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 November 3, 2016 | |
Avon Reports Third-Quarter 2016 Results |
• | Third-Quarter Revenue declined 2% to $1.4 Billion; Increased 4% in Constant Dollars |
• | Third-Quarter Active Representatives and Ending Representatives, both from Reportable Segments, were relatively unchanged and increased 1%, respectively |
• | Third-Quarter Operating Profit and Adjusted1 Operating Profit increased $67 Million to $112 Million and increased $44 Million to $99 Million, respectively |
• | Third-Quarter Operating Margin increased 480 bps to 8.0%; Adjusted1 Operating Margin increased 310 bps to 7.0% |
• | Third-Quarter Diluted Earnings Per Share From Continuing Operations of $0.07; Adjusted1 Diluted Earnings Per Share From Continuing Operations of $0.02 |
• | Total revenue for Avon Products, Inc. declined 2% to $1.4 billion, but increased 4% in constant dollars. |
• | Total revenue from reportable segments declined 2% to $1.4 billion, but increased 4% in constant dollars. |
◦ | Active Representatives were relatively unchanged year-over-year, as increases in South Latin America and Europe, Middle East & Africa were 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 1% due to growth in Europe, Middle East & Africa and South Latin America, partially offset by declines in Asia Pacific. |
• | Gross margin was 60.9%, down 20 basis points while Adjusted gross margin was 60.9%, down 60 basis points. These year-over-year comparisons were negatively impacted by an approximate 250 basis point impact from foreign exchange, largely offset by inflationary and strategic pricing and lower supply chain costs. |
• | Operating margin was 8.0% in the quarter, up 480 basis points while Adjusted operating margin was 7.0%, up 310 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. These benefits were partially offset by approximately 260 basis points of unfavorable impact of foreign exchange on operating margin and approximately 270 basis points of unfavorable impact of foreign exchange on Adjusted operating margin. |
• | The effective tax rate from continuing operations in the quarter was 51.3% and on an Adjusted basis was 72.5%. |
• | Income from continuing operations, net of tax was $36 million, or $0.07 per diluted share, compared with a loss of $668 million, or $1.51 per diluted share, for the third quarter of 2015. Adjusted income from continuing operations, net of tax was $16 million, or $0.02 per diluted share, compared with a loss of $48 million, or $0.11 per diluted share, for the third quarter of 2015. Earnings allocated to convertible preferred stock had a negative $0.01 impact on Diluted earnings per share and a negative $0.02 impact on Adjusted diluted earnings per share. |
• | Loss from discontinued operations, net of tax was $1 million associated with the previously separated North America business, or $0.00 per diluted share, compared with a loss of $29 million, or $0.06 per diluted share, for the third quarter of 2015. |
• | Foreign currency has impacted the Company’s financial results of continuing operations as shown in the table on the following page. |
Approximate Impact of Foreign Currency | |||||||||||||||
Third-Quarter 2016 | Year-to-Date 2016 | ||||||||||||||
Estimated impact ($ in millions) | Estimated impact on diluted EPS | Estimated impact ($ in millions) | Estimated impact on diluted EPS | ||||||||||||
Impact on Reported (GAAP) results: | |||||||||||||||
Total revenue | (6) pts | (12) pts | |||||||||||||
Operating profit - transaction | $ | (35 | ) | $ | (0.05 | ) | $ | (150 | ) | $ | (0.21 | ) | |||
Operating profit - translation | (10 | ) | (0.01 | ) | (60 | ) | (0.08 | ) | |||||||
Total operating profit | $ | (45 | ) | $ | (0.06 | ) | $ | (210 | ) | $ | (0.30 | ) | |||
