NEW YORK, Feb. 13, 2014 /PRNewswire/ -- Avon Products,
Inc. (NYSE: AVP) today reported fourth-quarter and full-year 2013
results. "Looking back at 2013, we made progress addressing tough
legacy issues, identifying and beginning to resolve operational
challenges, and rebuilding our management team. Although the
second half of the year was impacted by both execution and
macro-economic factors, I'm pleased that we are making headway
toward our financial goals and Avon's return to profitable growth," said
Sheri McCoy, Chief Executive
Officer, Avon Products, Inc. "While much work remains to be done,
we continue to make progress toward building a better, simpler and
more stable business."
Full-Year 2013 Results (compared with full-year 2012)
Total revenue of $10.0 billion
decreased 6%, or 1% in constant dollars. Total units decreased 5%
and price/mix increased 4%. Active Representatives² were down 2%
while average order increased 1%.
Total Beauty sales declined 7%, or 2% in constant dollars.
Fashion & Home sales declined 4%, or were up 1% in constant
dollars.
Operating profit was $427 million
and operating margin was 4.3%, down 70 basis points from 2012.
Adjusted operating profit was $791
million, and Adjusted operating margin was 7.9%, up 130
basis points from 2012.
Full-year effective tax rate from continuing operations was
100.6%, compared with 78.2% in 2012. Full-year Adjusted effective
tax rate was 30.3%, compared with 35.0% in 2012.
Full-year net loss from continuing operations was
$1 million, or $0.01 per diluted share, compared with net income
from continuing operations of $93
million, or $0.20 per diluted
share, in 2012. Adjusted net income from continuing operations was
$451 million, or $1.02 per share, compared with $373 million, or $0.84 per share, in 2012.
Cash flow from operations was $540
million for the twelve months ended December 31, 2013, $4
million lower than in the same period in 2012. Cash from
operations was unfavorably impacted by the make-whole premiums of
approximately $90 million paid in
connection with the prepayment of the Company's private notes and
2014 notes, higher contribution to the U.K. pension plan, as well
as higher payments for employee incentive compensation. Partially
offsetting these unfavorable impacts was improved Adjusted
operating profit. The overall net cash used in the twelve months
ended December 31, 2013 was
$102 million, compared with net cash
used of $36 million for the same
period in 2012. The increase is primarily due to the paydown of the
Company's debt, which was partially offset by lower dividends paid.
Avon's net debt (total debt
less cash) as of December 31, 2013
was $1.6 billion, down $376 million from December
31, 2012. For the twelve months ended December 31, 2013, the Company reduced the
overall debt balance by $475
million.
Adjustments to Full-Year 2013 GAAP Results to Arrive at
Adjusted Results
During 2013, the following items had a significant impact on the
financial results:
- The Company recorded non-cash impairment charges within
operating profit of $159 million
pre-tax. This included a charge of $117
million pre-tax related to the Service Model Transformation
("SMT") project, as a result of the Company's decision to halt
further roll-out of the SMT project beyond the pilot market of
Canada in the fourth quarter. In
addition, during the third quarter, the Company recorded a non-cash
impairment charge of $42 million
pre-tax, and a valuation allowance for deferred tax assets related
to the China business of
$9 million. These items had a
negative impact of $0.28 per diluted
share.
- The Company recorded a loss on extinguishment of debt in the
first and second quarters of approximately $86 million pre-tax, or $0.12 per diluted share, associated with the
prepayment of the $535 million
outstanding principal of the Company's private notes and the
$500 million outstanding principal of
the Company's 2014 notes, including make-whole premiums, and the
repayment of $380 million of the
outstanding term loan principal.
- The Company recorded an aggregate accrual related to the
previously disclosed government Foreign Corrupt Practices Act
("FCPA") investigations of $89
million, or $0.20 per diluted
share, within operating profit, of which $12
million was recorded in the second quarter. Based on the
status of the Company's current settlement negotiations with the
DOJ and the staff of the SEC, including the level of monetary
penalties being discussed, an additional $77
million was recorded in the fourth quarter, and the Company
estimates the aggregate amount of any potential settlements with
the government could exceed this accrual by up to approximately
$43 million. There can be no
assurance that the Company's efforts to reach settlements
with the government will be successful or, if they are, what the
timing or terms of such settlements will be.
- The Company recorded costs to implement ("CTI") restructuring
within operating profit of approximately $66
million pre-tax, or $0.09 per
diluted share.
- As a result of the 32% devaluation of Venezuelan currency,
during the first quarter, the Company recorded a one-time charge of
$34 million in other expense, net,
and $17 million in income taxes,
primarily reflecting the write-down of monetary net assets and
deferred tax benefits, respectively. In addition, as a result of
using the U.S. historic dollar cost basis of non-monetary assets,
such as inventory, full-year 2013 operating profit was negatively
impacted by approximately $50
million. During the fourth quarter, the Company also
recorded a valuation allowance for deferred tax assets related to
Venezuela of $42 million. These items had a negative impact of
$0.32 per diluted share.
Fourth-Quarter 2013 (compared with fourth-quarter
2012)
For the fourth quarter of 2013, total revenue of $2.7 billion decreased 10%, or 4% in constant
dollars. Total units decreased 10% and price/mix was up 6% during
the quarter. Active Representatives were down 5% while average
order increased 1%.
Beauty sales declined 11%, or 4% in constant dollars. Fashion
& Home sales declined 8%, or 2% in constant dollars.
Fourth-quarter 2013 gross margin was 61.0%. Gross margin
included a $5 million charge
associated with highly inflationary accounting for the 32%
devaluation of Venezuelan currency that occurred in the first
quarter of 2013. Adjusted gross margin was 61.2%, 140 basis points
higher than the prior-year quarter, primarily driven by the
favorable net impact of mix and pricing, largely due to
inflationary pricing in Latin
America. This benefit was partially offset by unfavorable
foreign exchange.
Operating loss was $17 million and
operating margin was (0.6)% in the quarter. Operating loss was
unfavorably impacted by a non-cash impairment charge related to the
SMT project, an accrual related to the government FCPA
investigations and CTI restructuring. Adjusted operating
profit was $219 million and Adjusted
operating margin was 8.2%, down 100 basis points from the fourth
quarter of 2012. The decline in Adjusted operating margin was
driven by the impact of the revenue decline with respect to fixed
expenses. Higher transportation costs, bad debt expense and net
brochure costs, primarily in Latin
America, were also factors. Additionally, unfavorable
foreign exchange negatively impacted Adjusted operating margin.
These items were partially offset by the improvement in gross
margin.
Fourth-quarter 2013's effective tax rate from continuing
operations was (55.5)%, compared with 117.1% in the fourth quarter
of 2012. The Adjusted effective tax rate was 21.6% in the
fourth quarter of 2013, compared with 37.1% in the fourth
quarter of 2012. The lower rate is due to the Company's geographic
mix of earnings for the year and the lower cost to repatriate
foreign earnings.
Fourth-quarter 2013's net loss from continuing operations was
$68 million, or $0.16 per diluted share, compared with a net loss
from continuing operations of $36
million, or $0.08 per diluted
share, in the fourth quarter of 2012. Fourth-quarter 2013's
Adjusted net income from continuing operations was $151 million, or $0.34 per diluted share, compared with
$154 million, or $0.36 per diluted share, in the fourth quarter of
2012.
Adjustments to Fourth-Quarter GAAP Results to Arrive at
Adjusted Results
During the fourth quarter of 2013, the following items had a
significant impact on the financial results:
- The Company recorded a non-cash impairment charge within
operating profit of $117 million
pre-tax, or $0.17 per diluted share,
related to the SMT project.
- The Company recorded an additional accrual related to the
previously disclosed government FCPA investigations within
operating profit of $77 million, or
$0.18 per diluted share. As a result,
the aggregate accrual for these matters at December 31, 2013 was $89
million.
- The Company recorded CTI restructuring within operating profit
of approximately $37 million pre-tax,
or $0.05 per diluted share, comprised
primarily of employee-related costs associated with the elimination
of approximately 650 positions.
