of continuing operations | (43.7 | ) | (47.4 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Cash dividends | — | (53.6 | ) | |||||
Debt, net (maturities of three months or less) | (11.6 | ) | (0.3 | ) | ||||
Proceeds from debt | 8.8 | 7.6 | ||||||
Repayment of debt | (6.2 | ) | (4.4 | ) | ||||
Repurchase of common stock | (3.7 | ) | (2.5 | ) | ||||
Net proceeds from the sale of series C convertible preferred stock | 426.3 | — | ||||||
Other financing activities | (1.0 | ) | (5.8 | ) | ||||
Net cash provided (used) by financing activities of continuing operations | 412.6 | (59.0 | ) | |||||
Cash Flows from Discontinued Operations | ||||||||
Net cash used by operating activities of discontinued operations | (65.9 | ) | (3.0 | ) | ||||
Net cash used by investing activities of discontinued operations | (96.7 | ) | (1.7 | ) | ||||
Net cash used by financing activities of discontinued operations | — | (10.1 | ) | |||||
Net cash used by discontinued operations | (162.6 | ) | (14.8 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (19.3 | ) | (29.4 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 56.8 | (257.5 | ) | |||||
Cash and cash equivalents at beginning of year(1) | 684.7 | 960.5 | ||||||
Cash and cash equivalents at end of period(2) | $ | 741.5 | $ | 703.0 | ||||
(1) | Includes cash and cash equivalents of discontinued operations of $(2.2) and $24.1 at the beginning of the year in 2016 and 2015. |
(2) | Includes cash and cash equivalents of discontinued operations of $1.0 and cash and cash equivalents held for sale of $6.1 at June 30, 2015. |
THREE MONTHS ENDED JUNE 30, 2016 | |||||||||||||||||
SEGMENT RESULTS | |||||||||||||||||
Revenue | Active Representatives | Average Order C$ | Units Sold | Price/ Mix C$ | Ending Representatives | ||||||||||||
US $ | C$ | ||||||||||||||||
Revenue & Drivers | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | % var. vs 2Q15 | ||||||||||
Europe, Middle East & Africa | $ | 520.9 | (2)% | 7% | 4% | 3% | 2% | 5% | 6% | ||||||||
South Latin America | 535.7 | (12) | 5 | — | 5 | (2) | 7 | 1 | |||||||||
North Latin America | 224.4 | (5) | 6 | 4 | 2 | (6) | 12 | — | |||||||||
Asia Pacific | 141.9 | (10) | (5) | (8) | 3 | (4) | (1) | (4) | |||||||||
Total from reportable segments | 1,422.9 | (7) | 5 | 1 | 4 | (2) | 7 | 2 | |||||||||
Other operating segments and business activities | 11.4 | (66) | (61) | (100) | * | (100) | * | (100) | |||||||||
Total revenue | $ | 1,434.3 | (8)% | 4% | (2)% | 6% | (3)% | 7% | (1)% |
Operating Profit/Margin | 2016 Operating Profit US$ | 2016 Operating Margin US$ | Change in US$ vs 2Q15 | Change in C$ vs 2Q15 | ||||||||
Segment profit/margin | ||||||||||||
Europe, Middle East & Africa | $ | 83.4 | 16.0 | % | 220 bps | 250 bps | ||||||
South Latin America | 61.0 | 11.4 | — | 10 | ||||||||
North Latin America | 32.1 | 14.3 | 90 | 110 | ||||||||
Asia Pacific | 14.8 | 10.4 | — | 30 | ||||||||
Total from reportable segments | 191.3 | 13.4 | 100 | 130 | ||||||||
Other operating segments and business activities | 0.7 | 6.1 | * | * | ||||||||
Unallocated global expenses | (87.5 | ) | — | * | * | |||||||
CTI restructuring initiatives | (9.4 | ) | * | * | * | |||||||
Operating profit | $ | 95.1 | 6.6 | % | 90 bps | 160 bps | ||||||
SIX MONTHS ENDED JUNE 30, 2016 | |||||||||||||||||
SEGMENT RESULTS | |||||||||||||||||
Revenue | Active Representatives | Average Order C$ | Units Sold | Price/ Mix C$ | Ending Representatives | ||||||||||||