Operating margin | (260) bps | (390) bps | |||||||||||||
Revaluation of working capital | $ | 25 | $ | 0.04 | $ | 33 | $ | 0.05 | |||||||
Diluted EPS | $ | (0.03 | ) | $ | (0.25 | ) | |||||||||
Impact on Adjusted (Non-GAAP) results: | |||||||||||||||
Adjusted operating profit - transaction | $ | (35 | ) | $ | (0.05 | ) | $ | (150 | ) | $ | (0.21 | ) | |||
Adjusted operating profit - translation | (10 | ) | (0.01 | ) | (65 | ) | (0.09 | ) | |||||||
Total Adjusted operating profit | $ | (45 | ) | $ | (0.06 | ) | $ | (215 | ) | $ | (0.31 | ) | |||
Adjusted operating margin | (270) bps | (390) bps | |||||||||||||
Revaluation of working capital | $ | 25 | $ | 0.04 | $ | 38 | $ | 0.05 | |||||||
Adjusted diluted EPS | $ | (0.03 | ) | $ | (0.25 | ) | |||||||||
Amounts in the table above may not necessarily sum because the computations are made independently. |
• | The Company settled claims relating to professional services that had been provided to the Company prior to 2013 in connection with a previously disclosed legal matter. The proceeds, net of legal fees, of approximately $27 million were recognized as a reduction of selling, general and administrative expenses in the third quarter of 2016 and were received by the Company in the fourth quarter of 2016. |
• | The Company recorded costs to implement restructuring within operating profit of approximately $14 million before tax (approximately $11 million after tax), primarily related to employee-related costs, as part of the previously announced Transformation Plan. |
• | The Company recorded a net gain on extinguishment of debt of approximately $4 million related to debt repayments through cash tender offers. |
THREE MONTHS ENDED SEPTEMBER 30, 2016 | ||||||||||||||||||||||||
SEGMENT RESULTS | ||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
Revenue | Active Representatives | Average Order C$ | Units Sold | Price/ Mix C$ | Ending Representatives | |||||||||||||||||||
US$ | C$ | |||||||||||||||||||||||
Revenue & Drivers | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | |||||||||||||||||
Europe, Middle East & Africa | $ | 476.4 | (4 | )% | 2 | % | 1 | % | 1 | % | (1 | )% | 3 | % | 5 | % | ||||||||
South Latin America | 594.8 | 4 | 9 | 2 | 7 | 2 | 7 | 3 | ||||||||||||||||
North Latin America | 196.8 | (6 | ) | 3 | — | 3 | (6 | ) | 9 | (1 | ) | |||||||||||||
Asia Pacific | 132.8 | (9 | ) | (7 | ) | (12 | ) | 5 | (8 | ) | 1 | (7 | ) | |||||||||||
Total from reportable segments | 1,400.8 | (2 | ) | 4 | — | 4 | (1 | ) | 5 | 1 | ||||||||||||||
Other operating segments and business activities | 8.0 | (36 | ) | (5 | ) | (100 | ) | * | (100 | ) | * | (100 | ) | |||||||||||
Total revenue | $ | 1,408.8 | (2 | )% | 4 | % | (2 | )% | 6 | % | (2 | )% | 6 | % | (1 | )% |
Operating Profit/Margin | 2016 Operating Profit (Loss) US$ | 2016 Operating Margin US$ | Change in US$ vs 3Q15 | Change in C$ vs 3Q15 | ||||||||
Segment profit/margin | ||||||||||||
Europe, Middle East & Africa | $ | 66.2 | 13.9 | % | (10) bps | (60) bps | ||||||
South Latin America | 73.8 | 12.4 | 310 | 300 | ||||||||
North Latin America | 24.4 | 12.4 | 390 | 410 | ||||||||
Asia Pacific | 12.7 | 9.6 | (100) | (90) | ||||||||
Total from reportable segments | 177.1 | 12.6 | 170 | 150 | ||||||||
Other operating segments and business activities | (0.8 | ) | ||||||||||
Unallocated global expenses | (77.5 | ) | ||||||||||
CTI restructuring initiatives | (14.0 | ) | ||||||||||
Legal settlement | 27.2 | |||||||||||
Operating profit | $ | 112.0 | 8.0 | % | 480 bps | 480 bps | ||||||
• | Europe, Middle East & Africa revenue was down 4%, or up 2% in constant dollars. Constant-dollar revenue was driven by growth in Active Representatives and average order. |