- As a result of the 32% devaluation of Venezuelan currency, and
using the U.S. historic dollar cost basis of non-monetary assets,
such as inventory, fourth-quarter 2013 operating profit was
negatively impacted by approximately $5
million. In addition, the Company recorded a valuation
allowance for deferred tax assets related to Venezuela of $42
million. These items had a negative impact of $0.11 per diluted share.
Fourth-Quarter 2013 Regional Highlights (compared with
fourth-quarter 2012)
Latin
America
|
|
|
|
|
|
|
|
|
|
|
$ in
millions
|
|
Fourth-Quarter
2013
|
|
FY
2013
|
|
|
|
|
|
% var.
vs
4Q12
|
|
|
|
% var.
vs
FY12
|
|
Total
revenue
|
|
$1,236.3
|
|
(7)%
|
|
$4,840.5
|
|
(3)%
|
|
C$ revenue
|
|
|
|
4%
|
|
|
|
6%
|
|
Change in Active
Representatives
|
|
|
|
(4)%
|
|
|
|
-%
|
|
Change in units
sold
|
|
|
|
(6)%
|
|
|
|
(3)%
|
|
Operating
profit
|
|
107.7
|
|
(21)%
|
|
478.6
|
|
8%
|
|
Adjusted operating
profit
|
|
118.8
|
|
(17)%
|
|
536.6
|
|
16%
|
|
Operating
margin
|
|
8.7%
|
|
(150) bps
|
|
9.9%
|
|
100 bps
|
|
Adjusted operating
margin
|
|
9.6%
|
|
(120) bps
|
|
11.1%
|
|
180 bps
|
|
|
|
|
|
|
|
|
|
|
|
Fourth-Quarter 2013 Discussion
- Fourth-quarter constant-dollar revenue growth was primarily due
to higher average order, which was partially offset by a decrease
in Active Representatives. Higher average order benefited from
pricing, including inflationary impacts, primarily in Argentina and Venezuela.
- Brazil revenue was down 3%, or
up 6% in constant dollars, primarily due to higher average order,
largely due to benefits from continued strength in Fashion &
Home and pricing.
- Mexico revenue was down 15% in
both reported and constant dollars, primarily driven by a decrease
in Active Representatives and lower average order. The business was
negatively impacted by executional challenges, coupled with the
weaker economy.
- Venezuela revenue was down
12%, or up 29% in constant dollars, due to higher average order,
partially offset by a decrease in Active Representatives. Average
order benefited from the inflationary impact on pricing, which was
partially offset by a decrease in units sold. The decline in Active
Representatives was partially due to continued economic and
political instability.
- The decline in Adjusted operating margin was primarily due to
higher Representative and sales leader investments, net brochure
costs and bad debt expense. In addition, foreign exchange
unfavorably impacted Adjusted operating margin. These impacts were
partially offset by higher gross margin, primarily due to the
favorable net impact of mix and pricing.
Europe, Middle
East & Africa
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
millions
|
|
Fourth-Quarter
2013
|
|
FY
2013
|
|
|
|
|
|
|
% var.
vs
4Q12
|
|
|
|
% var.
vs
FY12
|
|
|
Total
revenue
|
|
$
867.7
|
|
(4) %
|
|
$2,898.4
|
|
(1)%
|
|
|
C$ revenue
|
|
|
|
(2)%
|
|
|
|
2%
|
|
|
Change in Active
Representatives
|
|
|
|
(1)%
|
|
|
|
1%
|
|
|
Change in units
sold
|
|
|
|
(7)%
|
|
|
|
-%
|
|
|
Operating
profit
|
|
129.8
|
|
(1)%
|
|
406.7
|
|
30%
|
|
|
Adjusted operating
profit
|
|
135.0
|
|
3%
|
|
424.4
|
|
31%
|
|
|
Operating
margin
|
|
15.0%
|
|
50 bps
|
|
14.0%
|
|
330 bps
|
|
|
Adjusted operating
margin
|
|
15.6%
|
|
110 bps
|
|
14.6%
|
|
350 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth-Quarter 2013 Discussion
- Fourth-quarter constant-dollar revenue decline was due to both
lower average order and a decrease in Active Representatives. Units
declined due to merchandising and reduced discounting in several
markets.
- Russia revenue was down 7%, or
3% in constant dollars, due to a decrease in Active Representatives
and lower average order.
- U.K. revenue was down 5% in both reported and constant dollars,
primarily due to a decrease in Active Representatives.
- Turkey revenue was down 9%, or
up 3% in constant dollars, primarily due to higher average
order.
- South Africa revenue was down
12%, or up 2% in constant dollars, primarily due to an increase in
Active Representatives, which was partially offset by lower average
order.
- Adjusted operating margin increased primarily due to higher
gross margin, which benefited from supply chain actions to reduce
material and overhead costs.
North
America
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
millions
|
|
Fourth-Quarter
2013
|
|
FY
2013
|
|
|
|
|
|
|
% var.
vs
4Q12
|
|
|
|
% var.
vs
FY12
|
|
|
Total
revenue
|
|
$
370.8
|
|
(21)%
|
|
$1,458.2
|
|
(17)%
|
|
|
C$ revenue
|
|
|
|
(20)%
|
|
|
|
(16)%
|
|
|
Change in Active
Representatives
|
|
|
|
(17)%
|
|
|
|
(15)%
|
|
|
Change in units
sold
|
|
|
|
(27)%
|
|
|
|
(17)%
|
|
|
Operating
loss
|
|
(6.6)
|
|
*
|
|
(60.1)
|
|
*
|
|
|
Adjusted operating
loss
|
|
(4.4)
|
|
*
|
|
(47.6)
|
|
*
|
|
|
Operating
margin
|
|
(1.8)%
|
|
(190) bps
|
|
(4.1)%
|
|
(380) bps
|
|
|
Adjusted operating
margin
|
|
(1.2)%
|
|
(540) bps
|
|
(3.3)%
|
|
(480) bps
|
|
|
*
Calculation not meaningful
|
|
Note: In the
second quarter of 2013, Silpada was classified within discontinued
operations. Accordingly, the amounts for North America exclude the
results of Silpada for all periods presented.
|
Fourth-Quarter 2013 Discussion
- Fourth-quarter constant-dollar revenue decline was due to a
decrease in Active Representatives and lower average order. The
business continues to be impacted by executional challenges.
- North America Beauty sales declined 25%, driven primarily by
skincare and personal care, on both a reported and constant-dollar
basis. Fashion & Home sales declined 16%, or 15% in constant
dollars.
- The decline in Adjusted operating margin was primarily due to
the impact of the revenue decline with respect to fixed expenses.
In addition, increased transportation cost per unit as a result of
lower volume also contributed to the operating margin decline.
These items were partially offset by lower net brochure costs and
bad debt expense, as well as benefits resulting from the Company's
cost-savings initiatives.
Asia
Pacific
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
millions
|
|
Fourth-Quarter
2013
|
|
FY
2013
|
|
|
|
|
|
|
% var.
vs
4Q12
|
|
|
|
% var.
vs
FY12
|
|
|
Total
revenue
|
|
$
192.4
|
|
(22)%
|
|
$
757.9
|
|
(16)%
|
|
|
C$ revenue
|
|
|
|
(18)%
|
|
|
|
(15)%
|
|
|
Change in Active
Representatives¹
|
|
|
|
(19)%
|
|
|
|
(10)%
|
|
|
Change in units
sold
|
|
|
|
(18)%
|
|
|
|
(16)%
|
|
|
Operating
profit(loss)
|
|
0.1
|
|
*
|
|
(12.1)
|
|
*
|
|
|
Adjusted operating
profit
|
|
4.0
|
|
(82)%
|
|
35.0
|
|
(48)%
|
|
|
Operating
margin
|
|
0.1%
|
|
(350) bps
|
|
(1.6)%
|
|
(220) bps
|
|
|
Adjusted operating
margin
|
|
2.1%
|
|
(670) bps
|
|
4.6%
|
|
(290) bps
|
|
|
¹ Excludes
China
|
*
Calculation not meaningful
|
Fourth-Quarter 2013 Discussion
- Fourth-quarter constant-dollar revenue decline was driven by
the unfavorable results of China
and a decrease in Active Representatives in the other Asia Pacific markets. The region's revenue was
also negatively impacted by approximately one point as a result of
the Company's decision to exit the South
Korea and Vietnam
markets.
