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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Avon Products Inc | NYSE:AVP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.60 | 0 | 01:00:00 |
NEW YORK, Nov. 4, 2015 /PRNewswire/ -- Avon Products, Inc. (NYSE: AVP) today reported third-quarter 2015 results. "This was a difficult quarter impacted by currency and other macro pressures, and our financial results were not where we would like them to be," said Sheri McCoy, Chief Executive Officer of Avon Products, Inc. "Given the challenging environment, I'm proud of the progress our teams are making, driving solid top-line performance at the local level and continuing to make improvements in Representative engagement."
Third-Quarter 2015 Income Statement Review (compared with third-quarter 2014)
Approximate Impact of Foreign Currency |
||||||||||
Third-Quarter 2015 |
YTD 2015 | |||||||||
Estimated impact |
Estimated impact |
Estimated impact |
Estimated impact | |||||||
Total revenue |
(20) pts |
(19) pts |
||||||||
Adjusted operating profit - transaction |
$ (50) |
$ (0.07) |
$ (150) |
$ (0.22) | ||||||
Adjusted operating profit - translation |
(55) |
(0.08) |
(200) |
(0.29) | ||||||
Total Adjusted operating profit |
$ (105) |
$ (0.15) |
$ (350) |
$ (0.51) | ||||||
Adjusted operating margin |
(410) bps |
(420) bps |
||||||||
Revaluation of working capital |
$ (10) |
$ (0.01) |
$ (15) |
$ (0.02) | ||||||
Adjusted diluted EPS |
$ (0.16) |
$ (0.53) | ||||||||
Third-Quarter 2015 Cash Flow Review
Adjustments to Third-Quarter 2015 GAAP Results to Arrive at Adjusted Results
During the third quarter of 2015, the following items had an aggregate impact of $1.47 per diluted share on the financial results:
Third-Quarter 2015 Regional Highlights (compared with third-quarter 2014)
THREE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||
REGIONAL RESULTS | ||||||||||||||||||||||||
($ in millions) |
Revenue |
Active Reps |
Average |
Units Sold |
Price/Mix C$ | |||||||||||||||||||
Revenue & Performance Drivers |
US$ |
C$ |
||||||||||||||||||||||
% var. vs |
% var. vs |
% var. vs |
% var. vs |
% var. vs |
% var. vs | |||||||||||||||||||
Latin America |
$ |
790.9 |
(26)% |
1% |
(2)% |
3% |
(6)% |
7% | ||||||||||||||||
Europe, Middle East & Africa |
499.2 |
(19) |
3 |
5 |
(2) |
- |
3 | |||||||||||||||||
North America |
230.6 |
(17) |
(15) |
(13) |
(2) |
(24) |
9 | |||||||||||||||||
Asia Pacific |
146.2 |
(16) |
(8) |
(2) |
(6) |
(10) |
2 | |||||||||||||||||
Total |
$ |
1,666.9 |
(22)% |
(2)% |
(1)% |
(1)% |
(6)% |
4% | ||||||||||||||||
2015 GAAP |
Adjusted Operating Profit |
Adjusted Operating Margin | ||||||||||||||||||||||
Operating Profit/Margin |
Operating Profit |
Operating |
2015 |
2014 |
2015 |
2014 |
Change |
Change | ||||||||||||||||
Latin America |
$ |
34.7 |
4.4% |
$ |
39.8 |
$ |
144.5 |
5.0% |
13.5% |
(850) bps |
(600) bps | |||||||||||||
Europe, Middle East & Africa |
48.1 |
9.6 |
46.5 |
55.1 |
9.3 |
8.9 |
40 |
190 | ||||||||||||||||
North America |
(27.5) |
(11.9) |
(7.7) |
(12.5) |
(3.3) |
(4.5) |
120 |
100 | ||||||||||||||||
Asia Pacific |
9.4 |
6.4 |
9.6 |
9.0 |
6.6 |
5.2 |
140 |
200 | ||||||||||||||||
Total from operations |
64.7 |
3.9 |
88.2 |
196.1 |
5.3 |
9.2 |
(390) |
(180) | ||||||||||||||||
Global and other |
(41.7) |
- |
(35.5) |
1.7 |
- |
- |
- |
- | ||||||||||||||||
Total |
$ |
23.0 |
1.4% |
$ |
52.7 |
$ |
197.8 |
3.2% |
9.3% |
(610) bps |
(390) bps | |||||||||||||
Third-Quarter 2015 Regional Highlights
Full-Year 2015 Outlook
The Company's outlook has been updated. This current outlook now includes the Company's nine month actual results, an updated estimate for additional negative impacts from foreign currency translation and transaction costs due to the continued strengthening of the U.S. dollar, and an expected negative impact from recently enacted additional VAT taxes in Brazil. The Company's full-year outlook as compared with the prior-year results includes:
Additionally, the Company expects free cash flow to be positive, although less than the Company's previous outlook of approximately $100 million.
Conference call
Avon will conduct a conference call at 9 a.m. today to discuss the quarterly results. The dial-in number for the call is (800) 843-2086 in the U.S. or (706) 643-1815 from non-U.S. locations (conference ID number: 52753538). The call will be webcast live at www.avoninvestor.com and can be accessed or downloaded from that site for a period of one year. Please refer to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, for additional information on Avon's results for the quarter.
About Avon Products, Inc.
Avon is the Company that for more than 125 years has stood for beauty, innovation, optimism and, above all, for women. Avon, with nearly $9 billion in annual revenue in 2014, has products that are sold through 6 million active independent Avon Sales Representatives worldwide. Avon products include color cosmetics, skincare, fragrance, and fashion and home, featuring such well-recognized brand names as Avon Color, ANEW, Avon Care, Skin-So-Soft, and Advance Techniques. Learn more about Avon and its products at www.avoncompany.com.
Footnotes
1 "Adjusted" items refer to financial measures that are derived from measures calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), but which have been adjusted to exclude certain items. Other adjusted financial measures that we refer to include Constant dollar (C$) items. All of these adjusted items are Non-GAAP financial measures as described below under "Non-GAAP Financial Measures." These Non-GAAP measures should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Please refer to our "Non-GAAP Financial Measures" description at the end of this Release and the reconciliations we provide of these Non-GAAP financial measures to their comparable GAAP measures.