US $ | C$ | ||||||||||||||||
Revenue & Drivers | % var. vs 1H15 | % var. vs 1H15 | % var. vs 1H15 | % var. vs 1H15 | % var. vs 1H15 | % var. vs 1H15 | % var. vs 1H15 | ||||||||||
Europe, Middle East & Africa | $ | 1,041.3 | (2)% | 9% | 6% | 3% | 5% | 4% | 6% | ||||||||
South Latin America | 962.1 | (20) | 2 | (2) | 4 | (7) | 9 | 1 | |||||||||
North Latin America | 429.1 | (8) | 4 | — | 4 | (5) | 9 | — | |||||||||
Asia Pacific | 278.6 | (14) | (7) | (9) | 2 | (6) | (1) | (4) | |||||||||
Total from reportable segments | 2,711.1 | (11) | 4 | — | 4 | (3) | 7 | 2 | |||||||||
Other operating segments and business activities | 29.7 | (57) | (52) | (75) | * | (84) | * | (100) | |||||||||
Total revenue | $ | 2,740.8 | (12)% | 3% | (2)% | 5% | (4)% | 7% | (1)% |
Operating Profit/Margin | 2016 Operating Profit US$ | 2016 Operating Margin US$ | Change in US$ vs 1H15 | Change in C$ vs 1H15 | ||||||||
Segment profit/margin | ||||||||||||
Europe, Middle East & Africa | $ | 152.1 | 14.6 | % | 170 bps | 220 bps | ||||||
South Latin America | 84.1 | 8.7 | (270) | (270) | ||||||||
North Latin America | 60.6 | 14.1 | 120 | 140 | ||||||||
Asia Pacific | 29.5 | 10.6 | (140) | (100) | ||||||||
Total from reportable segments | 326.3 | 12.0 | (20) | 10 | ||||||||
Other operating segments and business activities | 4.9 | 16.5 | * | * | ||||||||
Unallocated global expenses | (172.1 | ) | — | * | * | |||||||
CTI restructuring initiatives | (56.2 | ) | * | * | * | |||||||
Operating profit | $ | 102.9 | 3.8 | % | 200 bps | (50) bps | ||||||
CATEGORY SALES FROM REPORTABLE SEGMENTS (US$) | ||||||||||||
Consolidated | ||||||||||||
Three Months Ended June 30 | US$ | C$ | ||||||||||
2016 | 2015 | % var. vs 2Q15 | % var. vs 2Q15 | |||||||||
Beauty: | ||||||||||||
Skincare | $ | 417.6 | $ | 451.2 | (7)% | 4% | ||||||
Fragrance | 361.4 | 394.9 | (8) | 5 | ||||||||
Color | 254.3 | 270.6 | (6) | 6 | ||||||||
Total Beauty | 1,033.3 | 1,116.7 | (7) | 5 | ||||||||
Fashion & Home: | ||||||||||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 217.0 | 225.6 | (4) | 6 | ||||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 149.2 | 169.4 | (12) | 3 | ||||||||
Total Fashion & Home | 366.2 | 395.0 | (7) | 5 | ||||||||
Net sales from reportable segments | 1,399.5 | 1,511.7 | (7) | 5 | ||||||||
Net sales from Other operating segments and business activities | — | 32.8 | (100) | (100) | ||||||||
Net sales | 1,399.5 | 1,544.5 | (9) | 2 | ||||||||
Other revenue | 34.8 | 20.4 | 71 | 96 | ||||||||
Total revenue | $ | 1,434.3 | $ | 1,564.9 | (8) | 4 | ||||||
CATEGORY SALES FROM REPORTABLE SEGMENTS (US$) | ||||||||||||
Consolidated | ||||||||||||
Six Months Ended June 30 | US$ | C$ | ||||||||||
2016 | 2015 | % var. vs 1H15 | % var. vs 1H15 | |||||||||
Beauty: | ||||||||||||
Skincare | $ | 780.2 | $ | 896.9 | (13)% | 1% | ||||||
Fragrance | 693.2 | 782.3 | (11) | 4 | ||||||||
Color | 500.3 | 560.5 | (11) | 4 | ||||||||
Total Beauty | 1,973.7 | 2,239.7 | (12) | 3 | ||||||||
Fashion & Home: | ||||||||||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 413.7 | 439.4 | (6) | 7 | ||||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 278.5 | 330.3 | (16) | 2 | ||||||||
Total Fashion & Home | 692.2 | 769.7 | (10) | 5 | ||||||||
Net sales from reportable segments | 2,665.9 | 3,009.4 | (11) | 3 | ||||||||
Net sales from Other operating segments and business activities | 13.6 | 68.0 | (80) | (83) | ||||||||
Net sales | 2,679.5 | 3,077.4 | (13) | 2 | ||||||||