- Revenue in the Philippines was
down 9%, or 4% in constant dollars, which includes approximately
two points due to the significant typhoon. The revenue decline was
primarily due to a decrease in Active Representatives, partially
offset by higher average order.
- Revenue in China was down 48%,
or 50% in constant dollars, primarily due to declines in unit
sales. Revenue was negatively impacted by a decline in the number
of beauty boutiques as well as the Company's continued actions
intended to reduce inventory levels held by beauty boutiques.
- The decline in Adjusted operating margin was primarily due to
lower gross margin, as well as the impact of the revenue decline
with respect to fixed expenses. The gross margin decline was
primarily due to the unfavorable net impact of mix and pricing,
higher obsolescence costs and the impact of lower unit volume.
These were partially offset by benefits resulting from the
Company's cost-savings initiatives.
Global
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
millions
|
|
Fourth-Quarter
2013
|
|
FY
2013
|
|
|
|
|
|
|
% var.
vs
4Q12
|
|
|
|
% var.
vs
FY12
|
|
|
Total global
expenses
|
|
368.2
|
|
93%
|
|
824.3
|
|
17%
|
|
|
Adjusted total global
expenses
|
|
154.1
|
|
(11)%
|
|
595.8
|
|
(10)%
|
|
|
Allocated to
segments
|
|
(120.0)
|
|
(6)%
|
|
(438.4)
|
|
(8)%
|
|
|
Adjusted net global
expenses
|
|
34.1
|
|
(26)%
|
|
157.4
|
|
(16)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth-Quarter 2013 Discussion
- Adjusted total global expenses decreased, primarily due to
lower professional and related fees associated with the FCPA
matters.
Avon will conduct a conference
call at 9:00 A.M. today to discuss
the quarterly and full-year 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: 33982530). 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.
Avon, the company for women, is a
leading global beauty company, with $10
billion in annual revenue. As one of the world's largest
direct sellers, Avon is sold
through more than 6 million active independent Avon Sales
Representatives. Avon products are
available in over 100 countries, and the product line includes
color cosmetics, skincare, fragrance, fashion and home products,
featuring such well-recognized brand names as Avon Color, ANEW,
Skin-So-Soft, Advance Techniques, and mark. Learn more about
Avon and its products at
www.avoncompany.com.
Footnotes
1 "Adjusted" items refer to financial results
presented in accordance with U.S. GAAP that have been adjusted to
exclude certain costs as described below, under "Non-GAAP Financial
Measures." We also refer to Adjusted financial measures as
Constant $ items, which are Non-GAAP financial measures as
described below under "Non-GAAP Financial Measures."
2 In the first quarter of 2013, we renamed our
"Growth in Active Representatives" performance metric as "Change in
Active Representatives." In addition, we revised the definition of
this metric to exclude China. As
previously disclosed, our business in China is predominantly retail, and as a
result, we do not believe including China within the Change in Active
Representatives calculation provides for a relevant indicator of
underlying business trends. There were no changes to the underlying
calculation other than the exclusion of China.
Non-GAAP Financial Measures
To supplement our financial results presented in accordance with
generally accepted accounting principles in the United States ("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. 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, income from
continuing operations, earnings per share from continuing
operations 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
Venezuela being designated as a
highly inflationary economy and the subsequent devaluation of its
currency in February 2013, a
valuation allowance for deferred tax assets related to Venezuela and the benefit related to the
release of a provision associated with the excess cost of acquiring
U.S. dollars in Venezuela
("Venezuelan special items"), 3) the total $89 million accrual for the potential settlements
related to the FCPA investigations ("FCPA accrual"), 4) the
goodwill and intangible asset impairment charges and a valuation
allowance for deferred tax assets related to the China business, as well as the capitalized
software impairment charge related to the SMT project ("Asset
impairment and other charges"), 5) costs and charges related to the
extinguishment of debt ("Loss on extinguishment of debt") and 6)
the additional provision for income taxes as we are no longer
asserting that the undistributed earnings of foreign subsidiaries
are indefinitely reinvested ("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.
The Venezuelan special items include the impact on the
Consolidated Statements of Income in 2013, caused by the
devaluation 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 inventory
and prepaid expenses. For non-monetary assets, the Venezuelan
special items include the earnings impact caused by the difference
between the historical cost of the assets at the previous official
exchange rate of 4.30 and the revised official exchange rate of
6.30. The Venezuelan special items also include the impact on the
Consolidated Statements of Income caused by a valuation allowance
for deferred tax assets related to Venezuela recorded in the fourth quarter of
2013, as well as the release of a provision in the fourth quarter
of 2012 associated with the excess cost of acquiring U.S. dollars
in Venezuela at the regulated
market rate as compared with the official exchange rate.
The Asset impairment and other charges include the impact on the
Consolidated Statements of Income caused by the goodwill and
intangible asset impairment charges and a valuation allowance for
deferred tax assets related to the China business in the third quarter of 2013,
and the goodwill impairment charge related to the China business in the third quarter of 2012.
The Asset impairment and other charges also include the impact on
the Consolidated Statements of Income caused by the capitalized
software impairment charge related to the SMT project in the fourth
quarter of 2013.
The Loss on extinguishment of debt includes the impact on the
Consolidated Statements of Income in the first quarter of 2013,
caused by the make-whole premium and the write-off of debt issuance
costs associated with the prepayment of the Company's private
notes, as well as the write-off of debt issuance costs associated
with the early repayment of $380
million of the outstanding principal amount of the term loan
agreement. The Loss on extinguishment of debt also includes the
impact on the Consolidated Statements of Income in the second
quarter of 2013, caused by the make-whole premium and the write-off
of debt issuance costs and discounts, partially offset by a
deferred gain associated with the January
2013 interest rate swap agreement termination, associated
with the prepayment of the Company's 2014 notes.
The Special tax items include the impact on the Consolidated
Statements of Income in 2012, caused by an additional
provision for income taxes as we no longer asserted that the
undistributed earnings of foreign subsidiaries are indefinitely
reinvested. During the fourth quarter of 2012, we determined that
the Company may repatriate offshore cash to meet certain domestic
funding needs.