2 To supplement our financial results presented in accordance with GAAP and the Non-GAAP Financial Measures discussed above, we have included additional analysis, "Non-GAAP Impact of Special Revenue Items Affecting Year-Over-Year Comparisons," which presents the change in three Non-GAAP financial measures – constant-dollar revenue, Adjusted gross margin and Adjusted operating margin – in each case, excluding certain revenue items which impact the comparability of our results. These special revenue items include the impacts of 1) the recognition of tax credits in 2014 in Brazil for expected VAT recoveries which did not recur in 2015 ("2014 Brazil VAT credits"), 2) a new IPI tax law on cosmetics in Brazil which went into effect in May 2015 ("2015 Brazil IPI tax"), and 3) lower constant-dollar revenue in the third quarter of 2015 as compared with the third quarter of 2014 as a result of the sale of Liz Earle in July 2015 ("Liz Earle divestiture"). We believe this additional analysis helps investors to understand the underlying business results. All of these additional adjustments to those three Non-GAAP financial measures are themselves Non-GAAP financial measures and should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Please refer to the reconciliations in the last schedule of this Release that we provide of these Non-GAAP financial measures to our other, related Non-GAAP Financial Measures and then to their comparable GAAP measures.
Forward-Looking Statements
Statements in this release that are not historical facts may be forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by Avon Products, Inc. with the Securities and Exchange Commission, including Forms 8-K, 10-Q, and 10-K. Some forward-looking statements in this release include and concern our outlook and expected results, pricing and cost reduction actions, and the impact of foreign currency, taxes and tax rates. These forward-looking statements involve risks, uncertainties and other factors, which may cause the actual results, levels of activity, performance or achievement of Avon to be materially different from any future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, our ability to improve our financial and operational performance and the impact of a continued decline in our business results, the possibility of business disruption, competitive uncertainties and general economic and business conditions in our markets, including fluctuations in foreign currency exchange rates. Any forward-looking statements speak only as of the date they are made. The Company does not undertake to update any such forward-looking statements.
AVON PRODUCTS, INC. | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||
Three Months Ended |
Percent |
Nine Months Ended |
Percent | |||||||||||||||
September 30 |
Change |
September 30 |
Change | |||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||
Net sales |
$ |
1,631.2 |
$ |
2,059.0 |
(21)% |
$ |
5,183.5 |
$ |
6,340.5 |
(18)% | ||||||||
Other revenue |
35.7 |
79.2 |
101.0 |
169.9 |
||||||||||||||
Total revenue |
1,666.9 |
2,138.2 |
(22)% |
5,284.5 |
6,510.4 |
(19)% | ||||||||||||
Cost of sales |
652.7 |
813.9 |
2,073.4 |
2,580.0 |
||||||||||||||
Selling, general and administrative expenses |
991.2 |
1,136.4 |
3,133.9 |
3,700.2 |
||||||||||||||
Operating profit |
23.0 |
187.9 |
(88)% |
77.2 |
230.2 |
(66)% | ||||||||||||
Interest expense |
30.1 |
27.5 |
89.7 |
83.7 |
||||||||||||||
Loss on extinguishment of debt |
5.5 |
- |
5.5 |
- |
||||||||||||||
Interest income |
(3.6) |
(3.8) |
(9.7) |
(11.4) |
||||||||||||||
Other expense, net |
29.4 |
19.8 |
48.3 |
88.8 |
||||||||||||||
Gain on sale of business |
(46.2) |
- |
(44.9) |
- |
||||||||||||||
Total other expenses |
15.2 |
43.5 |
88.9 |
161.1 |
||||||||||||||
Income (loss) before taxes |
7.8 |
144.4 |
* |
(11.7) |
69.1 |
* | ||||||||||||
Income taxes |
(704.8) |
(52.4) |
(802.0) |
(124.4) |
||||||||||||||
Net (loss) income |
(697.0) |
92.0 |
* |
(813.7) |
(55.3) |
* | ||||||||||||
Net income attributable to noncontrolling interests |
- |
(0.6) |
(1.8) |
(2.6) |
||||||||||||||
Net (loss) income attributable to Avon |
$ |
(697.0) |
$ |
91.4 |
* |
$ |
(815.5) |
$ |
(57.9) |
* | ||||||||
(Loss) earnings per share:(3) |
||||||||||||||||||
Basic |
$ |
(1.58) |
$ |
0.21 |
* |
$ |
(1.84) |
$ |
(0.13) |
* | ||||||||
Diluted |
(1.58) |
0.21 |
* |
(1.84) |
(0.13) |
* | ||||||||||||
Weighted-average shares outstanding: |
||||||||||||||||||
Basic |
435.4 |
434.6 |
435.1 |
434.4 |
||||||||||||||
Diluted |
435.4 |
434.6 |
435.1 |
434.4 |
||||||||||||||
* Calculation not meaningful |
||||||||||||||||||
(3) Under the two-class method, earnings (loss) per share is calculated using net income (loss) allocable to common shares, which is derived by reducing net income (loss) by the income (loss) allocable to participating securities. Net (loss) income allocable to common shares used in the basic and diluted (loss) earnings per share calculation was $(685.9) and $90.6 for the three months ended September 30, 2015 and 2014, respectively. Net loss allocable to common shares used in the basic and diluted loss per share calculation was $(802.7) and $(56.3) for the nine months ended September 30, 2015 and 2014, respectively. |