◦ | Russia revenue was down 2%, or up 2% in constant dollars, primarily driven by an increase in Active Representatives, partially offset by lower average order. |
◦ | U.K. revenue was down 14%, or up 1% in constant dollars, as higher average order was partially offset by a decrease in Active Representatives. |
• | South Latin America revenue was up 4%, or 9% in constant dollars, due to higher average order and an increase in Active Representatives. 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 late 2015. Argentina contributed approximately 5 points to this constant-dollar revenue growth, primarily due to inflationary pricing. |
◦ | Brazil revenue was up 14%, or 6% in constant dollars, driven by increases in Active Representatives and average order. MVA taxes (discussed above) negatively impacted Brazil’s constant-dollar revenue growth by an estimated 3 points. |
• | North Latin America revenue was down 6%, or up 3% in constant dollars. Constant-dollar revenue benefited from higher average order. |
◦ | Mexico revenue was down 5%, or up 9% in constant dollars, primarily driven by higher average order and an increase in Active Representatives. |
• | Asia Pacific revenue was down 9%, or 7% in constant dollars due to declines in most markets. The segment's constant-dollar revenue decline was driven by a decrease in Active Representatives, partially offset by higher average order. |
◦ | Philippines revenue decreased 2%, or was relatively unchanged in constant dollars as higher average order was offset by declines in Active Representatives. |
• | Net cash used by operating activities of continuing operations was $104 million for the nine months ended September 30, 2016, compared with $90 million for the same period in 2015. Cash used by operating activities during 2016 was unfavorably impacted by the timing of payments, primarily for inventory, increased levels of accounts receivable, 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 nine months ended September 30, 2016, there was $68 million of net cash used by investing activities of continuing operations, compared with net cash provided of $140 million in the same period in 2015. Cash provided by investing activities of continuing operations in 2015 included net proceeds on the sale of Liz Earle. |
• | Net cash provided by financing activities of continuing operations was $569 million for the nine months ended September 30, 2016, a $914 million increase over the prior year, primarily due to: |
◦ | net proceeds from Senior Secured Notes issued in the third quarter of 2016; |
◦ | the issuance of Series C Convertible Preferred Stock; |
◦ | the suspension of the common stock dividend; and |
◦ | the prepayment of 2.375% Notes in the third quarter of 2015; partially offset by |
◦ | payments for the August 2016 cash tender offers. |
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 | Nine Months Ended | Percent Change | |||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Net sales | $ | 1,367.5 | $ | 1,413.3 | (3 | )% | $ | 4,047.0 | $ | 4,490.7 | (10 | )% | ||||||||||
Other revenue | 41.3 | 22.9 | 102.6 | 62.5 | ||||||||||||||||||
Total revenue | 1,408.8 | 1,436.2 | (2 | )% | 4,149.6 | 4,553.2 | (9 | )% | ||||||||||||||
Cost of sales | 550.9 | 559.0 | 1,634.7 | 1,781.7 | ||||||||||||||||||
Selling, general and administrative expenses | 745.9 | 831.9 | 2,300.0 | 2,669.4 | ||||||||||||||||||
Operating profit | 112.0 | 45.3 | * | 214.9 | 102.1 | * | ||||||||||||||||
Interest expense | 34.4 | 29.6 | 100.3 | 88.2 | ||||||||||||||||||
(Gain) loss on extinguishment of debt | (3.9 | ) | 5.5 | (3.9 | ) | 5.5 | ||||||||||||||||
Interest income | (3.5 | ) | (3.6 | ) | (12.8 | ) | (9.7 | ) | ||||||||||||||
Other expense, net | 10.4 | 29.0 | 142.9 | 47.5 | ||||||||||||||||||