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.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements in this release that are not historical facts or
information may be forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as
"estimate," "plan," "believe," "may," "intend," "potential," "can,"
"could," "will" and similar expressions, or the negative of those
expressions, may identify forward-looking statements. They include,
among other things, statements regarding our anticipated or
expected results, future financial performance, various strategies
and initiatives (including our stabilization strategies, cost
savings initiatives, multi-year restructuring programs and other
initiatives and related actions), costs and cost savings,
competitive advantages, impairments, the impact of currency
devaluations and other laws and regulations, government
investigations, internal investigations and compliance reviews,
results of litigation, contingencies, taxes and tax rates,
potential acquisitions or divestitures, liquidity, cash flow, uses
of cash and financing, hedging and risk management strategies,
pension, postretirement and incentive compensation plans, supply
chain and the legal status of our Representatives. Such
forward-looking statements are based on management's reasonable
current assumptions, expectations, plans and forecasts regarding
the Company's current or future results and future business and
economic conditions more generally. Such 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, and there can be no assurance that
actual results will not differ materially from management's
expectations. Such factors include, among others, the
following:
- our ability to improve our financial and operational
performance and execute fully our global business strategy,
including our ability to implement the key initiatives of, and
realize the projected benefits (in the amounts and time schedules
we expect) from, our stabilization strategies, cost savings
initiatives, multi-year restructuring programs and other
initiatives, product mix and pricing strategies, enterprise
resource planning, customer service initiatives, sales and
operation planning process, outsourcing strategies, Internet
platform and technology strategies, marketing and advertising
strategies, information technology and related system enhancements
and cash management, tax, foreign currency hedging and risk
management strategies, and any plans to invest these projected
benefits ahead of future growth;
- the possibility of business disruption in connection with our
stabilization strategies, cost savings initiatives, multi-year
restructuring programs, or other initiatives;
- our ability to reverse declining revenue, margins and net
income, particularly in North
America, and to achieve profitable growth, particularly in
our largest markets such as Brazil
and developing and emerging markets such as Mexico and Russia;
- our ability to improve working capital and effectively manage
doubtful accounts and inventory and implement initiatives to reduce
inventory levels, including the potential impact on cash flows and
obsolescence;
- our ability to reverse declines in Active Representatives, to
implement our sales Leadership program globally, to generate
Representative activity, to increase the number of consumers served
per Representative and their engagement online, to enhance branding
and the Representative and consumer experience and increase
Representative productivity through field activation programs and
technology tools and enablers, to invest in the direct-selling
channel, and to compete with other direct-selling organizations to
recruit, retain and service Representatives and to continue to
innovate the direct-selling model;
- general economic and business conditions in our markets,
including social, economic and political uncertainties in the
international markets in our portfolio;
- the effect of economic factors, including inflation and
fluctuations in interest rates and currency exchange rates, as well
as the designation of Venezuela as
a highly inflationary economy and the devaluation of its currency,
foreign exchange restrictions, particularly currency restrictions
in Venezuela and Argentina, and the potential effect of such
factors on our business, results of operations and financial
condition;
- any developments in or consequences of investigations and
compliance reviews, and any litigation related thereto, including
the ongoing investigations and compliance reviews of FCPA and
related United States ("U.S.") and
foreign law matters in China and
additional countries, as well as any disruption or adverse
consequences resulting from such investigations, reviews, related
actions or litigation, including our ability to reach a settlement
with the SEC and the DOJ with regard to the ongoing FCPA
investigations or, if we are able to reach a settlement, the timing
or terms of such settlement, or if we are unable to reach a
settlement, the outcome of any subsequent litigation with the
government which could have a material adverse effect;
- a general economic downturn, a recession globally or in one or
more of our geographic regions, or sudden disruption in business
conditions, and the ability of our broad-based geographic portfolio
to withstand an economic downturn, recession, cost inflation,
commodity cost pressures, economic or political instability,
competitive or other market pressures or conditions;
- the effect of political, legal, tax and regulatory risks
imposed on us in the U.S. and abroad, our operations or our
Representatives, including foreign exchange or other restrictions,
adoption, interpretation and enforcement of foreign laws, including
in jurisdictions such as Brazil,
Russia, Venezuela and Argentina, and any changes thereto, as well as
reviews and investigations by government regulators that have
occurred or may occur from time to time, including, for example,
local regulatory scrutiny in China;
- the impact of changes in tax rates on the value of our deferred
tax assets, and declining earnings, including the amount of any
domestic source loss and the type, jurisdiction and timing of any
foreign source income, on our ability to realize foreign tax
credits in the U.S.;
- competitive uncertainties in our markets, including competition
from companies in the cosmetics, fragrances, skincare and
toiletries industry, some of which are larger than we are and have
greater resources;
- the impact of the typically seasonal nature of our business,
adverse effect of rising energy, commodity and raw material prices,
changes in market trends, purchasing habits of our consumers and
changes in consumer preferences, particularly given the global
nature of our business and the conduct of our business in primarily
one channel;
- our ability to attract and retain key personnel;
- other sudden disruption in business operations beyond our
control as a result of events such as acts of terrorism or war,
natural disasters, pandemic situations, large-scale power outages
and similar events;
- key information technology systems, process or site outages and
disruptions;
- the risk of product or ingredient shortages resulting from our
concentration of sourcing in fewer suppliers;
- the impact of any significant restructuring charges or
significant legal or regulatory settlements on our ability to
comply with certain covenants in our debt instruments;
- any changes to our credit ratings and the impact of such
changes on our financing costs, rates, terms, debt service
obligations and access to lending sources;
- the impact of our indebtedness, our access to cash and
financing, and our ability to secure financing or financing at
attractive rates;
- the impact of possible pension funding obligations, increased
pension expense and any changes in pension regulations or
interpretations thereof on our cash flow and results of
operations;
- our ability to successfully identify new business
opportunities, strategic alliances and strategic alternatives and
identify and analyze acquisition candidates, secure financing on
favorable terms and negotiate and consummate acquisitions, as well
as to successfully integrate or manage any acquired business;
- disruption in our supply chain or manufacturing and
distribution operations;
- the quality, safety and efficacy of our products;
- the success of our research and development activities;
- our ability to protect our intellectual property rights;
and
- the risk of an adverse outcome in any material pending and
future litigations or with respect to the legal status of
Representatives.
Additional information identifying such factors is contained in
Item 1A of our 2012 Form 10-K, as updated by our Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2013, our Quarterly Report on Form 10-Q
for the quarterly period ended September 30,
2013, and other reports and documents we file with the SEC.
We undertake no obligation to update any such forward-looking
statements.
AVON PRODUCTS,
INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(Unaudited)
|
(In millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Percent
|
|
Twelve Months
Ended
|
|
Percent
|
|
|
December
31
|
|
Change
|
|
December
31
|
|
Change
|
|
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
|
2,625.2
|
|
$
|
2,913.2
|
|
(10)%
|
|
$
|
9,764.4
|
|
$
|
10,405.3
|
|
(6)%
|
Other
revenue
|
|
42.0
|
|
|
39.0
|
|
|
|
|
190.6
|
|
|
156.1
|
|
|
Total
revenue
|
|
2,667.2
|
|
|
2,952.2
|
|
(10)%
|
|
|
9,955.0
|
|
|
10,561.4
|
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1,040.0
|
|
|
1,187.5
|
|
|
|
|
3,772.5
|
|
|
4,103.1
|
|
|
Selling, general and
administrative expenses
|
|
1,644.4
|
|
|
1,551.9
|
|
|
|
|
5,713.2
|
|
|
5,889.3
|
|
|
Impairment of
goodwill and intangible asset
|
|
-
|
|
|
-
|
|
|
|
|
42.1
|
|
|
44.0
|
|
|
Operating (loss)
profit
|
|
(17.2)
|
|
|
212.8
|
|
*
|
|
|
427.2
|
|
|
525.0
|
|
(19)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
29.8
|
|
|
27.5
|
|
|
|
|
120.6
|
|
|
104.3
|
|
|
Loss on
extinguishment of debt
|
|
-
|
|
|
-
|
|
|
|
|
86.0
|
|
|
-
|
|
|
Interest
income
|
|
(17.7)
|
|
|
(4.6)
|
|
|
|
|
(25.9)
|
|
|
(15.1)
|
|
|
Other expense,
net
|
|
14.3
|
|
|
(21.5)
|
|
|
|
|
83.9
|
|
|
7.1
|
|
|
Total other
expenses
|
|
26.4
|
|
|
1.4
|
|
|
|
|
264.6
|
|
|
96.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
continuing operations, before taxes
|
|
(43.6)
|
|
|
211.4
|
|
*
|
|
|
162.6
|
|
|
428.7
|
|
(62)%
|
Income
taxes
|
|
(24.1)
|
|
|
(247.6)
|
|
|
|
|
(163.6)
|
|
|
(335.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
continuing operations, net of tax
|
|
(67.7)
|
|
|
(36.2)
|
|
(87)%
|
|
|
(1.0)
|
|
|
93.3
|
|
*
|
Loss from
discontinued operations, net of tax
|
|
-
|
|
|
(124.9)
|
|
|
|
|
(50.9)
|
|
|
(131.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
(67.7)
|
|
|
(161.1)
|
|
|
|
|
(51.9)
|
|
|
(38.2)
|
|
|
Net income
attributable to noncontrolling interests
|
|
(1.4)
|
|
|
(1.1)
|
|
|
|
|
(4.5)
|
|
|
(4.3)
|
|
|
Net loss
attributable to Avon
|
$
|
(69.1)
|
|
$
|
(162.2)
|
|
57%
|
|
$
|
(56.4)
|
|
$
|
(42.5)
|
|
(33)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per share:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from
continuing operations
|
$
|
(0.16)
|
|
$
|
(0.08)
|
|
(100)%
|
|
$
|
(0.01)
|
|
$
|
0.20
|
|
*
|
Basic EPS from
discontinued operations
|
$
|
-
|
|
$
|
(0.28)
|
|
|
|
$
|
(0.12)
|
|
$
|
(0.30)
|
|
|
Basic EPS
attributable to Avon
|
$
|
(0.16)
|
|
$
|
(0.37)
|
|
57%
|
|
$
|
(0.13)
|
|
$
|
(0.10)
|
|
(30)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
$
|
(0.16)
|
|
$
|
(0.08)
|
|
(100)%
|
|
$
|
(0.01)
|
|
$
|
0.20
|
|
*
|
Diluted EPS from
discontinued operations
|
$
|
-
|
|
$
|
(0.28)
|
|
|
|
$
|
(0.12)
|
|
$
|
(0.30)
|
|
|
Diluted EPS
attributable to Avon
|
$
|
(0.16)
|
|
$
|
(0.37)
|
|
57%
|
|
$
|
(0.13)
|
|
$
|
(0.10)
|
|
(30)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
433.6
|
|
|
432.1
|
|
|
|
|
433.4
|
|
|
431.9
|
|
|
Diluted
|
|
433.6
|
|
|
432.1
|
|
|
|
|
433.4
|
|
|
432.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Under the two-class
method, loss per share is calculated using net loss allocable to
common shares, which is derived by reducing net loss by the loss
allocable to participating securities. Net loss allocable to common
shares used in the basic and diluted loss per share calculation
were ($68.5) and ($159.2) for the three months ended December 31,
2013 and 2012, respectively. Net loss allocable to common shares
used in the basic and diluted loss per share calculation were
($55.9) and ($42.2) for the twelve months ended December 31, 2013
and 2012, respectively.
