EARNINGS PER SHARE AND SHARE REPURCHASES

9 Months Ended

Sep. 30, 2019

EARNINGS PER SHARE AND SHARE REPURCHASES

We compute earnings per share ("EPS") using the two-class method, which is a earnings allocation formula that determines loss per share for common stock and 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)	2019		2018		2019		2018
Numerator from continuing operations:
Income from continuing operations, less amounts attributable to noncontrolling interests	$	113.2	$	114.5	$	83.7	$	58.1
Less: Earnings allocated to participating securities	1.6		1.4		1.2		.7
Less: Earnings allocated to convertible preferred stock	18.6		18.8		19.0		18.1
Income from continuing operations allocated to common shareholders	93.0		94.3		63.5		39.3
Numerator from discontinued operations:
Loss from discontinued operations	$	(6.3)	$	—	$	(29.0)	$	—

Loss allocated to common shareholders	(6.3)		—		(29.0)		—
Numerator attributable to Avon:
Net income attributable to Avon	$	106.9	$	114.5	$	54.7	$	58.1
Less: Earnings allocated to participating securities	1.6		1.4		1.2		.7
Less: Earnings allocated to convertible preferred stock	18.6		18.8		19.0		18.1
Income allocated to common shareholders	86.7		94.3		34.5		39.3
Denominator:
Basic EPS weighted-average shares outstanding	442.4		442.3		442.7		441.8
Diluted effect of assumed conversion of stock-based compensation	.2		—		.2		—
Diluted effect of assumed conversion of preferred stock	—		—		—		—
Diluted EPS adjusted weighted-average shares outstanding	442.6		442.3		442.9		441.8
Earnings per Common Share from continuing operations:
Basic	$	0.21	$	0.21	$	0.14	$	0.09
Diluted	$	0.21	$	0.21	$	0.14	$	0.09
Loss per Common Share from discontinued operations:
Basic	$	(0.01)	$	—	$	(0.06)	$	—
Diluted	$	(0.01)	$	—	$	(0.06)	$	—
Earnings per Common Share attributable to Avon:
Basic	$	0.20	$	0.21	$	0.08	$	0.09
Diluted	$	0.20	$	0.21	$	0.08	$	0.09

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

During the three and nine months ended September 30, 2019, we did not include stock options to purchase 8.6 million and 16.6 million shares, respectively, of Avon common stock in the calculation of diluted EPS as the exercise prices of those options were greater than the average market price. Since the inclusion of such shares would be anti-dilutive, these are excluded from the calculation. During the three and nine months ended September 30, 2018, we did not include stock options to purchase 18.1 million shares and 17.6 million shares, respectively, of Avon common stock in the calculation of diluted EPS for the same reason.

For the three and nine months ended September 30, 2019 and 2018, respectively, it is more dilutive to assume the series C convertible preferred stock is not converted into common stock; therefore, the weighted-average shares outstanding were not adjusted by the as-if converted series C convertible preferred stock because the effect would be anti-dilutive. The inclusion of the series C convertible preferred stock would increase the earnings per share for the three and nine months ended September 30, 2019 and 2018. 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, 2019 and 2018. See Note 6, Related Party Transactions, to the Consolidated Financial Statements contained herein.

We purchased approximately 0.5 million shares of Avon common stock for $1.5 during the first nine months of 2019, as compared to approximately 1.1 million shares of Avon common stock for $3.2 during the first nine months of 2018, through acquisition of stock from employees in connection with tax payments upon the vesting of restricted stock units and performance restricted stock units.