AVON PRODUCTS, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(Unaudited) | |||||||||
(In millions) | |||||||||
September 30 |
December 31 | ||||||||
2015 |
2014 | ||||||||
Assets |
|||||||||
Current Assets |
|||||||||
Cash and cash equivalents |
$ |
587.4 |
$ |
960.5 | |||||
Accounts receivable, net |
470.3 |
563.5 | |||||||
Inventories |
847.2 |
822.2 | |||||||
Prepaid expenses and other |
480.7 |
618.3 | |||||||
Total current assets |
2,385.6 |
2,964.5 | |||||||
Property, plant and equipment, at cost |
1,917.5 |
2,292.6 | |||||||
Less accumulated depreciation |
(969.2) |
(1,061.6) | |||||||
Property, plant and equipment, net |
948.3 |
1,231.0 | |||||||
Goodwill |
99.9 |
249.3 | |||||||
Other assets |
340.9 |
1,052.0 | |||||||
Total assets |
$ |
3,774.7 |
$ |
5,496.8 | |||||
Liabilities and Shareholders' (Deficit) Equity |
|||||||||
Current Liabilities |
|||||||||
Debt maturing within one year |
$ |
117.2 |
$ |
137.1 | |||||
Accounts payable |
815.2 |
895.4 | |||||||
Accrued compensation |
189.9 |
210.5 | |||||||
Other accrued liabilities |
424.6 |
598.8 | |||||||
Sales and taxes other than income |
149.4 |
168.6 | |||||||
Income taxes |
29.2 |
36.8 | |||||||
Total current liabilities |
1,725.5 |
2,047.2 | |||||||
Long-term debt |
2,196.3 |
2,463.9 | |||||||
Employee benefit plans |
473.5 |
501.8 | |||||||
Long-term income taxes |
62.3 |
77.8 | |||||||
Other liabilities |
85.5 |
100.8 | |||||||
Total liabilities |
4,543.1 |
5,191.5 | |||||||
Shareholders' (Deficit) Equity |
|||||||||
Common stock |
187.9 |
187.6 | |||||||
Additional paid-in-capital |
2,233.4 |
2,207.9 | |||||||
Retained earnings |
2,808.6 |
3,702.9 | |||||||
Accumulated other comprehensive loss |
(1,417.4) |
(1,217.6) | |||||||
Treasury stock, at cost |
(4,594.0) |
(4,591.0) | |||||||
Total Avon shareholders' (deficit) equity |
(781.5) |
289.8 | |||||||
Noncontrolling interests |
13.1 |
15.5 | |||||||
Total shareholders' (deficit) equity |
(768.4) |
305.3 | |||||||
Total liabilities and shareholders' (deficit) equity |
$ |
3,774.7 |
$ |
5,496.8 | |||||
AVON PRODUCTS, INC. | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(Unaudited) | |||||||||||
(In millions) | |||||||||||
Nine Months Ended | |||||||||||
September 30 | |||||||||||
2015 |
2014 | ||||||||||
Cash Flows from Operating Activities |
|||||||||||
Net loss |
$ |
(813.7) |
$ |
(55.3) | |||||||
Adjustments to reconcile net loss to net cash (used) provided by operating activities: |
|||||||||||
Depreciation |
87.7 |
106.1 | |||||||||
Amortization |
27.3 |
38.7 | |||||||||
Provision for doubtful accounts |
114.2 |
146.9 | |||||||||
Provision for obsolescence |
44.7 |
67.6 | |||||||||
Share-based compensation |
28.9 |
28.4 | |||||||||
Foreign exchange losses |
28.2 |
21.1 | |||||||||
Deferred income taxes |
674.9 |
(87.9) | |||||||||
Charge for Venezuelan monetary assets and liabilities |
(4.2) |
53.7 | |||||||||
Charge for Venezuelan non-monetary assets |
101.7 |
115.7 | |||||||||
Pre-tax gain on sale of business |
(44.9) |
- | |||||||||
Other |
56.2 |
55.8 | |||||||||
Changes in assets and liabilities: |
|||||||||||
Accounts receivable |
(118.4) |
(120.0) | |||||||||
Inventories |
(198.9) |
(229.7) | |||||||||
Prepaid expenses and other |
(1.6) |
(56.3) | |||||||||
Accounts payable and accrued liabilities |
(47.9) |
100.0 | |||||||||
Income and other taxes |
17.6 |
23.8 | |||||||||
Noncurrent assets and liabilities |
(48.5) |
(82.8) | |||||||||
Net cash (used) provided by operating activities |
(96.7) |
125.8 | |||||||||
Cash Flows from Investing Activities |
|||||||||||
Capital expenditures |
(61.8) |
(88.2) | |||||||||
Disposal of assets |
5.7 |
7.0 | |||||||||
Net proceeds from sale of business |
208.3 |
- | |||||||||
Purchases of investments |
(25.0) |
(22.9) | |||||||||
Proceeds from sale of investments |
9.0 |
18.4 | |||||||||
Net cash provided (used) by investing activities |
136.2 |
(85.7) | |||||||||
Cash Flows from Financing Activities |
|||||||||||
Cash dividends |
(80.7) |
(81.9) | |||||||||
Debt, net (maturities of three months or less) |
(10.3) |
(6.4) | |||||||||
Proceeds from debt |
7.6 |
- | |||||||||
Repayment of debt |
(265.6) |
(70.0) | |||||||||
Net proceeds from exercise of stock options |
- |
0.2 | |||||||||
Repurchase of common stock |
(3.0) |
(9.4) | |||||||||
Other financing activities |
(5.9) |
- | |||||||||
Net cash used by financing activities |
(357.9) |
(167.5) | |||||||||
Effect of exchange rate changes on cash and cash equivalents |
(54.7) |
(154.5) | |||||||||
Net decrease in cash and cash equivalents |
(373.1) |
(281.9) | |||||||||
Cash and cash equivalents at beginning of year |
960.5 |
1,107.9 | |||||||||
Cash and cash equivalents at end of period |