|
|
AVON PRODUCTS,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31
|
|
December
31
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,107.9
|
|
$
|
1,206.9
|
Accounts receivable,
net
|
|
676.3
|
|
|
752.1
|
Inventories
|
|
1,005.6
|
|
|
1,101.1
|
Prepaid expenses and
other
|
|
689.3
|
|
|
827.0
|
Current assets of
discontinued operations
|
|
-
|
|
|
41.8
|
Total current
assets
|
|
3,479.1
|
|
|
3,928.9
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, at cost
|
|
2,484.5
|
|
|
2,684.8
|
Less accumulated
depreciation
|
|
(1,091.2)
|
|
|
(1,158.8)
|
Property, plant and
equipment, net
|
|
1,393.3
|
|
|
1,526.0
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
282.5
|
|
|
330.3
|
Other intangible
assets, net
|
|
33.5
|
|
|
40.6
|
Other
assets
|
|
1,303.9
|
|
|
1,407.9
|
Noncurrent assets of
discontinued operations
|
|
-
|
|
|
148.8
|
Total
assets
|
$
|
6,492.3
|
|
$
|
7,382.5
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Debt maturing within
one year
|
$
|
188.0
|
|
$
|
572.0
|
Accounts
payable
|
|
896.5
|
|
|
914.3
|
Accrued
compensation
|
|
271.2
|
|
|
264.7
|
Other accrued
liabilities
|
|
652.6
|
|
|
645.3
|
Sales and taxes other
than income
|
|
186.8
|
|
|
210.6
|
Income
taxes
|
|
45.4
|
|
|
73.6
|
Current liabilities
of discontinued operations
|
|
-
|
|
|
24.1
|
Total current
liabilities
|
|
2,240.5
|
|
|
2,704.6
|
Long-term
debt
|
|
2,532.7
|
|
|
2,623.8
|
Employee benefit
plans
|
|
398.0
|
|
|
637.6
|
Long-term income
taxes
|
|
53.3
|
|
|
52.0
|
Other
liabilities
|
|
140.3
|
|
|
131.1
|
Noncurrent
liabilities of discontinued operations
|
|
-
|
|
|
0.1
|
Total
liabilities
|
$
|
5,364.8
|
|
$
|
6,149.2
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
Common
stock
|
$
|
189.4
|
|
$
|
188.3
|
Additional
paid-in-capital
|
|
2,175.6
|
|
|
2,119.6
|
Retained
earnings
|
|
4,196.7
|
|
|
4,357.8
|
Accumulated other
comprehensive loss
|
|
(870.4)
|
|
|
(876.7)
|
Treasury stock, at
cost
|
|
(4,581.2)
|
|
|
(4,571.9)
|
Total Avon
shareholders' equity
|
|
1,110.1
|
|
|
1,217.1
|
Noncontrolling
interests
|
|
17.4
|
|
|
16.2
|
Total shareholders'
equity
|
$
|
1,127.5
|
|
$
|
1,233.3
|
Total liabilities
and shareholders' equity
|
$
|
6,492.3
|
|
$
|
7,382.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
December
31
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(51.9)
|
|
$
|
(38.2)
|
(Loss)
income from discontinued operations, net of tax
|
|
|
50.9
|
|
|
131.5
|
(Loss) income from
continuing operations
|
|
$
|
(1.0)
|
|
$
|
93.3
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
224.6
|
|
|
212.5
|
Provision for
doubtful accounts
|
|
|
239.3
|
|
|
250.9
|
Provision for
obsolescence
|
|
|
117.1
|
|
|
118.8
|
Share-based
compensation
|
|
|
43.3
|
|
|
41.1
|
Deferred income
taxes
|
|
|
(128.6)
|
|
|
27.9
|
Impairment of
goodwill, intangible assets and SMT capitalized software
|
|
|
159.3
|
|
|
44.0
|
Charge for Venezuelan
monetary assets and liabilities
|
|
|
34.1
|
|
|
-
|
Other
|
|
|
54.5
|
|
|
35.3
|
|
|
|
|
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(235.3)
|
|
|
(240.9)
|
Inventories
|
|
|
(78.5)
|
|
|
(85.0)
|
Prepaid expenses and
other
|
|
|
77.7
|
|
|
59.1
|
Accounts payable and
accrued liabilities
|
|
|
140.1
|
|
|
82.6
|
Income and other
taxes
|
|
|
3.4
|
|
|
(23.3)
|
Noncurrent assets and
liabilities
|
|
|
(110.4)
|
|
|
(72.3)
|
Net cash provided
by operating activities of continuing operations
|
|
|
539.6
|
|
|
544.0
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(197.3)
|
|
|
(228.5)
|
Disposal of
assets
|
|
|
37.8
|
|
|
15.4
|
Proceeds from sale of
investments
|
|
|
14.3
|
|
|
1.2
|
Purchases of
investments
|
|
|
(28.2)
|
|
|
(1.5)
|
Net cash used by
investing activities of continuing operations
|
|
|
(173.4)
|
|
|
(213.4)
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
Cash
dividends
|
|
|
(106.8)
|
|
|
(329.3)
|
Debt, net (maturities
of three months or less)
|
|
|
(1.2)
|
|
|
(710.5)
|
Proceeds from
debt
|
|
|
1,488.2
|
|
|
735.8
|
Repayment of
debt
|
|
|
(1,942.7)
|
|
|
(138.3)
|
Interest rate swap
termination
|
|
|
88.1
|
|
|
43.6
|
Proceeds from
exercise of stock options
|
|
|
19.4
|
|
|
8.6
|
Excess tax benefit
realized from share-based compensation
|
|
|
(3.5)
|
|
|
(2.4)
|
Repurchase of common
stock
|
|
|
(9.4)
|
|
|
(8.8)
|
Net cash used by
financing activities of continuing operations
|
|
|
(467.9)
|
|
|
(401.3)
|
|
|
|
|
|
|
|
Net cash (used)
provided by operating activities of discontinued
operations
|
|
|
(4.0)
|
|
|
12.1
|
Net cash provided
(used) by investing activities of discontinued
operations
|
|
|
84.8
|
|
|
(0.3)
|
Net cash provided
by discontinued operations
|
|
|
80.8
|
|
|
11.8
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and equivalents
|
|
|
(80.8)
|
|
|
23.4
|
Net decrease in
cash and equivalents
|
|
|
(101.7)
|
|
|
(35.5)
|
Cash and equivalents
at beginning of year (1)
|
|
$
|
1,209.6
|
|
$
|
1,245.1
|
Cash and equivalents
at end of period (2)
|
|
$
|
1,107.9
|
|
$
|
1,209.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes cash and
cash equivalents of discontinued operations of $2.7 and $6.9 at
January 1, 2013 and 2012, respectively.