Gain on sale of business | — | (46.2 | ) | — | (44.9 | ) | ||||||||||||||||
Total other expenses | 37.4 | 14.3 | 226.5 | 86.6 | ||||||||||||||||||
Income (loss) from continuing operations, before taxes | 74.6 | 31.0 | * | (11.6 | ) | 15.5 | * | |||||||||||||||
Income taxes | (38.3 | ) | (699.0 | ) | (72.1 | ) | (797.2 | ) | ||||||||||||||
Income (loss) from continuing operations, net of tax | 36.3 | (668.0 | ) | * | (83.7 | ) | (781.7 | ) | 89 | % | ||||||||||||
Loss from discontinued operations, net of tax | (0.7 | ) | (29.0 | ) | (12.9 | ) | (32.0 | ) | ||||||||||||||
Net income (loss) | 35.6 | (697.0 | ) | (96.6 | ) | (813.7 | ) | |||||||||||||||
Net loss (income) attributable to noncontrolling interests | 0.4 | — | (0.3 | ) | (1.8 | ) | ||||||||||||||||
Net income (loss) attributable to Avon | $ | 36.0 | $ | (697.0 | ) | * | $ | (96.9 | ) | $ | (815.5 | ) | 88 | % | ||||||||
Earnings (loss) per share:(1) | ||||||||||||||||||||||
Basic | ||||||||||||||||||||||
Basic EPS from continuing operations | $ | 0.07 | $ | (1.51 | ) | * | $ | (0.22 | ) | $ | (1.77 | ) | 88 | % | ||||||||
Basic EPS from discontinued operations | — | (0.06 | ) | (0.03 | ) | (0.07 | ) | |||||||||||||||
Basic EPS attributable to Avon | $ | 0.07 | $ | (1.58 | ) | * | $ | (0.25 | ) | $ | (1.84 | ) | 86 | % | ||||||||
Diluted | ||||||||||||||||||||||
Diluted EPS from continuing operations | $ | 0.07 | $ | (1.51 | ) | * | $ | (0.22 | ) | $ | (1.77 | ) | 88 | % | ||||||||
Diluted EPS from discontinued operations | — | (0.06 | ) | (0.03 | ) | (0.07 | ) | |||||||||||||||
Diluted EPS attributable to Avon | $ | 0.07 | $ | (1.58 | ) | * | $ | (0.25 | ) | $ | (1.84 | ) | 86 | % | ||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||||
Basic | 437.4 | 435.4 | 436.7 | 435.1 | ||||||||||||||||||
Diluted | 437.4 | 435.4 | 436.7 | 435.1 | ||||||||||||||||||
* 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 earnings (loss) allocable to common shares used in the basic and diluted earnings (loss) per share calculation was $29.4 and ($685.9) for the three months ended September 30, 2016 and 2015, respectively. Net loss allocable to common shares used in the basic and diluted loss per share calculation was ($108.4) and ($802.7) for the nine months ended September 30, 2016 and 2015, respectively. |
September 30 | December 31 | |||||||
2016 | 2015 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 901.7 | $ | 686.9 | ||||
Accounts receivable, net | 505.2 | 443.0 | ||||||
Inventories | 706.4 | 624.0 | ||||||
Prepaid expenses and other | 323.5 | 296.1 | ||||||
Current assets of discontinued operations | 4.7 | 291.1 | ||||||
Total current assets | 2,441.5 | 2,341.1 | ||||||
Property, plant and equipment, at cost | 1,529.4 | 1,495.7 | ||||||
Less accumulated depreciation | (782.7 | ) | (728.8 | ) | ||||
Property, plant and equipment, net | 746.7 | 766.9 | ||||||
Goodwill | 98.1 | 92.3 | ||||||
Other assets | 619.2 | 490.0 | ||||||
Noncurrent assets of discontinued operations | — | 180.1 | ||||||
Total assets | $ | 3,905.5 | $ | 3,870.4 | ||||
Liabilities and Shareholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 111.3 | $ | 55.2 | ||||
Accounts payable | 760.1 | 774.2 | ||||||
Accrued compensation | 156.0 | 157.6 | ||||||
Other accrued liabilities | 399.7 | 419.6 | ||||||
Sales and taxes other than income | 144.0 | 174.9 | ||||||
Income taxes | 4.4 | 23.9 | ||||||
Payable to discontinued operations | — | 100.0 | ||||||
Current liabilities of discontinued operations | 12.9 | 489.7 | ||||||
Total current liabilities | 1,588.4 | 2,195.1 | ||||||
Long-term debt | 2,226.8 | 2,150.5 | ||||||
Employee benefit plans | 162.5 | 177.5 | ||||||
Long-term income taxes | 77.1 | 65.1 | ||||||
Other liabilities | 187.1 | 78.4 | ||||||
Noncurrent liabilities of discontinued operations | — | 260.2 | ||||||