$ |
587.4 |
$ |
826.0 | |||||||
AVON PRODUCTS, INC. | ||||||||||||||||||||||||
SUPPLEMENTAL SCHEDULE | ||||||||||||||||||||||||
SEGMENT PERFORMANCE METRICS | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||
REGIONAL RESULTS | ||||||||||||||||||||||||
Revenue |
Active Reps |
Average |
Units Sold |
Price/Mix C$ | ||||||||||||||||||||
Revenue & Performance Drivers |
US$ |
C$ |
||||||||||||||||||||||
% var. vs |
% var. vs |
% var. vs |
% var. vs |
% var. vs |
% var. vs | |||||||||||||||||||
Latin America |
$ |
790.9 |
(26)% |
1% |
(2)% |
3% |
(6)% |
7% | ||||||||||||||||
Europe, Middle East & Africa |
499.2 |
(19) |
3 |
5 |
(2) |
- |
3 | |||||||||||||||||
North America |
230.6 |
(17) |
(15) |
(13) |
(2) |
(24) |
9 | |||||||||||||||||
Asia Pacific |
146.2 |
(16) |
(8) |
(2) |
(6) |
(10) |
2 | |||||||||||||||||
Total |
$ |
1,666.9 |
(22)% |
(2)% |
(1)% |
(1)% |
(6)% |
4% | ||||||||||||||||
2015 GAAP |
Adjusted Operating Profit |
Adjusted Operating Margin | ||||||||||||||||||||||
Operating Profit/Margin |
Operating Profit |
Operating |
2015 |
2014 |
2015 |
2014 |
Change |
Change | ||||||||||||||||
Latin America |
$ |
34.7 |
4.4% |
$ |
39.8 |
$ |
144.5 |
5.0% |
13.5% |
(850) bps |
(600) bps | |||||||||||||
Europe, Middle East & Africa |
48.1 |
9.6 |
46.5 |
55.1 |
9.3 |
8.9 |
40 |
190 | ||||||||||||||||
North America |
(27.5) |
(11.9) |
(7.7) |
(12.5) |
(3.3) |
(4.5) |
120 |
100 | ||||||||||||||||
Asia Pacific |
9.4 |
6.4 |
9.6 |
9.0 |
6.6 |
5.2 |
140 |
200 | ||||||||||||||||
Total from operations |
64.7 |
3.9 |
88.2 |
196.1 |
5.3 |
9.2 |
(390) |
(180) | ||||||||||||||||
Global and other |
(41.7) |
- |
(35.5) |
1.7 |
- |
- |
- |
- | ||||||||||||||||
Total |
$ |
23.0 |
1.4% |
$ |
52.7 |
$ |
197.8 |
3.2% |
9.3% |
(610) bps |
(390) bps | |||||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||
REGIONAL RESULTS | ||||||||||||||||||||||||
Revenue |
Active Reps |
Average |
Units Sold |
Price/Mix C$ | ||||||||||||||||||||
Revenue & Performance Drivers |
US$ |
C$ |
||||||||||||||||||||||
% var. vs |
% var. vs |
% var. vs |
% var. vs |
% var. vs |
% var. vs | |||||||||||||||||||
Latin America |
$ |
2,481.2 |
(22)% |
2% |
(2)% |
4% |
(4)% |
6% | ||||||||||||||||
Europe, Middle East & Africa |
1,602.8 |
(17) |
6 |
6 |
- |
4 |
2 | |||||||||||||||||
North America |
731.3 |
(17) |
(15) |
(15) |
- |
(23) |
8 | |||||||||||||||||
Asia Pacific |
469.2 |
(9) |
(3) |
(3) |
- |
(6) |
3 | |||||||||||||||||
Total |
$ |
5,284.5 |
(19)% |
- % |
(1)% |
1% |
(4)% |
4% | ||||||||||||||||
2015 GAAP |
Adjusted Operating Profit |
Adjusted Operating Margin | ||||||||||||||||||||||
Operating Profit/Margin |
Operating Profit |
Operating |
2015 |
2014 |
2015 |
2014 |
Change |
Change | ||||||||||||||||
Latin America |
$ |
55.6 |
2.2% |
$ |
175.9 |
$ |
350.6 |
7.1% |
11.0% |
(390) bps |
(220) bps | |||||||||||||
Europe, Middle East & Africa |
139.6 |
8.7 |
143.8 |
216.9 |
9.0 |
11.2 |
(220) |
(70) | ||||||||||||||||
North America |
(46.9) |
(6.4) |
(12.3) |
(15.3) |
(1.7) |
(1.7) |
- |
- | ||||||||||||||||
Asia Pacific |
26.8 |
5.7 |
37.0 |
18.5 |
7.9 |
3.6 |
430 |
450 | ||||||||||||||||
Total from operations |
175.1 |
3.3 |
344.4 |
570.7 |
6.5 |
8.8 |
(230) |
(60) | ||||||||||||||||
Global and other |
(97.9) |
- |
(80.3) |
(53.5) |
- |
- |
- |
- | ||||||||||||||||
Total |
$ |
77.2 |
1.5% |
$ |
264.1 |
$ |
517.2 |
5.0% |
7.9% |
(290) bps |
(110) bps | |||||||||||||
AVON PRODUCTS, INC. | ||||||||||||||||
SUPPLEMENTAL SCHEDULE | ||||||||||||||||
CATEGORY SALES | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In millions) | ||||||||||||||||
Consolidated | ||||||||||||||||
Three Months Ended September 30 |
US$ |
C$ | ||||||||||||||
2015 |
2014 |
% var. vs |
% var. vs | |||||||||||||
Beauty: |
||||||||||||||||
Skincare |
$ |
470.5 |
$ |
638.8 |
(26)% |
(6)% | ||||||||||
Fragrance |
412.3 |
507.2 |
(19) |
4 | ||||||||||||
Color |
289.0 |
371.5 |
(22) |
- | ||||||||||||
Total Beauty |
1,171.8 |
1,517.5 |
(23) |
(1) | ||||||||||||
Fashion & Home: |
||||||||||||||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) |
285.0 |
331.4 |
(14) |
2 | ||||||||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) |
174.4 |
210.1 |
(17) |
5 | ||||||||||||
Total Fashion & Home |
459.4 |
541.5 |
(15) |
3 | ||||||||||||
Net sales |
1,631.2 |
2,059.0 |
(21) |
- | ||||||||||||
Other revenue |
35.7 |
79.2 |
(55) |
(44) | ||||||||||||
Total revenue |
$ |
1,666.9 |
$ |
2,138.2 |
(22) |
(2) | ||||||||||
Consolidated | ||||||||||||||||
Nine Months Ended September 30 |
US$ |
C$ | ||||||||||||||
2015 |
2014 |
% var. vs |
% var. vs | |||||||||||||
Beauty: |
||||||||||||||||
Skincare |
$ |
1,552.0 |
$ |
1,946.1 |
(20)% |
(1)% | ||||||||||
Fragrance |
1,264.4 |
1,524.4 |
(17) |
5 | ||||||||||||
Color |
939.3 |
1,167.9 |
(20) |
- | ||||||||||||
Total Beauty |
3,755.7 |
4,638.4 |
(19) |
1 | ||||||||||||
Fashion & Home: |
||||||||||||||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) |
881.6 |
1,035.2 |
(15) |