|
(2)
|
Includes cash and
cash equivalents of discontinued operations of $2.7 at December 31,
2012.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
DECEMBER 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REGIONAL
RESULTS
|
|
$ in
Millions
|
Total Revenue
US$
|
|
C$
|
|
Units
Sold
|
|
Price/Mix
C$
|
|
Active Reps
(1)
|
|
Average Order
C$
|
|
|
|
|
% var. vs
4Q12
|
|
% var. vs
4Q12
|
|
% var. vs
4Q12
|
|
% var. vs
4Q12
|
|
% var. vs
4Q12
|
|
% var. vs
4Q12
|
Latin
America
|
$
|
1,236.3
|
(7)%
|
|
4%
|
|
|
(6)%
|
|
|
10%
|
|
(4)%
|
|
8%
|
Europe, Middle East
& Africa
|
|
867.7
|
(4)
|
|
(2)
|
|
|
(7)
|
|
|
5
|
|
(1)
|
|
(1)
|
North
America
|
|
370.8
|
(21)
|
|
(20)
|
|
|
(27)
|
|
|
7
|
|
(17)
|
|
(3)
|
Asia Pacific
(1)
|
|
192.4
|
(22)
|
|
(18)
|
|
|
(18)
|
|
|
-
|
|
(19)
|
|
1
|
Total from
operations
|
|
2,667.2
|
(10)
|
|
(4)
|
|
|
(10)
|
|
|
6
|
|
(5)
|
|
1
|
Global and
other
|
|
-
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
-
|
Total
|
$
|
2,667.2
|
(10)%
|
|
(4)%
|
|
|
(10)%
|
|
|
6%
|
|
(5)%
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 GAAP
Operating
Profit (Loss)
US$
|
% var. vs
4Q12
|
|
2013 GAAP
Operating
Margin US$
|
|
2013 Adjusted
Operating
Profit (Loss)
US$ (2)
|
|
2012
Adjusted
Operating
Profit US$ (2)
|
|
2013
Adjusted
Operating
Margin (2)
|
|
2012
Adjusted
Operating
Margin (2)
|
Latin
America
|
$
|
107.7
|
(21)%
|
|
8.7%
|
|
$
|
118.8
|
|
$
|
143.7
|
|
9.6%
|
|
10.8%
|
Europe, Middle East
& Africa
|
|
129.8
|
(1)
|
|
15.0
|
|
|
135.0
|
|
|
131.5
|
|
15.6
|
|
14.5
|
North
America
|
|
(6.6)
|
*
|
|
(1.8)
|
|
|
(4.4)
|
|
|
19.7
|
|
(1.2)
|
|
4.2
|
Asia
Pacific
|
|
0.1
|
*
|
|
0.1
|
|
|
4.0
|
|
|
21.8
|
|
2.1
|
|
8.8
|
Total from
operations
|
|
231.0
|
(17)
|
|
8.7
|
|
|
253.4
|
|
|
316.7
|
|
9.5
|
|
10.7
|
Global and
other
|
|
(248.2)
|
*
|
|
-
|
|
|
(34.1)
|
|
|
(46.3)
|
|
-
|
|
-
|
Total
|
$
|
(17.2)
|
*
|
|
(0.6)%
|
|
$
|
219.3
|
|
$
|
270.4
|
|
8.2%
|
|
9.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CATEGORY SALES
(US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
US$
|
|
C$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% var.
vs 4Q12
|
|
% var. vs
4Q12
|
Beauty
(color/fragrance/skincare/personal care)
|
|
$
|
1,887.6
|
|
(11)%
|
|
(4)%
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
|
441.1
|
|
(11)
|
|
(6)
|
Home (gift &
decorative products/housewares/entertainment &
leisure/children's/nutrition)
|
|
|
296.5
|
|
(4)
|
|
4
|
Net sales
|
|
|
|
|
|
|
|
$
|
2,625.2
|
|
(10)%
|
|
(4)%
|
Other
revenue
|
|
|
|
|
|
|
|
|
42.0
|
|
8
|
|
11
|
Total
revenue
|
|
|
|
|
|
|
|
$
|
2,667.2
|
|
(10)%
|
|
(4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beauty
Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fragrance
|
|
|
|
|
|
|
|
|
|
|
(7)%
|
|
-%
|
|
Color
|
|
|
|
|
|
|
|
|
|
|
(9)
|
|
(4)
|
|
Skincare
|
|
|
|
|
|
|
|
|
|
|
(15)
|
|
(9)
|
|
Personal
care
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
(7)
|
|
Fashion &
Home
|
|
|
|
|
|
|
|
|
|
|
(8)
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In the first quarter
of 2013, we revised the definition of Active Representatives to
exclude China. As previously disclosed, our business in China is
predominantly retail, and as a result, we do not believe including
China within the Change in Active Representatives calculation
provides for a relevant indicator of underlying business trends.
There were no changes to the underlying calculation other than the
exclusion of China.
|
|
|
(2)
|
For a further
discussion on our Non-GAAP financial measures, please refer to our
discussion of Non-GAAP financial measures in this release
and reconciliations of our Non-GAAP
financial measures to the related GAAP financial measure in the
following supplemental schedules.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TWELVE MONTHS ENDED
DECEMBER 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REGIONAL
RESULTS
|
|
$ in
Millions
|
Total Revenue
US$
|
|
C$
|
|
Units
sold
|
|
Price/Mix
C$
|
|
Active Reps
(1)
|
|
Average Order
C$
|
|
|
|
|
% var. vs
FY12
|
|
% var. vs
FY12
|
|
% var. vs
FY12
|
|
% var. vs
FY12
|
|
% var. vs
FY12
|
|
% var. vs
FY12
|
Latin
America
|
$
|
4,840.5
|
(3)%
|
|
6%
|
|
|
(3)%
|
|
|
9%
|
|
-%
|
|
6%
|
Europe, Middle East
& Africa
|
|
2,898.4
|
(1)
|
|
2
|
|
|
-
|
|
|
2
|
|
1
|
|
1
|
North
America
|
|
1,458.2
|
(17)
|
|
(16)
|
|
|
(17)
|
|
|
1
|
|
(15)
|
|
(1)
|
Asia Pacific
(1)
|
|
757.9
|
(16)
|
|
(15)
|
|
|
(16)
|
|
|
1
|
|
(10)
|
|
(5)
|
Total from
operations
|
|
9,955.0
|
(6)
|
|
(1)
|
|
|
(5)
|
|
|
4
|
|
(2)
|
|
1
|
Global and
other
|
|
-
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
-
|
Total
|
$
|
9,955.0
|
(6)%
|
|
(1)%
|
|
|
(5)%
|
|
|
4%
|
|
(2)%
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 GAAP
Operating
Profit (Loss)
US$
|
% var. vs
FY12
|
|
2013 GAAP
Operating
Margin US$
|
|
2013 Adjusted
Operating
Profit (Loss)
US$ (2)
|
|
2012
Adjusted
Operating
Profit US$ (2)
|
|
2013
Adjusted
Operating
Margin (2)
|
|
2012
Adjusted
Operating
Margin (2)
|
Latin
America
|
$
|
478.6
|
8%
|
|
9.9%
|
|
$
|
536.6
|
|
$
|
463.5
|
|
11.1%
|
|
9.3%
|
Europe, Middle East
& Africa
|
|
406.7
|
30
|
|
14.0
|
|
|
424.4
|
|
|
324.6
|
|
14.6
|
|
11.1
|
North
America
|
|
(60.1)
|
*
|
|
(4.1)
|
|
|
(47.6)
|
|
|
25.8
|
|
(3.3)
|
|
1.5
|
Asia
Pacific
|
|
(12.1)
|
*
|
|
(1.6)
|
|
|
35.0
|
|
|
67.3
|
|
4.6
|
|
7.5
|
Total from
operations
|
|
813.1
|
7
|
|
8.2
|
|
|
948.4
|
|
|
881.2
|
|
9.5
|
|
8.3
|
Global and
other
|
|
(385.9)
|
(66)
|
|
-
|
|
|
(157.4)
|
|
|
(187.5)
|
|
-
|
|
-
|
Total
|
$
|
427.2
|
(19)%
|
|
4.3%
|
|
$
|
791.0
|
|
$
|
693.7
|
|
7.9%
|
|
6.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CATEGORY SALES
(US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
US$
|
|
C$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% var.
