RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2019

The following tables present the related party transactions with New Avon, affiliates of Cerberus and the Instituto Avon in Brazil. There are no other related party transactions. On August 14, 2019, we sold our investment in New Avon to LG Household & Health Care Ltd. Upon completion of the sale, New Avon is no longer a related party. See Note 3, Discontinued Operation, Assets and Liabilities Held for Sale and Divestitures, to the Consolidated Financial Statements contained herein, for further details.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Statement of Operations Data
Revenue from sale of product to New Avon⁽¹⁾	$	3.5	$	7.3	$	12.0	$	20.3
Gross profit from sale of product to New Avon⁽¹⁾	$	.1	$	.6	$	.2	$	1.3

Cost of sales for purchases from New Avon⁽²⁾	$	.7	$	.9	$	2.1	$	2.1

Selling, general and administrative expenses related to New Avon:
Transition services, intellectual property, technical support and innovation and subleases⁽³⁾	$	—	$	(.6)	$	(.2)	$	(4.3)
Project management team⁽⁴⁾	.6		$	.2	$	4.0	$	1.0
Net reduction of selling, general and administrative expenses	$	.6	$	(.4)	$	3.8	$	(3.3)

Interest income from Instituto Avon⁽⁵⁾	$	—	$	.1	$	.1	$	.1


	September 30, 2019		December 31, 2018
Balance Sheet Data
Inventories⁽⁶⁾	N/A		$	.3
Receivables due from New Avon⁽⁶⁾	N/A		$	7.0
Receivables due from Instituto Avon⁽⁵⁾	$	2.0	$	3.2
Payables due to New Avon⁽⁶⁾	N/A		$	.2
Payables due to an affiliate of Cerberus⁽⁷⁾	$	2.1	$	.6

⁽¹⁾ The Company supplies product to New Avon as part of a manufacturing and supply agreement. On August 14, 2019, the Company sold it's investment in New Avon to LG Household & Health Care Ltd, from this point New Avon is no longer a related party. Transactions entered into with New Avon for the three month and nine month periods ended September 30, 2019 have been disclosed above.

⁽²⁾ New Avon supplies product to the Company as part of the same manufacturing and supply agreement discussed in footnote (1) above. The Company purchased $.5 and $.7 from New Avon associated with this agreement during the three months ended September 30, 2019 and 2018, respectively, and recorded $.7 and $.9 associated with these purchases within cost of sales in our Consolidated Statement of Operations during the three months ended September 30, 2019 and 2018, respectively. The Company purchased $1.6 and $1.9 from New Avon associated with this agreement during the nine months ended September 30, 2019 and 2018, respectively, and recorded $2.1 and $2.1 associated with these purchases within cost of sales in our Consolidated Statement of Operations during the nine months ended September 30, 2019 and 2018, respectively. On August 14, 2019, the Company sold its investment in New Avon to LG Household & Health Care Ltd; from this point New Avon is no longer a related party. Transactions entered into with New Avon for the three month and nine month periods ended September 30, 2019 have been disclosed above.

⁽³⁾ The Company also entered into a transition services agreement to provide certain services to New Avon, which expired on October 31, 2018, as well as an intellectual property license agreement, an agreement for technical support and innovation and sublease for office space. The net amounts recorded within selling, general and administrative expenses generally represent a recovery of the related costs.

⁽⁴⁾ The Company also entered into agreements with an affiliate of Cerberus, which provide for the secondment of Cerberus affiliate personnel to the Company's project management team responsible for assisting with the execution of the implementation of the Company’s strategic initiatives. The Company recorded net cost of $.6 and $.2 in selling, general and administrative expenses associated with these agreements during the three months ended September 30, 2019 and 2018, respectively, and recorded $4.0 and $1.0 in selling, general and administrative expenses associated with these agreements during the nine months ended September 30, 2019 and 2018, respectively. See Note 15, Restructuring Initiatives to the Consolidated Financial Statements contained herein, for additional information related to the Company's strategic initiatives.

⁽⁵⁾ During the second quarter of 2018, the Company entered into an agreement to loan the Instituto Avon, an independent non-government charitable organization in Brazil, R$12 million (Brazilian real) for an unsecured 5-year term at a fixed interest rate of 7% per annum, to be paid back in five equal annual installments. The Instituto Avon was created by an Avon subsidiary in Brazil, with the board and executive team comprised of Avon Brazil management. The purpose of the loan was to provide the Instituto Avon with the means to donate funds to Fundação Pio XII (a leading cancer prevention and treatment organization in Brazil and owner of the Hospital do Câncer de Barretos), in order to invest in equipment with the objective of expanding breast cancer prevention and treatment. During the third quarter of 2019 Institutio Avon repaid $1 million of the loan.

⁽⁶⁾ On August 14, 2019, the Company sold its investment in New Avon to LG Household & Health Care Ltd, from this point New Avon is no longer a related party. Therefore at September 30, 2019, we do not have any related party balances with New Avon.

⁽⁷⁾ The payables due to an affiliate of Cerberus relate to the agreement for the project management team, and were classified within other accrued liabilities in our Consolidated Balance Sheets.

In addition, the Company also issued standby letters of credit to the lessors of certain equipment, a lease for which was transferred to New Avon in connection with the separation of the Company's North America business. As of September 30, 2019, the Company has a liability of $.8 for the estimated value of such standby letters of credit.

Series C Preferred Stock

On March 1, 2016, the Company issued and sold to Cerberus Investor 435,000 shares of newly issued series C preferred stock for an aggregate purchase price of $435.0. Cumulative preferred dividends accrue daily on the series C preferred stock at a rate of 1.25% per quarter. The series C preferred stock had accrued unpaid dividends of $84.8 as of September 30, 2019. Series C convertible preferred stock and accrued dividends of $511.1 on the Consolidated Balance Sheet at September 30, 2019 is stated net of $8.7 of costs incurred in connection with the issuance of the Series C convertible preferred stock in 2016. There were no dividends declared in the nine months ended September 30, 2019 and 2018.