(1) | ||||||||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) |
546.2 |
666.9 |
(18) |
2 | ||||||||||||
Total Fashion & Home |
1,427.8 |
1,702.1 |
(16) |
- | ||||||||||||
Net sales |
5,183.5 |
6,340.5 |
(18) |
1 | ||||||||||||
Other revenue |
101.0 |
169.9 |
(41) |
(31) | ||||||||||||
Total revenue |
$ |
5,284.5 |
$ |
6,510.4 |
(19) |
- | ||||||||||
AVON PRODUCTS, INC. | ||||||||||||||||||||||||||||
SUPPLEMENTAL SCHEDULE | ||||||||||||||||||||||||||||
NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||||||||||
This supplemental schedule provides adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the |
||||||||||||||||||||||||||||
Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP. |
||||||||||||||||||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||||||
CTI |
Pension |
|||||||||||||||||||||||||||
Reported |
restructuring |
Venezuelan |
Liz Earle |
settlement |
Debt-related |
Special |
Adjusted | |||||||||||||||||||||
(GAAP) |
initiatives |
special items |
gain on sale |
charge |
items |
tax items |
(Non-GAAP) | |||||||||||||||||||||
Total revenue |
$ |
1,666.9 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
1,666.9 | ||||||||||||
Cost of sales |
652.7 |
- |
5.7 |
- |
- |
- |
- |
647.0 | ||||||||||||||||||||
Selling, general and administrative expenses |
991.2 |
0.2 |
- |
- |
23.8 |
- |
- |
967.2 | ||||||||||||||||||||
Operating profit |
23.0 |
0.2 |
5.7 |
- |
23.8 |
- |
- |
52.7 | ||||||||||||||||||||
Income (loss) before taxes |
7.8 |
0.2 |
5.7 |
(46.2) |
23.8 |
5.5 |
- |
(3.2) | ||||||||||||||||||||
Income taxes |
(704.8) |
0.1 |
- |
(6.7) |
- |
- |
664.9 |
(46.5) | ||||||||||||||||||||
Net (loss) income |
$ |
(697.0) |
$ |
0.3 |
$ |
5.7 |
$ |
(52.9) |
$ |
23.8 |
$ |
5.5 |
$ |
664.9 |
$ |
(49.7) | ||||||||||||
Diluted EPS |
$ |
(1.58) |
$ |
- |
$ |
0.01 |
$ |
(0.12) |
$ |
0.05 |
$ |
0.01 |
$ |
1.50 |
$ |
(0.11) | ||||||||||||
Gross margin |
60.8% |
- |
0.3 |
- |
- |
- |
- |
61.2% | ||||||||||||||||||||
SG&A as a % of revenues |
59.5% |
- |
- |
- |
(1.4) |
- |
- |
58.0% | ||||||||||||||||||||
Operating margin |
1.4% |
- |
0.3 |
- |
1.4 |
- |
- |
3.2% | ||||||||||||||||||||
Effective tax rate |
* |
* | ||||||||||||||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) |
||||||||||||||||||||||||||||
Latin America |
$ |
34.7 |
$ |
(0.6) |
$ |
5.7 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
39.8 | ||||||||||||
Europe, Middle East & Africa |
48.1 |
(1.6) |
- |
- |
- |
- |
- |
46.5 | ||||||||||||||||||||
North America |
(27.5) |
2.2 |
- |
- |
17.6 |
- |
- |
(7.7) | ||||||||||||||||||||
Asia Pacific |
9.4 |
0.2 |
- |
- |
- |
- |
- |
9.6 | ||||||||||||||||||||
Global and other |
(41.7) |
- |
- |
- |
6.2 |
- |
- |
(35.5) | ||||||||||||||||||||
Total |
$ |
23.0 |
$ |
0.2 |
$ |
5.7 |
$ |
- |
$ |
23.8 |
$ |
- |
$ |
- |
$ |
52.7 | ||||||||||||
SEGMENT OPERATING MARGIN |
||||||||||||||||||||||||||||
Latin America |
4.4% |
(0.1) |
0.7 |
- |
- |
- |
- |
5.0% | ||||||||||||||||||||
Europe, Middle East & Africa |
9.6% |
(0.3) |
- |
- |
- |
- |
- |
9.3% | ||||||||||||||||||||
North America |
(11.9)% |
1.0 |
- |
- |
7.6 |
- |
- |
(3.3)% | ||||||||||||||||||||
Asia Pacific |
6.4% |
0.1 |
- |
- |
- |
- |
- |
6.6% | ||||||||||||||||||||
Global and other |
-% |
- |
- |
- |
- |
- |
- |
-% | ||||||||||||||||||||
Total |
1.4% |
- |
0.3 |
- |
1.4 |
- |
- |
3.2% | ||||||||||||||||||||
Amounts in the table above may not necessarily sum because the computations are made independently. |
||||||||||||||||||||||||||||
* Calculation not meaningful |
AVON PRODUCTS, INC. | ||||||||||||||||||||||||||||
SUPPLEMENTAL SCHEDULE | ||||||||||||||||||||||||||||
NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||||||||||
This supplemental schedule provides adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the |
||||||||||||||||||||||||||||
Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP. |
||||||||||||||||||||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||||||
CTI |
Pension |
|||||||||||||||||||||||||||
Reported |
restructuring |
Venezuelan |
Liz Earle |
settlement |
Debt-related |
Special |
Adjusted | |||||||||||||||||||||
(GAAP) |
initiatives |
special items |
gain on sale |
charge |
items |
tax items |
(Non-GAAP) | |||||||||||||||||||||
Total revenue |
$ |
5,284.5 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
5,284.5 | ||||||||||||
Cost of sales |
2,073.4 |
- |
26.6 |
- |
- |
- |
- |
2,046.8 | ||||||||||||||||||||
Selling, general and administrative expenses |
3,133.9 |
44.8 |
91.7 |
- |
23.8 |
- |
- |
2,973.6 | ||||||||||||||||||||
Operating profit |
77.2 |
44.8 |
118.3 |
- |
23.8 |
- |
- |
264.1 | ||||||||||||||||||||
(Loss) income before taxes |
(11.7) |
44.8 |
114.1 |
(44.9) |
23.8 |
8.0 |
- |
134.1 | ||||||||||||||||||||
Income taxes |
(802.0) |
(3.8) |
0.8 |
(6.7) |
- |
- |
693.0 |
(118.7) | ||||||||||||||||||||
Net (loss) income |
$ |
(813.7) |
$ |
41.0 |
$ |
114.9 |
$ |
(51.6) |
$ |
23.8 |
$ |
8.0 |
$ |
693.0 |
$ |
15.3 | ||||||||||||
Diluted EPS |