vs FY12
|
|
% var. vs
FY12
|
Beauty
(color/fragrance/skincare/personal care)
|
|
$
|
7,103.2
|
|
(7)%
|
|
(2)%
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
|
1,623.5
|
|
(7)
|
|
(4)
|
Home (gift &
decorative products/housewares/entertainment &
leisure/children's/nutrition)
|
|
|
1,037.7
|
|
3
|
|
9
|
Net sales
|
|
|
|
|
|
|
$
|
9,764.4
|
|
(6)%
|
|
(1)%
|
Other
revenue
|
|
|
|
|
|
|
|
190.6
|
|
22
|
|
24
|
Total
revenue
|
|
|
|
|
|
|
$
|
9,955.0
|
|
(6)%
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beauty
Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fragrance
|
|
|
|
|
|
|
|
|
|
(4)%
|
|
2%
|
|
Color
|
|
|
|
|
|
|
|
|
|
(6)
|
|
(1)
|
|
Skincare
|
|
|
|
|
|
|
|
|
|
(12)
|
|
(8)
|
|
Personal
care
|
|
|
|
|
|
|
|
|
|
(7)
|
|
(3)
|
|
Fashion &
Home
|
|
|
|
|
|
|
|
|
|
(4)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In the first quarter
of 2013, we revised the definition of Active Representatives to
exclude China. As previously disclosed, our business in China is
predominantly retail, and as a result, we do not believe including
China within the Change in Active Representatives calculation
provides for a relevant indicator of underlying business
trends. There were no changes to the underlying calculation other
than the exclusion of China.
|
|
|
(2)
|
For a further
discussion on our Non-GAAP financial measures, please refer to our
discussion of Non-GAAP financial measures in this release
and reconciliations of our non-GAAP
financial measures to the related GAAP financial measure in the
following supplemental schedules.
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in Millions (except
per share data)
|
THREE MONTHS ENDED
DECEMBER 31, 2013
|
|
|
|
|
|
CTI
|
|
|
|
|
|
Asset
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
FCPA
|
|
impairment
and
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
accrual
|
|
other
charges
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
|
1,040.0
|
|
$
|
-
|
|
$
|
4.9
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,035.1
|
Selling, general and
administrative expenses
|
|
1,644.4
|
|
|
37.4
|
|
|
-
|
|
|
77.0
|
|
|
117.2
|
|
|
1,412.8
|
Operating (loss)
profit
|
|
|
|
(17.2)
|
|
|
37.4
|
|
|
4.9
|
|
|
77.0
|
|
|
117.2
|
|
|
219.3
|
(Loss) income from
continuing operations, before taxes
|
|
(43.6)
|
|
|
37.4
|
|
|
4.9
|
|
|
77.0
|
|
|
117.2
|
|
|
193.0
|
Income
taxes
|
|
|
|
(24.1)
|
|
|
(16.2)
|
|
|
41.8
|
|
|
-
|
|
|
(43.1)
|
|
|
(41.6)
|
(Loss) income from
continuing operations, net of tax
|
$
|
(67.7)
|
|
$
|
21.2
|
|
$
|
46.7
|
|
$
|
77.0
|
|
$
|
74.1
|
|
$
|
151.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
$
|
(0.16)
|
|
$
|
0.05
|
|
$
|
0.11
|
|
$
|
0.18
|
|
$
|
0.17
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
61.0%
|
|
|
-
|
|
|
0.2
|
|
|
-
|
|
|
-
|
|
|
61.2%
|
SG&A as a % of
revenues
|
|
61.7%
|
|
|
(1.4)
|
|
|
-
|
|
|
(2.9)
|
|
|
(4.4)
|
|
|
53.0%
|
Operating
margin
|
|
(0.6)%
|
|
|
1.4
|
|
|
0.2
|
|
|
2.9
|
|
|
4.4
|
|
|
8.2%
|
Effective tax
rate
|
|
(55.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
107.7
|
|
$
|
6.2
|
|
$
|
4.9
|
|
$
|
-
|
|
$
|
-
|
|
$
|
118.8
|
Europe, Middle East
& Africa
|
|
129.8
|
|
|
5.2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
135.0
|
North
America
|
|
(6.6)
|
|
|
2.2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4.4)
|
Asia
Pacific
|
|
0.1
|
|
|
3.9
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4.0
|
Global and
other
|
|
(248.2)
|
|
|
19.9
|
|
|
-
|
|
|
77.0
|
|
|
117.2
|
|
|
(34.1)
|
Total
|
$
|
(17.2)
|
|
$
|
37.4
|
|
$
|
4.9
|
|
$
|
77.0
|
|
$
|
117.2
|
|
$
|
219.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
8.7%
|
|
|
0.5
|
|
|
0.4
|
|
|
-
|
|
|
-
|
|
|
9.6%
|
Europe, Middle East
& Africa
|
|
15.0%
|
|
|
0.6
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15.6%
|
North
America
|
|
(1.8)%
|
|
|
0.6
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1.2)%
|
Asia
Pacific
|
|
0.1%
|
|
|
2.0
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2.1%
|
Global and
other
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Total
|
|
(0.6)%
|
|
|
1.4
|
|
|
0.2
|
|
|
2.9
|
|
|
4.4
|
|
|
8.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in Millions (except
per share data)
|
TWELVE MONTHS
ENDED DECEMBER 31, 2013
|
|
|
|
|
|
CTI
|
|
|
|
|
|
|
|
Asset
|
|
Loss on
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
FCPA
|
|
impairment
and
|
|
extinguishment
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
accrual
|
|
other
charges
|
|
of debt
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
|
3,772.5
|
|
$
|
(0.9)
|
|
$
|
44.6
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
3,728.8
|
Selling, general and
administrative expenses
|
|
5,713.2
|
|
|
66.8
|
|
|
5.0
|
|
|
89.0
|
|
|
117.2
|
|
|
-
|
|
|
5,435.2
|
Impairment of
goodwill and intangible asset
|
|
42.1
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
42.1
|
|
|
-
|
|
|
-
|
Operating
profit
|
|
427.2
|
|
|
65.9
|
|
|
49.6
|
|
|
89.0
|
|
|
159.3
|
|
|
-
|
|
|
791.0
|
Income from
continuing operations, before taxes
|
|
162.6
|
|
|
65.9
|
|
|
83.7
|
|
|
89.0
|
|
|
159.3
|
|
|
86.0
|
|
|
646.5
|
Income
taxes
|
|
(163.6)
|
|
|
(24.5)
|
|
|
58.4
|
|
|
-
|
|
|
(34.8)
|
|
|
(31.6)
|
|
|
(196.0)
|
(Loss) income from
continuing operations, net of tax
|
$
|
(1.0)
|
|
$
|
41.4
|
|
$
|
142.1
|
|
$
|
89.0
|
|
$
|
124.5
|
|
$
|
54.4
|
|
$
|
450.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
$
|
(0.01)
|
|
$
|
0.09
|
|
$
|
0.32
|
|
$
|
0.20
|
|
$
|
0.28
|
|
$
|
0.12
|
|
$
|
1.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
62.1%
|
|
|
-
|
|
|
0.4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
62.5%
|
SG&A as a % of
revenues
|
|
57.4%
|
|
|
(0.7)
|
|
|
(0.1)
|
|
|
(0.9)
|
|
|
(1.2)
|
|
|
-
|
|
|
54.6%
|
Operating
margin
|
|
4.3%
|
|
|
0.7
|
|
|
0.5
|
|
|
0.9
|
|
|
