Agreement and Plan of Mergers with Natura Cosmeticos S.A.

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Agreement and Plan of Mergers with Natura Cosmeticos S.A.

Discontinued Operations and Assets and Liabilities Held for Sale

Discontinued Operations

On December 17, 2015, the Company entered into definitive agreements with affiliates controlled by Cerberus. The agreements resulted in 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 Company, formerly New Avon, a privately-held company majority-owned and managed by Cerberus NA Investor LLC (an affiliate of Cerberus). The Company retained an investment of 19.9% ownership interest in New Avon. These transactions closed on March 1, 2016; from that date, resolution of contingent liabilities relating to Avon's ownership and operation of the North America business prior to its separation from the Company into New Avon have been treated as discontinued operations. Refer to the Divestitures section below for information relating to the sale of New Avon.

The Company incurred costs during the year ended December 31, 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. 

The major classes of financial statement components comprising the loss on discontinued operations, net of tax for New Avon are shown below:

	Year Ended December 31, 2019
Selling, general and administrative expenses	$	36.6
Operating loss	$	(36.6)
Loss from discontinued operations, net of tax	$	(36.6)

There were no amounts recorded in discontinued operations for the years ended December 31, 2018 and December 31, 2017.

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 Sheet as of December 31, 2019 and December 31, 2018 are shown in the following table.

	Year ended December 31,
	2019		2018
Current held for sale assets
Inventories	$	—	$	8.7
Property, Plant & Equipment (net)	22.6		52.0
Cash and cash equivalents	—		3.7
Other assets	—		1.2
	$	22.6	$	65.6
Current held for sale liabilities
Accounts payable	$	—	$	8.6
Other liabilities	—		2.8
	$	—	$	11.4

During 2019, the Company, in line with the Open Up Avon strategy, identified five properties to be sold which met the held for sale criteria under ASC 360 as of December 31, 2019. The Company expects to close these transactions within a year.

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 $.2 in assets.

Malaysia Maximin

On May 9, 2019, we completed the sale of all of our equity interests in Malaysia Maximin for a total selling 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. ("TheFaceShop"), of all of the equity interests in Avon Manufacturing (Guangzhou), Ltd. for a total selling price of $71.0, less expenses of approximately $1.1. The selling 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, this was subsequently 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 December 31, 2019.

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.

New Avon

In April 2019, we signed an agreement with LG Household & Health Care Ltd. to sell our 19.9% ownership interest in New Avon. During August 2019, we completed the sale of New Avon for a selling price of $24.5. Expenses were approximately $1.1, resulting in cash proceeds of $23.4. These proceeds are presented as investing activities in the Consolidated Statement of Cash Flows.

In the third quarter of 2019, we recorded a gain on sale of $26.8 before and after tax, which is reported in the Consolidated Statements of Operations as Gain on sale of business/asset. The gain recorded represents the total proceeds and the release of AOCI of $3.4.

Our recorded investment balance in New Avon at December 31, 2019 and December 31, 2018 was zero.