XML 39 R12.htm IDEA: XBRL DOCUMENT v3.19.2
DISCONTINUED OPERATIONS, ASSETS AND LIABILITIES HELD FOR SALE AND DIVESTITURES
 6 Months Ended
Jun. 30, 2019
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS, ASSETS AND LIABILITIES HELD FOR SALE AND DIVESTITURES DISCONTINUED OPERATIONS, ASSETS AND LIABILITIES HELD FOR SALE AND DIVESTITURES

Discontinued Operations
On December 17, 2015, the Company entered into definitive agreements with affiliates controlled by Cerberus Capital Management, L.P. ("Cerberus"). The agreements include an investment agreement providing for a $435.0 investment by Cleveland Apple Investor L.P. ("Cerberus Investor") (an affiliate of Cerberus) in the Company through the purchase of perpetual convertible preferred stock (see Note 6, Related Party Transactions) and a separation and investment agreement providing for the separation of the Company's North America business, which represented the Company's operations in the United States, Canada and Puerto Rico, from the Company into New Avon LLC ("New Avon"), a privately-held company that is majority-owned and managed by Cerberus NA Investor LLC (an affiliate of Cerberus). These transactions closed on March 1, 2016.
The Company incurred costs during the three and six months ended June 30, 2019 following the resolution of certain contingent liabilities related to its ownership and operation of the North America business prior to its separation into New Avon. These costs are reported as discontinued operations related to New Avon.
The major classes of financial statement components comprising the loss on discontinued operations, net of tax for New Avon are shown below:
 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
Selling, general and administrative expenses
 
$
13.2

 
$
22.7

Operating loss
 
$
(13.2
)
 
$
(22.7
)
Loss from discontinued operations, net of tax
 
$
(13.2
)
 
$
(22.7
)

There were no amounts recorded in discontinued operations for the three and six months ended June 30, 2018. See Note 5, Investment in New Avon, for additional information relating to New Avon.

Assets and Liabilities Held for Sale
The major classes of assets and liabilities comprising Held for sale assets and Held for sale liabilities on the Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018 are shown in the following table.
 
 
June 30, 2019
Current Held for sale assets
 
 
Property, Plant & Equipment (net)
 
$
10.1

 
 
$
10.1

 
 
December 31, 2018
 
 
Avon Manufacturing (Guangzhou)
 
Rye Office
 
Malaysia Maximin
 
Total
Current held for sale assets
 
 
 
 
 
 
 
 
Inventories
 
$
8.7

 
$
—

 
$
—

 
$
8.7

Property, Plant & Equipment (net)
 
36.7

 
12.3

 
3.0

 
52.0

Cash and cash equivalents
 
3.7

 
—

 
—

 
3.7

Other assets
 
1.1

 
—

 
.1

 
1.2

 
 
$
50.2

 
$
12.3

 
$
3.1

 
$
65.6

 
 
 
 
 
 
 
 
 
Current held for sale liabilities
 
 
 
 
 
 
 
 
Accounts payable
 
$
8.6

 
$
—

 
$
—

 
$
8.6

Other liabilities
 
2.6

 
—

 
.2

 
2.8

 
 
$
11.2

 
$
—

 
$
.2

 
$
11.4


During the second quarter of 2019, the Company, in line with the Open Up Avon strategy, identified two properties to be sold which met the held for sale criteria under ASC 360 as of June 30, 2019. The Company expects to close these transactions within the year.
Refer to Divestitures section below for the sale of Avon Manufacturing (Guangzhou), Rye Office and Malaysia Maximin.

Divestitures
Rye Office
On June 26, 2019, we completed the sale of the Rye office for a selling price of $23.2, less expenses of approximately $0.8, resulting in proceeds of $22.4. These proceeds are presented as investing activities in the Consolidated Statement of Cash Flows.
In the second quarter of 2019, we recorded a gain on sale of $9.9 before and after tax, which is reported separately in the Consolidated Statements of Operations. The gain recorded represents the difference between the proceeds and the carrying value of the Rye office on the date of sale. During the first quarter of 2019, we refined the calculation for the Held for sale assets which gave rise to an additional $0.2 in assets.
Malaysia Maximin
On May 9, 2019, we completed the sale of all of the equity interests in Maximin Corporation Sdn Bhd ("Malaysia Maximin") for a total purchase price of $7.8. The cash proceeds of $7.6, net of expenses, are presented within investing activities in the Consolidated Statement of Cash Flows.
In the second quarter of 2019, we recorded a gain on sale of $3.3 before tax, which is reported separately in the Consolidated Statements of Operations, and $3.0 after tax. The gain recorded represents the difference between the proceeds and the carrying value of Malaysia Maximin on the date of sale. During the second quarter of 2019, we refined the calculation for the Held for sale assets which gave rise to an additional $1.4 in assets.
China manufacturing
On February 15, 2019, we completed the sale to TheFaceShop Co., Ltd., an affiliate of LG Household & Health Care Ltd., of all of the equity interests in Avon Manufacturing (Guangzhou), Ltd. for a total purchase price of $71.0, less expenses of approximately $1.1. The purchase price included $23.5 relating to outstanding intercompany loans payable to Avon Manufacturing (Guangzhou), Ltd. from other Avon subsidiaries, that was presented as financing activities in the Consolidated Statement of Cash Flows when settled in April 2019. The cash proceeds of $46.4, net of loan amounts, are presented as investing activities in the Consolidated Statement of Cash Flows, which includes $7.6 of restricted cash as of June 30, 2019, refer to Note 4, Restricted Cash.
In the first quarter of 2019, we recorded a gain on sale of $10.3 before tax, which is reported separately in the Consolidated Statements of Operations, and $8.2 after tax, representing the difference between the proceeds, including the settlement of the intercompany loans, and the carrying value of Avon Manufacturing (Guangzhou), Ltd. on the date of sale.