RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2020

On January 3, 2020, the Company became a wholly owned subsidiary of Natura &Co Holding. From this point Natura &Co Holding, its subsidiaries and affiliates became related parties of the Company.

The following tables present the related party transactions with Natura &Co and its affiliates, 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 was no longer a related party.


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Statement of Operations Data
Revenue from sale of product to New Avon⁽¹⁾	N/A		$	3.7	N/A		$	8.5
Gross profit from sale of product to New Avon⁽¹⁾	N/A		$	—	N/A		$	.1

Cost of sales for purchases from New Avon⁽²⁾	N/A		$	.8	N/A		$	1.5

Revenue from affiliates of Natura &Co⁽⁸⁾	$	1.8	$	—	$	1.8	$	—
Gross profit from affiliates of Natura &Co⁽⁸⁾	$	.4	$	—	$	.4	$	—

Selling, general and administrative expenses related to New Avon:
Transition services, intellectual property, technical support and innovation and subleases	N/A		$	(.1)	N/A		$	(.2)
Project management team⁽³⁾	N/A		$	2.1	N/A		$	3.4
Interest income from Instituto Avon⁽⁴⁾	$	—	$	.1	$	—	$	.1
Interest expense on Loan from affiliates of Natura &Co⁽⁷⁾	$	(.3)	$	—	$	(.3)	$	—


	June 30, 2020		December 31, 2019
Balance Sheet Data
Receivables due from Instituto Avon⁽⁴⁾	$	1.2	$	2.1
Receivables due from affiliates of Natura &Co⁽⁸⁾	$	1.9	$	—
Payables due to an affiliate of Cerberus⁽⁵⁾	N/A		$	2.1
Payables due to affiliates of Natura &Co⁽⁶⁾	$	91.5	$	—
Loan from affiliates of Natura &Co⁽⁷⁾	$	4.6	$	—

⁽¹⁾ The Company supplies product to New Avon as part of a manufacturing and supply agreement. On August 14, 2019, the Company sold its investment in New Avon to LG Household & Health Care Ltd, from that point New Avon was no longer a related party. Transactions entered into with New Avon for the three and six month periods ended June 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 $.6 from New Avon associated with this agreement during the three months ended June 30, 2019, and recorded $.8 associated with these purchases within cost of sales in our Consolidated Statement of Operations during the three months ended June 30, 2019. The Company purchased $1.4 from New Avon associated with this agreement during the six months ended June 30, 2019, and recorded $1.5 associated with these purchases within cost of sales in our Consolidated Statement of Operations during the six months ended June 30, 2019. Transactions entered into with New Avon for the three and six month periods ended June 30, 2019 have been disclosed above. On August 14, 2019, the Company sold its investment in New Avon to LG Household & Health Care Ltd; from that point New Avon was no longer a related party.

⁽³⁾ The Company also entered into agreements with an affiliate of Cerberus, which provided 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. Furthermore, upon consummation of the Transaction with Natura &Co Holding in January 2020, Cerberus ceased being a related party. During the three and six months ended June 30, 2019 the Company recorded net costs of $2.1 and $3.4, respectively, in selling, general and administrative expenses associated with these agreements.

⁽⁴⁾ 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 reais) for an unsecured five-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.

⁽⁵⁾ Payables due to an affiliate of Cerberus related to the agreement for the project management team, classified within other accrued liabilities in our Consolidated Balance Sheets. Upon the consummation of Transaction with Natura in January 2020, Cerberus ceased their involvement in Company operations and is no longer a related party.

⁽⁶⁾ Upon consummation of the Transaction on January 3, 2020, the Company was acquired by Natura &Co Holding and became a wholly owned direct subsidiary of Natura &Co Holding. The payables due to Natura &Co Holding relate to the amount of accrued dividend paid by Natura &Co Holding in relation to Series C preferred stock and is presented separately in the Consolidated Balance Sheet. On December 30, 2019, Cerberus elected to convert 435,000 shares of series C preferred stock, representing all shares of series C preferred stock outstanding, into 87,000,000 shares of the Company’s common stock, par value U.S.$0.25 per share, pursuant to the holder of the Company’s series C preferred stock’s rights under the Company’s certificate of incorporation. The foregoing election was conditioned upon the filing of the certificates of merger with respect to the First Merger (the "Conversion Condition"). Upon consummation of the Transaction in January 2020, the Company’s common stock was converted to Natura &Co Holding common stock. In January 2020 Natura &Co Holding paid the accrued unpaid dividends on the shares of series C preferred stock in an amount equal to U.S. $91.5 to Cerberus. The Company intends to repay this balance. See Note 13, Series C Convertible Preferred Stock, for discussion of preferred shares issued to Cleveland Apple Investor L.P. ("Cerberus Investor") (an affiliate of Cerberus).

⁽⁷⁾ During the second quarter of 2020, the Company entered into an agreement to receive funding from Natura &Co Holding with respect to our Argentina operations. At June 30, 2020 the balance outstanding under this loan is 300 Argentinian Pesos, which is equivalent to $4.6. See Note 17, Debt for further details of the terms of this loan.

⁽⁸⁾ During the second quarter of 2020, the Company entered into manufacturing agreements with affiliates of Natura &Co Holding. The Company recorded revenue from related party of $1.8 and gross profit of $.4 associated with these agreements during the quarter ended June 30, 2020. The receivables from Natura &Co Holding relate to these manufacturing agreements.