1.6
|
|
|
-
|
|
|
7.9%
|
Effective tax
rate
|
|
100.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
478.6
|
|
$
|
8.4
|
|
$
|
49.6
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
$
|
536.6
|
Europe, Middle East
& Africa
|
|
406.7
|
|
|
17.7
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
424.4
|
North
America
|
|
(60.1)
|
|
|
12.5
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
(47.6)
|
Asia
Pacific
|
|
(12.1)
|
|
|
5.0
|
|
|
-
|
|
|
-
|
|
|
42.1
|
|
|
|
|
|
35.0
|
Global and
other
|
|
(385.9)
|
|
|
22.3
|
|
|
-
|
|
|
89.0
|
|
|
117.2
|
|
|
|
|
|
(157.4)
|
Total
|
$
|
427.2
|
|
$
|
65.9
|
|
$
|
49.6
|
|
$
|
89.0
|
|
$
|
159.3
|
|
|
|
|
$
|
791.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
9.9%
|
|
|
0.2
|
|
|
1.0
|
|
|
-
|
|
|
-
|
|
|
|
|
|
11.1%
|
Europe, Middle East
& Africa
|
|
14.0%
|
|
|
0.6
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
14.6%
|
North
America
|
|
(4.1)%
|
|
|
0.9
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
(3.3)%
|
Asia
Pacific
|
|
(1.6)%
|
|
|
0.7
|
|
|
-
|
|
|
-
|
|
|
5.6
|
|
|
|
|
|
4.6%
|
Global and
other
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
Total
|
|
4.3%
|
|
|
0.7
|
|
|
0.5
|
|
|
0.9
|
|
|
1.6
|
|
|
|
|
|
7.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in Millions (except
per share data)
|
THREE MONTHS ENDED
DECEMBER 31, 2012
|
|
|
|
|
|
CTI
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
Special
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
tax items
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
|
1,187.5
|
|
$
|
1.3
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,186.2
|
Selling, general and
administrative expenses
|
|
1,551.9
|
|
|
56.2
|
|
|
-
|
|
|
-
|
|
|
1,495.7
|
Operating
profit
|
|
212.8
|
|
|
57.5
|
|
|
-
|
|
|
-
|
|
|
270.3
|
Income from
continuing operations, before taxes
|
|
211.4
|
|
|
57.5
|
|
|
(23.8)
|
|
|
-
|
|
|
245.2
|
Income
taxes
|
|
(247.6)
|
|
|
(19.8)
|
|
|
8.1
|
|
|
168.3
|
|
|
(91.1)
|
(Loss) income from
continuing operations, net of tax
|
$
|
(36.2)
|
|
$
|
37.7
|
|
$
|
(15.7)
|
|
$
|
168.3
|
|
$
|
154.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
$
|
(0.08)
|
|
$
|
0.09
|
|
$
|
(0.03)
|
|
$
|
0.39
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
59.8%
|
|
|
-
|
|
|
|
|
|
|
|
|
59.8%
|
SG&A as a % of
revenues
|
|
52.6%
|
|
|
(1.9)
|
|
|
|
|
|
|
|
|
50.7%
|
Operating
margin
|
|
7.2%
|
|
|
1.9
|
|
|
|
|
|
|
|
|
9.2%
|
Effective tax
rate
|
|
117.1%
|
|
|
|
|
|
|
|
|
|
|
|
37.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
136.0
|
|
$
|
7.7
|
|
|
|
|
|
|
|
$
|
143.7
|
Europe, Middle East
& Africa
|
|
131.4
|
|
|
0.1
|
|
|
|
|
|
|
|
|
131.5
|
North
America
|
|
0.7
|
|
|
19.0
|
|
|
|
|
|
|
|
|
19.7
|
Asia
Pacific
|
|
8.8
|
|
|
13.0
|
|
|
|
|
|
|
|
|
21.8
|
Global and
other
|
|
(64.1)
|
|
|
17.8
|
|
|
|
|
|
|
|
|
(46.3)
|
Total
|
$
|
212.8
|
|
$
|
57.5
|
|
|
|
|
|
|
|
$
|
270.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
10.2%
|
|
|
0.6
|
|
|
|
|
|
|
|
|
10.8%
|
Europe, Middle East
& Africa
|
|
14.5%
|
|
|
-
|
|
|
|
|
|
|
|
|
14.5%
|
North
America
|
|
0.1%
|
|
|
4.0
|
|
|
|
|
|
|
|
|
4.2%
|
Asia
Pacific
|
|
3.6%
|
|
|
5.3
|
|
|
|
|
|
|
|
|
8.8%
|
Global and
other
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
Total
|
|
7.2%
|
|
|
1.9
|
|
|
|
|
|
|
|
|
9.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in Millions (except
per share data)
|
TWELVE MONTHS
ENDED DECEMBER 31, 2012
|
|
|
|
|
|
CTI
|
|
Asset
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
impairment
and
|
|
Venezuelan
|
|
Special
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
other
charges
|
|
special
items
|
|
tax items
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
|
4,103.1
|
|
$
|
4.5
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
4,098.6
|
Selling, general and
administrative expenses
|
|
5,889.3
|
|
|
120.1
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,769.2
|
Impairment of
goodwill and intangible asset
|
|
44.0
|
|
|
-
|
|
|
44.0
|
|
|
-
|
|
|
-
|
|
|
-
|
Operating
profit
|
|
525.0
|
|
|
124.7
|
|
|
44.0
|
|
|
-
|
|
|
-
|
|
|
693.7
|
Income from
continuing operations, before taxes
|
|
428.7
|
|
|
124.7
|
|
|
44.0
|
|
|
(23.8)
|
|
|
-
|
|
|
573.6
|
Income
taxes
|
|
(335.4)
|
|
|
(42.0)
|
|
|
-
|
|
|
8.1
|
|
|
168.3
|
|
|
(201.0)
|
Income from
continuing operations, net of tax
|
$
|
93.3
|
|
$
|
82.7
|
|
$
|
44.0
|
|
$
|
(15.7)
|
|
$
|
168.3
|
|
$
|
372.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
$
|
0.20
|
|
$
|
0.19
|
|
$
|
0.10
|
|
$
|
(0.04)
|
|
$
|
0.39
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
61.2%
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
61.2%
|
SG&A as a % of
revenues
|
|
55.8%
|
|
|
(1.1)
|
|
|
-
|
|
|
|
|
|
|
|
|
54.6%
|
Operating
margin
|
|
5.0%
|
|
|
1.2
|
|
|
0.4
|
|
|
|
|
|
|
|
|
6.6%
|
Effective tax
rate
|
|
78.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
443.9
|
|
$
|
19.6
|
|
$
|
-
|
|
|
|
|
|
|
|
$
|
463.5
|
Europe, Middle East
& Africa
|
|
312.8
|
|
|
11.8
|
|
|
-
|
|
|
|
|
|
|
|
|
324.6
|
North
America
|
|
(4.7)
|
|
|
30.5
|
|
|
-
|
|
|
|
|
|
|
|
|
25.8
|
Asia
Pacific
|
|
5.1
|
|
|
18.2
|
|
|
44.0
|
|
|
|
|
|
|
|
|
67.3
|
Global and
other
|
|
(232.1)
|
|
|
44.6
|
|
|
-
|
|
|
|
|
|
|
|
|
(187.5)
|
Total
|
$
|
525.0
|
|
$
|
124.7
|
|
$
|
44.0
|
|
|
|
|
|
|
|
$
|
693.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
8.9%
|
|
|
0.4
|
|
|
-
|
|
|
|
|
|
|
|
|
9.3%
|
Europe, Middle East
& Africa
|
|
10.7%
|
|
|
0.4
|
|
|
-
|
|
|
|
|
|
|
|
|
11.1%
|
North
America
|
|
(0.3)%
|
|
|
1.7
|
|
|
-
|
|
|
|
|
|
|
|
|
1.5%
|
Asia
Pacific
|
|
0.6%
|
|
|
2.0
|
|
|
4.9
|
|
|
|
|
|
|
|
|
7.5%
|
Global and
other
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
Total
|
|
5.0%
|
|
|
1.2
|
|
|
0.4
|
|
|
|
|
|
|
|
|
6.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Avon Products, Inc.