Total liabilities | 4,241.9 | 4,926.8 | ||||||
Series C convertible preferred stock | 439.1 | — | ||||||
Shareholders’ Deficit | ||||||||
Common stock | 188.7 | 187.9 | ||||||
Additional paid-in capital | 2,272.2 | 2,254.0 | ||||||
Retained earnings | 2,338.5 | 2,448.1 | ||||||
Accumulated other comprehensive loss | (989.0 | ) | (1,366.2 | ) | ||||
Treasury stock, at cost | (4,599.4 | ) | (4,594.1 | ) | ||||
Total Avon shareholders’ deficit | (789.0 | ) | (1,070.3 | ) | ||||
Noncontrolling interests | 13.5 | 13.9 | ||||||
Total shareholders’ deficit | (775.5 | ) | (1,056.4 | ) | ||||
Total liabilities, series C convertible preferred stock and shareholders’ deficit | $ | 3,905.5 | $ | 3,870.4 | ||||
Nine Months Ended | ||||||||
September 30 | ||||||||
2016 | 2015 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (96.6 | ) | $ | (813.7 | ) | ||
Loss from discontinued operations, net of tax | 12.9 | 32.0 | ||||||
Loss from continuing operations, net of tax | $ | (83.7 | ) | $ | (781.7 | ) | ||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
Depreciation | 62.5 | 72.0 | ||||||
Amortization | 22.4 | 25.0 | ||||||
Provision for doubtful accounts | 114.6 | 105.9 | ||||||
Provision for obsolescence | 26.6 | 35.2 | ||||||
Share-based compensation | 23.1 | 28.9 | ||||||
Foreign exchange (gains) losses | (0.3 | ) | 27.5 | |||||
Deferred income taxes | (16.3 | ) | 667.1 | |||||
Charge for Venezuelan monetary assets and liabilities | — | (4.2 | ) | |||||
Charge for Venezuelan non-monetary assets | — | 101.7 | ||||||
Loss on deconsolidation of Venezuela | 120.5 | — | ||||||
Pre-tax gain on sale of business | — | (44.9 | ) | |||||
Other | 3.0 | 10.2 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (167.1 | ) | (117.4 | ) | ||||
Inventories | (109.5 | ) | (153.5 | ) | ||||
Prepaid expenses and other | (16.8 | ) | 1.2 | |||||
Accounts payable and accrued liabilities | (41.7 | ) | (34.5 | ) | ||||
Income and other taxes | (15.3 | ) | 18.8 | |||||
Noncurrent assets and liabilities | (26.3 | ) | (47.2 | ) | ||||
Net cash used by operating activities of continuing operations | (104.3 | ) | (89.9 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Capital expenditures | (68.2 | ) | (58.4 | ) | ||||
Disposal of assets | 3.3 | 5.7 | ||||||
Net proceeds from sale of business | — | 208.3 | ||||||
Purchases of investments | — | (25.0 | ) | |||||
Net proceeds from sale of investments | — | 9.0 | ||||||
Reduction of cash due to Venezuela deconsolidation | (4.5 | ) | — | |||||
Other investing activities | 1.6 | — | ||||||
Net cash (used) provided by investing activities of continuing operations | (67.8 | ) | 139.6 | |||||
Cash Flows from Financing Activities | ||||||||
Cash dividends | — | (80.7 | ) | |||||
Debt, net (maturities of three months or less) | (31.4 | ) | (4.6 | ) | ||||
Proceeds from debt | 508.7 | 7.6 | ||||||
Repayment of debt | (311.9 | ) | (258.7 | ) | ||||
Repurchase of common stock | (5.3 | ) | (3.0 | ) | ||||
Net proceeds from the sale of series C convertible preferred stock | 426.3 | — | ||||||
Other financing activities | (17.2 | ) | (5.9 | ) | ||||
Net cash provided (used) by financing activities of continuing operations | 569.2 | (345.3 | ) | |||||
Cash Flows from Discontinued Operations | ||||||||
Net cash used by operating activities of discontinued operations | (67.6 | ) | (6.8 | ) | ||||
Net cash used by investing activities of discontinued operations | (94.6 | ) | (3.4 | ) | ||||
Net cash used by financing activities of discontinued operations | — | (12.6 | ) | |||||
Net cash used by discontinued operations | (162.2 | ) | (22.8 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (17.9 | ) | (54.7 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 217.0 | (373.1 | ) | |||||