$ |
(1.84) |
$ |
0.10 |
$ |
0.26 |
$ |
(0.11) |
$ |
0.06 |
$ |
0.02 |
$ |
1.57 |
$ |
0.03 | ||||||||||||
Gross margin |
60.8% |
- |
0.5 |
- |
- |
- |
- |
61.3% | ||||||||||||||||||||
SG&A as a % of revenues |
59.3% |
(0.8) |
(1.7) |
- |
(0.5) |
- |
- |
56.3% | ||||||||||||||||||||
Operating margin |
1.5% |
0.8 |
2.2 |
- |
0.5 |
- |
- |
5.0% | ||||||||||||||||||||
Effective tax rate |
* |
* | ||||||||||||||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) |
||||||||||||||||||||||||||||
Latin America |
$ |
55.6 |
$ |
2.0 |
$ |
118.3 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
175.9 | ||||||||||||
Europe, Middle East & Africa |
139.6 |
4.2 |
- |
- |
- |
- |
- |
143.8 | ||||||||||||||||||||
North America |
(46.9) |
17.0 |
- |
- |
17.6 |
- |
- |
(12.3) | ||||||||||||||||||||
Asia Pacific |
26.8 |
10.2 |
- |
- |
- |
- |
- |
37.0 | ||||||||||||||||||||
Global and other |
(97.9) |
11.4 |
- |
- |
6.2 |
- |
- |
(80.3) | ||||||||||||||||||||
Total |
$ |
77.2 |
$ |
44.8 |
$ |
118.3 |
$ |
- |
$ |
23.8 |
$ |
- |
$ |
- |
$ |
264.1 | ||||||||||||
SEGMENT OPERATING MARGIN |
||||||||||||||||||||||||||||
Latin America |
2.2% |
0.1 |
4.8 |
- |
- |
- |
- |
7.1% | ||||||||||||||||||||
Europe, Middle East & Africa |
8.7% |
0.3 |
- |
- |
- |
- |
- |
9.0% | ||||||||||||||||||||
North America |
(6.4)% |
2.3 |
- |
- |
2.4 |
- |
- |
(1.7)% | ||||||||||||||||||||
Asia Pacific |
5.7% |
2.2 |
- |
- |
- |
- |
- |
7.9% | ||||||||||||||||||||
Global and other |
-% |
- |
- |
- |
- |
- |
- |
-% | ||||||||||||||||||||
Total |
1.5% |
0.8 |
2.2 |
- |
0.5 |
- |
- |
5.0% | ||||||||||||||||||||
Amounts in the table above may not necessarily sum because the computations are made independently. |
||||||||||||||||||||||||||||
* Calculation not meaningful |
AVON PRODUCTS, INC. | |||||||||||||||||||
SUPPLEMENTAL SCHEDULE | |||||||||||||||||||
NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(In millions, except per share data) | |||||||||||||||||||
This supplemental schedule provides adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the | |||||||||||||||||||
Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP. |
|||||||||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2014 | |||||||||||||||||||
CTI |
Pension |
||||||||||||||||||
Reported |
restructuring |
Venezuelan |
settlement |
Adjusted | |||||||||||||||
(GAAP) |
initiatives |
special items |
charge |
(Non-GAAP) | |||||||||||||||
Total revenue |
$ |
2,138.2 |
$ |
- |
$ |
- |
$ |
- |
$ |
2,138.2 | |||||||||
Cost of sales |
813.9 |
- |
2.0 |
- |
811.9 | ||||||||||||||
Selling, general and administrative expenses |
1,136.4 |
2.5 |
- |
5.4 |
1,128.5 | ||||||||||||||
Operating profit |
187.9 |
2.5 |
2.0 |
5.4 |
197.8 | ||||||||||||||
Income before taxes |
144.4 |
2.5 |
2.0 |
5.4 |
154.3 | ||||||||||||||
Income taxes |
(52.4) |
(0.5) |
- |
(2.0) |
(54.9) | ||||||||||||||
Net income |
$ |
92.0 |
$ |
2.0 |
$ |
2.0 |
$ |
3.4 |
$ |
99.4 | |||||||||
Diluted EPS |
$ |
0.21 |
$ |
0.01 |
$ |
0.01 |
$ |
0.01 |
$ |
0.23 | |||||||||
Gross margin |
61.9% |
- |
0.1 |
- |
62.0% | ||||||||||||||
SG&A as a % of revenues |
53.1% |
(0.1) |
- |
(0.3) |
52.8% | ||||||||||||||
Operating margin |
8.8% |
0.1 |
0.1 |
0.3 |
9.3% | ||||||||||||||
Effective tax rate |
36.3% |
35.6% | |||||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) |
|||||||||||||||||||
Latin America |
$ |
142.3 |
$ |
0.2 |
$ |
2.0 |
$ |
- |
$ |
144.5 | |||||||||
Europe, Middle East & Africa |
55.5 |
(0.4) |
- |
- |
55.1 | ||||||||||||||
North America |
(18.3) |
1.8 |
- |
4.0 |
(12.5) | ||||||||||||||
Asia Pacific |
9.0 |
- |
- |
- |
9.0 | ||||||||||||||
Global and other |
(0.6) |
0.9 |
- |
1.4 |
1.7 | ||||||||||||||
Total |
$ |
187.9 |
$ |
2.5 |
$ |
2.0 |
$ |
5.4 |
$ |
197.8 | |||||||||
SEGMENT OPERATING MARGIN |
|||||||||||||||||||
Latin America |
13.3% |
- |
0.2 |
- |
13.5% | ||||||||||||||
Europe, Middle East & Africa |
9.0% |
(0.1) |
- |
- |
8.9% | ||||||||||||||
North America |
(6.6)% |
0.7 |
- |
1.4 |
(4.5%) | ||||||||||||||
Asia Pacific |
5.2% |
- |
- |
- |
5.2% | ||||||||||||||
Global and other |
-% |
- |
- |
- |
-% | ||||||||||||||
Total |
8.8% |
0.1 |
0.1 |
0.3 |
9.3% | ||||||||||||||
Amounts in the table above may not necessarily sum because the computations are made independently. |
AVON PRODUCTS, INC. | |||||||||||||||||||
SUPPLEMENTAL SCHEDULE | |||||||||||||||||||
NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(In millions, except per share data) | |||||||||||||||||||
This supplemental schedule provides adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the | |||||||||||||||||||
Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP. |
|||||||||||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2014 | |||||||||||||||||||
CTI |
Pension |
||||||||||||||||||
Reported |
restructuring |
Venezuelan |
FCPA |
settlement |
Adjusted | ||||||||||||||
(GAAP) |
initiatives |
special items |
accrual |
charge |
(Non-GAAP) | ||||||||||||||
Total revenue |
$ |
