EARNINGS (LOSS) PER SHARE AND SHARE REPURCHASES

We compute earnings (loss) per share ("EPS") using the two-class method, which is an earnings (loss) allocation formula that determines earnings (loss) per share for common stock, and earnings (loss) allocated to convertible preferred stock and participating securities, as appropriate. The earnings allocated to convertible preferred stock are the larger of 1) the preferred dividends accrued in the period or 2) the percentage of earnings from continuing operations allocable to the preferred stock as if they had been converted to common stock. Our participating securities are our grants of restricted stock and restricted stock units, which contain non-forfeitable rights to dividend equivalents to the extent any dividends are declared and paid on our common stock. We compute basic EPS by dividing net income (loss) allocated to common shareholders by the weighted-average number of shares outstanding during the period. Diluted EPS is calculated to give effect to all potentially dilutive common shares that were outstanding during the period.



	Three Months Ended September 30,						Nine Months Ended September 30,
(Shares in millions)	2016			2015			2016			2015
Numerator from continuing operations:
Income (loss) from continuing operations, less amounts attributable to noncontrolling interests	$	36.7		$	(668.0	)	$	(84.0	)	$	(783.5	)
Less: (Earnings) loss allocated to participating securities	(.5		)	10.7			1.1			12.3
Less: Earnings allocated to convertible preferred stock	(6.1		)	—			(12.8		)	—
Earnings (loss) from continuing operations allocated to common shareholders	30.1			(657.3		)	(95.7		)	(771.2		)
Numerator from discontinued operations:
Loss from discontinued operations	$	(.7	)	$	(29.0	)	$	(12.9	)	$	(32.0	)
Less: Loss allocated to participating securities	—			.8			.2			1.5
Loss allocated to common shareholders	(.7		)	(28.2		)	(12.7		)	(30.5		)
Numerator attributable to Avon:
Net income (loss) attributable to Avon	$	36.0		$	(697.0	)	$	(96.9	)	$	(815.5	)
Less: (Earnings) loss allocated to participating securities	(.5		)	11.1			1.3			12.8
Less: Earnings allocated to convertible preferred stock	(6.1		)	—			(12.8		)	—
Earnings (loss) allocated to common shareholders	29.4			(685.9		)	(108.4		)	(802.7		)
Denominator:
Basic EPS weighted-average shares outstanding	437.4			435.4			436.7			435.1
Diluted effect of assumed conversion of stock options	—			—			—			—
Diluted effect of assumed conversion of preferred stock	—			—			—			—
Diluted EPS adjusted weighted-average shares outstanding	437.4			435.4			436.7			435.1
Earnings (Loss) per Common Share from continuing operations:
Basic	$	.07		$	(1.51	)	$	(.22	)	$	(1.77	)
Diluted	.07			(1.51		)	(.22		)	(1.77		)
Loss per Common Share from discontinued operations:
Basic	$	—		$	(.06	)	$	(.03	)	$	(.07	)
Diluted	—			(.06		)	(.03		)	(.07		)
Earnings (Loss) per Common Share attributable to Avon:
Basic	$	.07		$	(1.58	)	$	(.25	)	$	(1.84	)
Diluted	.07			(1.58		)	(.25		)	(1.84		)

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

During the three months ended September 30, 2016, we did not include stock options to purchase 15.0 million shares of Avon common stock in the calculation of diluted EPS because the exercise prices of those options were greater than the average market price, and therefore, their inclusion would be anti-dilutive. During the nine months ended September 30, 2016, we did not include stock options to purchase 14.2 million shares of Avon common stock in the calculation of diluted EPS as we had a loss from continuing operations, net of tax. During the three and nine months ended September 30, 2015, we did not include stock options to purchase 11.9 million shares and 13.2 million shares, respectively, of Avon common stock in the calculation of diluted EPS as we had a loss from continuing operations, net of tax. For the nine months ended September 30, 2016 and the three and nine months ended September 30, 2015, when we had a loss from continuing operations, net of tax, the inclusion of these shares would decrease the net loss per share, and therefore, their inclusion would be anti-dilutive.

For the three and nine months ended September 30, 2016, it is more dilutive to assume the Series C Convertible Preferred Stock is not converted into common stock and therefore the weighted-average outstanding shares outstanding was not adjusted by the as-if converted Series C Convertible Preferred Stock because the effect would decrease the net loss per share, and therefore, their inclusion would be anti-dilutive. If the as-if converted Series C Convertible Preferred Stock had been dilutive, approximately 87.1 million additional shares would have been included in the diluted weighted average number of shares outstanding for the three and nine months ended September 30, 2016. See Note 7, Series C Convertible Preferred Stock.

We purchased approximately 1.3 million shares of Avon common stock for $5.3 during the first nine months of 2016, as compared to approximately .4 million shares of Avon common stock for $3.0 during the first nine months of 2015, through acquisition of stock from employees in connection with tax payments upon vesting of restricted stock units in 2016 and 2015 and performance restricted stock units in 2016.