Cash and cash equivalents at beginning of year(1) | 684.7 | 960.5 | ||||||
Cash and cash equivalents at end of period(2) | $ | 901.7 | $ | 587.4 |
(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 respectively. |
(2) | Includes cash and cash equivalents of discontinued operations of $1.1 at September 30, 2015. |
THREE MONTHS ENDED SEPTEMBER 30, 2016 | |||||||||||||||||
SEGMENT RESULTS | |||||||||||||||||
Revenue | Active Representatives | Average Order C$ | Units Sold | Price/ Mix C$ | Ending Representatives | ||||||||||||
US$ | C$ | ||||||||||||||||
Revenue & Drivers | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | % var. vs 3Q15 | ||||||||||
Europe, Middle East & Africa | $ | 476.4 | (4)% | 2% | 1% | 1% | (1)% | 3% | 5% | ||||||||
South Latin America | 594.8 | 4 | 9 | 2 | 7 | 2 | 7 | 3 | |||||||||
North Latin America | 196.8 | (6) | 3 | — | 3 | (6) | 9 | (1) | |||||||||
Asia Pacific | 132.8 | (9) | (7) | (12) | 5 | (8) | 1 | (7) | |||||||||
Total from reportable segments | 1,400.8 | (2) | 4 | — | 4 | (1) | 5 | 1 | |||||||||
Other operating segments and business activities | 8.0 | (36) | (5) | (100) | * | (100) | * | (100) | |||||||||
Total revenue | $ | 1,408.8 | (2)% | 4% | (2)% | 6% | (2)% | 6% | (1)% |
Operating Profit/Margin | 2016 Operating Profit (Loss) US$ | 2016 Operating Margin US$ | Change in US$ vs 3Q15 | Change in C$ vs 3Q15 | ||||||||
Segment profit/margin | ||||||||||||
Europe, Middle East & Africa | $ | 66.2 | 13.9 | % | (10) bps | (60) bps | ||||||
South Latin America | 73.8 | 12.4 | 310 | 300 | ||||||||
North Latin America | 24.4 | 12.4 | 390 | 410 | ||||||||
Asia Pacific | 12.7 | 9.6 | (100) | (90) | ||||||||
Total from reportable segments | 177.1 | 12.6 | 170 | 150 | ||||||||
Other operating segments and business activities | (0.8 | ) | ||||||||||
Unallocated global expenses | (77.5 | ) | ||||||||||
CTI restructuring initiatives | (14.0 | ) | ||||||||||
Legal settlement | 27.2 | |||||||||||
Operating profit | $ | 112.0 | 8.0 | % | 480 bps | 480 bps | ||||||
NINE MONTHS ENDED SEPTEMBER 30, 2016 | |||||||||||||||||
SEGMENT RESULTS | |||||||||||||||||
Revenue | Active Representatives | Average Order C$ | Units Sold | Price/ Mix C$ | Ending Representatives | ||||||||||||
US $ | C$ | ||||||||||||||||
Revenue & Drivers | % var. vs 9M15 | % var. vs 9M15 | % var. vs 9M15 | % var. vs 9M15 | % var. vs 9M15 | % var. vs 9M15 | % var. vs 9M15 | ||||||||||
Europe, Middle East & Africa | $ | 1,517.7 | (3)% | 7% | 4% | 3% | 3% | 4% | 5% | ||||||||
South Latin America | 1,556.9 | (12) | 4 | (1) | 5 | (4) | 8 | 3 | |||||||||
North Latin America | 625.9 | (7) | 4 | — | 4 | (5) | 9 | (1) | |||||||||
Asia Pacific | 411.4 | (12) | (7) | (10) | 3 | (7) | — | (7) | |||||||||
Total from reportable segments | 4,111.9 | (8) | 4 | — | 4 | (2) | 6 | 1 | |||||||||
Other operating segments and business activities | 37.7 | (54) | (46) | (82) | * | (87) | * | (100) | |||||||||
Total revenue | $ | 4,149.6 | (9)% | 3% | (2)% | 5% | (3)% | 6% | (1)% |
Operating Profit/Margin | 2016 Operating Profit US$ | 2016 Operating Margin US$ | Change in US$ vs 9M15 | Change in C$ vs 9M15 | ||||||||
Segment profit/margin | ||||||||||||
Europe, Middle East & Africa | $ | 218.3 | 14.4 | % | 120 bps | 130 bps | ||||||
South Latin America | 157.9 | 10.1 | (60) | (60) | ||||||||
North Latin America | 85.0 | 13.6 | 200 | 230 | ||||||||
Asia Pacific | 42.2 | 10.3 | (130) | (100) | ||||||||
Total from reportable segments | 503.4 | 12.2 | 40 | 60 | ||||||||
Other operating segments and business activities | 4.1 | |||||||||||
Unallocated global expenses | (249.6 | ) | ||||||||||
CTI restructuring initiatives | (70.2 | ) | ||||||||||
Legal settlement | 27.2 | |||||||||||
Operating profit | $ | 214.9 | 5.2 | % | 300 bps | 130 bps | ||||||