6,510.4 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
6,510.4 | |||||||
Cost of sales |
2,580.0 |
- |
119.7 |
- |
- |
2,460.3 | |||||||||||||
Selling, general and administrative expenses |
3,700.2 |
76.4 |
16.0 |
46.0 |
28.9 |
3,532.9 | |||||||||||||
Operating profit |
230.2 |
76.4 |
135.7 |
46.0 |
28.9 |
517.2 | |||||||||||||
Income before taxes |
69.1 |
76.4 |
189.4 |
46.0 |
28.9 |
409.8 | |||||||||||||
Income taxes |
(124.4) |
(20.8) |
(11.9) |
- |
(10.4) |
(167.5) | |||||||||||||
Net (loss) income |
$ |
(55.3) |
$ |
55.6 |
$ |
177.5 |
$ |
46.0 |
$ |
18.5 |
$ |
242.3 | |||||||
Diluted EPS |
$ |
(0.13) |
$ |
0.13 |
0.41 |
$ |
0.11 |
$ |
0.04 |
$ |
0.55 | ||||||||
Gross margin |
60.4% |
- |
1.8 |
- |
- |
62.2% | |||||||||||||
SG&A as a % of revenues |
56.8% |
(1.2) |
(0.2) |
(0.7) |
(0.4) |
54.3% | |||||||||||||
Operating margin |
3.5% |
1.2 |
2.1 |
0.7 |
0.4 |
7.9% | |||||||||||||
Effective tax rate |
180.0% |
40.9% | |||||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) |
|||||||||||||||||||
Latin America |
$ |
196.9 |
$ |
18.0 |
$ |
135.7 |
$ |
- |
$ |
- |
$ |
350.6 | |||||||
Europe, Middle East & Africa |
199.7 |
17.2 |
- |
- |
- |
216.9 | |||||||||||||
North America |
(54.1) |
17.4 |
- |
- |
21.4 |
(15.3) | |||||||||||||
Asia Pacific |
15.6 |
2.9 |
- |
- |
- |
18.5 | |||||||||||||
Global and other |
(127.9) |
20.9 |
- |
46.0 |
7.5 |
(53.5) | |||||||||||||
Total |
$ |
230.2 |
$ |
76.4 |
$ |
135.7 |
$ |
46.0 |
$ |
28.9 |
$ |
517.2 | |||||||
SEGMENT OPERATING MARGIN |
|||||||||||||||||||
Latin America |
6.2% |
0.6 |
4.3 |
- |
- |
11.0% | |||||||||||||
Europe, Middle East & Africa |
10.3% |
0.9 |
- |
- |
- |
11.2% | |||||||||||||
North America |
(6.2)% |
2.0 |
- |
- |
2.4 |
(1.7)% | |||||||||||||
Asia Pacific |
3.0% |
0.6 |
- |
- |
- |
3.6% | |||||||||||||
Global and other |
-% |
- |
- |
- |
- |
-% | |||||||||||||
Total |
3.5% |
1.2 |
2.1 |
0.7 |
0.4 |
7.9% | |||||||||||||
Amounts in the table above may not necessarily sum because the computations are made independently. |
AVON PRODUCTS, INC. | ||||||||||||
SUPPLEMENTAL SCHEDULE | ||||||||||||
NON-GAAP IMPACT OF SPECIAL REVENUE ITEMS AFFECTING YEAR-OVER-YEAR COMPARISONS | ||||||||||||
(Unaudited) | ||||||||||||
This supplemental schedule provides adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the Non-GAAP financial | ||||||||||||
measures shown, other related Non-GAAP financial measures we present elsewhere and the financial measures calculated and reported in accordance with GAAP. | ||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||
Constant $ revenue | ||||||||||||
Year-over-Year Impacts of: |
||||||||||||
Revenue % |
C$ revenue % |
2014 Brazil |
2015 Brazil |
Liz Earle |
C$ revenue % | |||||||
VAT credits |
IPI tax |
divestiture |
||||||||||
Total Avon |
(22)% |
(2)% |
2 pts |
2 pts |
1 pt |
3% | ||||||
Latin America |
(26)% |
1% |
4 pts |
4 pts |
- |
9% | ||||||
Brazil |
(42)% |
(10)% |
8 pts |
8 pts |
- |
6% | ||||||
Europe, Middle East & Africa |
(19)% |
3% |
- |
- |
3 pts |
6% | ||||||
Gross Margin |
Operating Margin | |||||||||||
Total Avon |
2015 |
2014 |
Change |
2015 |
2014 |
Change | ||||||
Reported (GAAP) |
60.8% |
61.9% |
(110) bps |
1.4% |
8.8% |
(740) bps | ||||||
Adjusted (Non-GAAP) |
61.2% |
62.0% |
(80) bps |
3.2% |
9.3% |
(610) bps | ||||||
Impacts of: |
||||||||||||
2015 Brazil IPI tax |
30 bps |
- |
120 bps |
- |
||||||||
2014 Brazil VAT credits |
- |
(70) bps |
- |
(180) bps |
||||||||
Adjusted, excluding special revenue items |
61.5% |
61.3% |
20 bps |
4.4% |
7.5% |
(310) bps | ||||||
Operating Margin | ||||||||||||
Latin America |
2015 |
2014 |
Change | |||||||||
Reported (GAAP) |
4.4% |
13.3% |
(890) bps | |||||||||
Adjusted (Non-GAAP) |
5.0% |
13.5% |
(850) bps | |||||||||
Impacts of: |
||||||||||||
2015 Brazil IPI tax |
220 bps |
- |
||||||||||
2014 Brazil VAT credits |
- |
(350) bps |
||||||||||
Adjusted, excluding special revenue items |
7.2% |
10.0% |
(280) bps | |||||||||
Note: Liz Earle has an immaterial impact on the Adjusted gross margin and Adjusted operating margin change of Total Avon and Europe, Middle East & Africa. | ||||||||||||
Refer to the Non-GAAP Financial Measures schedules for the reconciliation of the Adjusted Non-GAAP financial measures. |
Non-GAAP Financial Measures
To supplement our financial results presented in accordance with GAAP, we disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, including changes in: revenue, operating profit, Adjusted operating profit, operating margin and Adjusted operating margin. We also refer to these adjusted financial measures as Constant $ items, which are Non-GAAP financial measures. We believe these measures provide investors an additional perspective on trends. To exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, we calculate current-year results and prior-year results at a constant exchange rate. Foreign currency impact is determined as the difference between actual growth rates and constant-currency growth rates.