Other revenue | 61.3 | 39.6 | 55 | 81 | ||||||||
Total revenue | $ | 2,740.8 | $ | 3,117.0 | (12) | 3 | ||||||
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 | % | ||||||||||||
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 | % | |||||||||||||||||
THREE MONTHS ENDED JUNE 30, 2015 | ||||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | Other items | Special tax items | Adjusted (Non-GAAP) | |||||||||||||||||||
Total revenue | $ | 1,564.9 | $ | — | $ | — | $ | — | $ | — | $ | 1,564.9 | ||||||||||||
Cost of sales | 611.0 | — | 5.7 | — | — | 605.3 | ||||||||||||||||||
Selling, general and administrative expenses | 864.2 | 2.9 | 0.5 | — | — | 860.8 | ||||||||||||||||||
Operating profit | 89.7 | 2.9 | 6.2 | — | — | 98.8 | ||||||||||||||||||
Income from continuing operations, before taxes | 61.2 | 2.9 | 6.2 | 3.8 | — | 74.1 | ||||||||||||||||||
Income taxes | (32.3 | ) | — | — | — | (3.2 | ) | (35.5 | ) | |||||||||||||||
Income from continuing operations, net of tax | $ | 28.9 | $ | 2.9 | $ | 6.2 | $ | 3.8 | $ | (3.2 | ) | $ | 38.6 | |||||||||||
Diluted EPS from continuing operations | $ | 0.06 | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | (0.01 | ) | $ | 0.09 | |||||||||||
Gross margin | 61.0 | % | — | 0.4 | — | — | 61.3 | % | ||||||||||||||||
SG&A as a % of revenues | 55.2 | % | (0.2 | ) | — | — | — | 55.0 | % | |||||||||||||||
Operating margin | 5.7 | % | 0.2 | 0.4 | — | — | 6.3 | % | ||||||||||||||||
Effective tax rate | 52.8 | % | 47.9 | % | ||||||||||||||||||||
SIX MONTHS ENDED JUNE 30, 2015 | ||||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | Other items | Special tax items | Adjusted (Non-GAAP) | |||||||||||||||||||
Total revenue | $ | 3,117.0 | $ | — | $ | — | $ | — | $ | — | $ | 3,117.0 | ||||||||||||
Cost of sales | 1,222.7 | — | 20.9 | — | — | 1,201.8 | ||||||||||||||||||
Selling, general and administrative expenses | 1,837.5 | 30.1 | 91.7 | — | — | 1,715.7 | ||||||||||||||||||
Operating profit | 56.8 | 30.1 | 112.6 | — | — | 199.5 | ||||||||||||||||||
(Loss) income from continuing operations, before taxes | (15.5 | ) | 30.1 | 108.4 | 3.8 | — | 126.8 | |||||||||||||||||
Income taxes | (98.2 | ) | (3.5 | ) | 0.8 | — | 28.1 | (72.8 | ) | |||||||||||||||
(Loss) income from continuing operations, net of tax | $ | (113.7 | ) | $ | 26.6 | $ | 109.2 | $ | 3.8 | $ | 28.1 | $ | 54.0 | |||||||||||
Diluted EPS from continuing operations | $ | (0.26 | ) | $ | 0.06 | $ | 0.25 | $ | 0.01 | $ | 0.07 | $ | 0.12 | |||||||||||
Gross margin | 60.8 | % | — | 0.7 | — | — | 61.4 | % | ||||||||||||||||
SG&A as a % of revenues | 58.9 | % | (1.0 | ) | (2.9 | ) | — | — | 55.0 | % | ||||||||||||||
Operating margin | 1.8 | % | 1.0 | 3.6 | — | — | 6.4 | % | ||||||||||||||||
Effective tax rate | * | 57.4 | % | |||||||||||||||||||||
THREE MONTHS ENDED JUNE 30, 2016 | |||||||||||||
Revenue % change | Year-over-Year impact of foreign currency | C$ revenue % change | Year-over-Year C$ impact of Liz Earle | C$ revenue % change, excluding impact of Liz Earle | |||||||||
Total Avon | (8 | )% | 12 pts | 4 | % | 1 pt | 5 | % | |||||
SIX MONTHS ENDED JUNE 30, 2016 | |||||||||||||
Revenue % change | Year-over-Year impact of foreign currency | C$ revenue % change | Year-over-Year C$ impact of Liz Earle | C$ revenue % change, excluding impact of Liz Earle | |||||||||
Total Avon | (12 | )% | 15 pts | 3 | % | 1 pt | 4 | % | |||||
'-1%L\B3>0Q0QC+9QV]ZQK]M7M;R^N;6
MZF(M[*!A&80RSOE\_3CKM]151C