CATEGORY SALES FROM REPORTABLE SEGMENTS (US$) | ||||||||||||
Consolidated | ||||||||||||
Three Months Ended September 30 | US$ | C$ | ||||||||||
2016 | 2015 | % var. vs 3Q15 | % var. vs 3Q15 | |||||||||
Beauty: | ||||||||||||
Skincare | $ | 397.3 | $ | 405.4 | (2)% | 2% | ||||||
Fragrance | 373.6 | 379.1 | (1) | 5 | ||||||||
Color | 244.0 | 249.1 | (2) | 3 | ||||||||
Total Beauty | 1,014.9 | 1,033.6 | (2) | 3 | ||||||||
Fashion & Home: | ||||||||||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 202.2 | 214.8 | (6) | (1) | ||||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 150.4 | 152.7 | (2) | 7 | ||||||||
Total Fashion & Home | 352.6 | 367.5 | (4) | 2 | ||||||||
Net sales from reportable segments | 1,367.5 | 1,401.1 | (2) | 3 | ||||||||
Other revenue from reportable segments | 33.3 | 22.7 | 47 | 47 | ||||||||
Total revenue from reportable segments | 1,400.8 | 1,423.8 | (2) | 4 | ||||||||
Total revenue from Other operating segments and business activities | 8.0 | 12.4 | (35) | (5) | ||||||||
Total revenue | $ | 1,408.8 | $ | 1,436.2 | (2) | 4 | ||||||
CATEGORY SALES FROM REPORTABLE SEGMENTS (US$) | ||||||||||||
Consolidated | ||||||||||||
Nine Months Ended September 30 | US$ | C$ | ||||||||||
2016 | 2015 | % var. vs 9M15 | % var. vs 9M15 | |||||||||
Beauty: | ||||||||||||
Skincare | $ | 1,177.5 | $ | 1,302.3 | (10)% | 1% | ||||||
Fragrance | 1,066.8 | 1,161.4 | (8) | 5 | ||||||||
Color | 744.3 | 809.6 | (8) | 4 | ||||||||
Total Beauty | 2,988.6 | 3,273.3 | (9) | 3 | ||||||||
Fashion & Home: | ||||||||||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 615.9 | 654.2 | (6) | 4 | ||||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 428.9 | 483.0 | (11) | 3 | ||||||||
Total Fashion & Home | 1,044.8 | 1,137.2 | (8) | 4 | ||||||||
Net sales from reportable segments | 4,033.4 | 4,410.5 | (9) | 3 | ||||||||
Other revenue from reportable segments | 78.5 | 61.4 | 28 | 40 | ||||||||
Total revenue from reportable segments | 4,111.9 | 4,471.9 | (8) | 4 | ||||||||
Total revenue from Other operating segments and business activities | 37.7 | 81.3 | (54) | (46) | ||||||||
Total revenue | $ | 4,149.6 | $ | 4,553.2 | (9) | 3 | ||||||
THREE MONTHS ENDED SEPTEMBER 30, 2016 | ||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Legal settlement | Other items | Adjusted (Non-GAAP) | ||||||||||||||||
Total revenue | $ | 1,408.8 | $ | — | $ | — | $ | — | $ | 1,408.8 | ||||||||||
Cost of sales | 550.9 | — | — | — | 550.9 | |||||||||||||||
Selling, general and administrative expenses | 745.9 | 14.0 | (27.2 | ) | — | 759.1 | ||||||||||||||
Operating profit | 112.0 | 14.0 | (27.2 | ) | — | 98.8 | ||||||||||||||
Income from continuing operations, before taxes | 74.6 | 14.0 | (27.2 | ) | (3.9 | ) | 57.5 | |||||||||||||
Income taxes | (38.3 | ) | (3.4 | ) | — | — | (41.7 | ) | ||||||||||||
Income from continuing operations, net of tax | $ | 36.3 | $ | 10.6 | $ | (27.2 | ) | $ | (3.9 | ) | $ | 15.8 | ||||||||
Diluted EPS from continuing operations | $ | 0.07 | $ | 0.02 | ||||||||||||||||
Gross margin | 60.9 | % | — | — | — | 60.9 | % | |||||||||||||
SG&A as a % of revenues | 52.9 | % | (1.0 | ) | 1.9 | — | 53.9 | % | ||||||||||||
Operating margin | 8.0 | % | 1.0 | (1.9 | ) | — | 7.0 | % | ||||||||||||
Effective tax rate | 51.3 | % | 72.5 | % | ||||||||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2016 | ||||||||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Legal settlement | Venezuelan special items | Other items | Special tax items | Adjusted (Non-GAAP) | ||||||||||||||||||||||
Total revenue | $ | 4,149.6 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4,149.6 | ||||||||||||||
Cost of sales | 1,634.7 | 0.3 | — | — | — | — | 1,634.4 | |||||||||||||||||||||