We also present gross margin, selling, general and administrative expenses as a percentage of revenue, total and net global expenses, operating profit, operating margin, net income, diluted earnings per share and effective tax rate on a Non-GAAP basis. The discussion of our segments presents operating profit and operating margin on a Non-GAAP basis. We refer to these Non-GAAP financial measures as "Adjusted." We have provided a quantitative reconciliation of the difference between the Non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP. The Company uses the Non-GAAP financial measures to evaluate its operating performance and believes that it is meaningful for investors to be made aware of, on a period-to-period basis, the impacts of 1) costs to implement ("CTI") restructuring initiatives, 2) costs and charges related to the devaluations of Venezuelan currency in February 2015 and March 2014, combined with being designated as a highly inflationary economy ("Venezuelan special items"), 3) the additional $46 million accrual recorded in the first quarter of 2014 for the settlements related to the Foreign Corrupt Practices Act ("FCPA") investigations ("FCPA accrual"), 4) the settlement charges associated with the U.S. pension plan ("Pension settlement charge"), 5) costs and charges related to the extinguishment of debt and the termination of the Company's previous $1 billion revolving credit facility ("Debt-related items"), 6) the gain on sale of Liz Earle ("Liz Earle gain on sale") and, 7) the non-cash income tax adjustments associated with the Company's deferred tax assets recorded in 2015 ("Special tax items"). The Company believes investors find the Non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the Company's financial results in any particular period. These Non-GAAP measures should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
The Venezuelan special items include the impact on the Consolidated Statements of Operations in 2015 and 2014 caused by the devaluations of Venezuelan currency on monetary assets and liabilities, such as cash, receivables and payables; deferred tax assets and liabilities; and non-monetary assets, such as inventories. For non-monetary assets, the Venezuelan special items include the earnings impact caused by the difference between the historical U.S. dollar cost of the assets at the previous exchange rate and the revised exchange rate. In 2015 and 2014, the Venezuelan special items also include adjustments of approximately $11 million and approximately $116 million, respectively, to reflect certain non-monetary assets at their net realizable value. In 2015, the Venezuelan special items also include an impairment charge of approximately $90 million to reflect the write-down of the long-lived assets to their estimated fair value. In 2014, the devaluation was caused as a result of moving from the official exchange rate of 6.30 to the SICAD II exchange rate of approximately 50, and in 2015, the devaluation was caused as a result of moving from the SICAD II exchange rate of approximately 50 to the SIMADI exchange rate of approximately 170.
The Pension settlement charge includes the impact on the Consolidated Statements of Operations in the third quarter of 2015 and the second and third quarters of 2014 associated with the payments made to former employees who were vested and participated in the U.S. pension plan. Such payments fully settle the Company's pension plan obligation to those participants who elected to receive such payment.
The Debt-related items include the impact on the Consolidated Statements of Operations in the third quarter of 2015 of the loss on extinguishment of debt caused by the make-whole premium and the write-off of debt issuance costs and discounts associated with the prepayment of the Company's 2.375% Notes. The Debt-related items also include the impact during the second quarter of 2015 on other expense, net in the Consolidated Statements of Operations of $2.5 million associated with the write-off of issuance costs related to the Company's previous $1 billion revolving credit facility.
The Liz Earle gain on sale includes the impact during 2015 on the Consolidated Statements of Operations due to the gain on sale of Liz Earle.
The Special tax items include the impact during 2015 on income taxes in the Consolidated Statements of Operations due to a non-cash income tax charge in the first quarter of 2015 and a non-cash income tax benefit in the second quarter of 2015, each associated with valuation allowances, to adjust the Company's U.S. deferred tax assets to an amount that was "more likely than not" to be realized. In the first quarter of 2015 the additional valuation allowance was due to the continued strengthening of the U.S. dollar against currencies of some of the Company's key markets, and in the second quarter of 2015 the Company released a portion of its valuation allowance due to the weakening of the U.S. dollar against currencies of some of its key markets. The Special tax items also include the impact during the third quarter of 2015 on income taxes in the Consolidated Statements of Operations due to a non-cash income tax charge as a result of establishing a valuation allowance for the full amount of the Company's U.S. deferred tax assets due to the impact of the continued strengthening of the U.S. dollar against currencies of some of its key markets and its associated effect on the Company's tax planning strategies. Additionally, the Special tax items includes the impact during the third quarter of 2015 on income taxes in the Consolidated Statements of Operations due to a non-cash income tax charge associated with valuation allowances, to adjust certain non-U.S. deferred tax assets to an amount that is "more likely than not" to be realized. The non-U.S. valuation allowance included an adjustment associated with Russia, which was primarily the result of lower earnings, which were significantly impacted by foreign exchange losses on working capital balances.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/avon-reports-third-quarter-2015-results-300172125.html
SOURCE Avon Products, Inc.
Copyright 2015 PR Newswire
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