Selling, general and administrative expenses | 2,300.0 | 69.9 | (27.2 | ) | — | — | — | 2,257.3 | ||||||||||||||||||||
Operating profit | 214.9 | 70.2 | (27.2 | ) | — | — | — | 257.9 | ||||||||||||||||||||
(Loss) income from continuing operations, before taxes | (11.6 | ) | 70.2 | (27.2 | ) | 120.5 | (3.9 | ) | — | 148.0 | ||||||||||||||||||
Income taxes | (72.1 | ) | (13.6 | ) | — | — | — | (36.4 | ) | (122.1 | ) | |||||||||||||||||
(Loss) income from continuing operations, net of tax | $ | (83.7 | ) | $ | 56.6 | $ | (27.2 | ) | $ | 120.5 | $ | (3.9 | ) | $ | (36.4 | ) | $ | 25.9 | ||||||||||
Diluted EPS from continuing operations | $ | (0.22 | ) | $ | 0.03 | |||||||||||||||||||||||
Gross margin | 60.6 | % | — | — | — | — | — | 60.6 | % | |||||||||||||||||||
SG&A as a % of revenues | 55.4 | % | (1.7 | ) | 0.7 | — | — | — | 54.4 | % | ||||||||||||||||||
Operating margin | 5.2 | % | 1.7 | (0.7 | ) | — | — | — | 6.2 | % | ||||||||||||||||||
Effective tax rate | * | 82.5 | % | |||||||||||||||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | Pension settlement charge | Other items | Special tax items | Adjusted (Non-GAAP) | ||||||||||||||||||||||
Total revenue | $ | 1,436.2 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,436.2 | ||||||||||||||
Cost of sales | 559.0 | — | 5.7 | — | — | — | 553.3 | |||||||||||||||||||||
Selling, general and administrative expenses | 831.9 | (1.9 | ) | — | 6.2 | — | — | 827.6 | ||||||||||||||||||||
Operating profit | 45.3 | (1.9 | ) | 5.7 | 6.2 | — | — | 55.3 | ||||||||||||||||||||
Income from continuing operations, before taxes | 31.0 | (1.9 | ) | 5.7 | 6.2 | (40.7 | ) | — | 0.3 | |||||||||||||||||||
Income taxes | (699.0 | ) | 0.8 | — | — | (6.7 | ) | 657.0 | (47.9 | ) | ||||||||||||||||||
Loss from continuing operations, net of tax | $ | (668.0 | ) | $ | (1.1 | ) | $ | 5.7 | $ | 6.2 | $ | (47.4 | ) | $ | 657.0 | $ | (47.6 | ) | ||||||||||
Diluted EPS from continuing operations | $ | (1.51 | ) | $ | — | $ | 0.01 | $ | 0.01 | $ | (0.11 | ) | $ | 1.49 | $ | (0.11 | ) | |||||||||||
Gross margin | 61.1 | % | — | 0.4 | — | — | — | 61.5 | % | |||||||||||||||||||
SG&A as a % of revenues | 57.9 | % | 0.1 | — | (0.4 | ) | — | — | 57.6 | % | ||||||||||||||||||
Operating margin | 3.2 | % | (0.1 | ) | 0.4 | 0.4 | — | — | 3.9 | % | ||||||||||||||||||
Effective tax rate | * | * | ||||||||||||||||||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | Pension settlement charge | Other items | Special tax items | Adjusted (Non-GAAP) | ||||||||||||||||||||||
Total revenue | $ | 4,553.2 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4,553.2 | ||||||||||||||
Cost of sales | 1,781.7 | — | 26.6 | — | — | — | 1,755.1 | |||||||||||||||||||||
Selling, general and administrative expenses | 2,669.4 | 28.2 | 91.7 | 6.2 | — | — | 2,543.3 | |||||||||||||||||||||
Operating profit | 102.1 | 28.2 | 118.3 | 6.2 | — | — | 254.8 | |||||||||||||||||||||
Income from continuing operations, before taxes | 15.5 | 28.2 | 114.1 | 6.2 | (36.9 | ) | — | 127.1 | ||||||||||||||||||||
Income taxes | (797.2 | ) | (2.7 | ) | 0.8 | — | (6.7 | ) | 685.1 | (120.7 | ) | |||||||||||||||||
(Loss) income from continuing operations, net of tax | $ | (781.7 | ) | $ | 25.5 | $ | 114.9 | $ | 6.2 | $ | (43.6 | ) | $ | 685.1 | $ | 6.4 | ||||||||||||
Diluted EPS from continuing operations | $ | (1.77 | ) | $ | 0.06 | $ | 0.26 | $ | 0.02 | $ | (0.10 | ) | $ | 1.55 | $ | 0.01 | ||||||||||||
Gross margin | 60.9 | % | — | 0.6 | — | — | — | 61.5 | % | |||||||||||||||||||
SG&A as a % of revenues | 58.6 | % | (0.6 | ) | (2.0 | ) | (0.1 | ) | — | — | 55.9 | % | ||||||||||||||||
Operating margin | 2.2 | % | 0.6 | 2.6 | 0.1 | — | — | 5.6 | % | |||||||||||||||||||
Effective tax rate | * | * | ||||||||||||||||||||||||||
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