NEW YORK, April 30, 2015 /PRNewswire/ -- Avon
Products, Inc. (NYSE: AVP) today reported first-quarter 2015
results. "Overall, the first quarter was in line with our
expectations despite currency pressures that were greater than
anticipated. Continuing on the momentum we saw in the second half
of 2014, I'm encouraged to see improvement in our Active
Representative trends and constant-dollar revenue growth in the
majority of our top markets," said Sheri
McCoy, Chief Executive Officer of Avon Products, Inc.
"Despite continued foreign exchange pressure, I'm really
impressed with how well our teams in market are managing in this
volatile environment. This is a payoff for the work we've done over
the past two years on strengthening our talent and improving core
processes."
First-Quarter 2015 Income Statement Review (compared with
first-quarter 2014)
- Revenues for Avon Products, Inc. decreased 18% to
$1.8 billion, but increased 1% in
constant dollars, driven by strong growth in Europe, Middle
East & Africa.
- Active Representatives2 were down 1% year-over-year
but reflect a sequential improvement from prior quarters. The
overall decline in Active Representatives was driven by
North America, partially offset by
growth in a number of markets, most significantly Russia. Average order2 increased
2%, which benefited from price increases in markets
experiencing high inflation (Venezuela and Argentina).
- Total units decreased 2%, driven by a decline in North America. Price/mix was up 3% during the
quarter, aided by pricing in markets experiencing high
inflation.
- Beauty sales declined 17%, but increased 3% in constant
dollars. Fashion & Home sales declined 19%, or 3% in constant
dollars.
- Gross margin was 60.6%, up 440 basis points.
Adjusted gross margin was 61.4%, down 10 basis points,
primarily due to the unfavorable impact of foreign exchange,
partially offset by lower supply chain
costs.
- Operating margin was (2.1)% in the quarter, up 20 basis
points. Adjusted operating margin was 5.7%, down 40 basis points,
primarily due to the unfavorable impact of foreign exchange.
Increased advertising, primarily for new product launches of color
cosmetics in Brazil, was also a
factor. These unfavorable impacts were partially offset by
continued benefits from cost savings initiatives.
- The effective tax rate from continuing operations was
(77.2)%, compared with (18.6)% in the prior-year period. The
Adjusted effective tax rate was 67.9% for the first quarter of
2015, compared with 46.3% for the first quarter of 2014. The higher
2015 Adjusted effective tax rate is primarily due to the inability,
in accordance with GAAP, to recognize additional deferred tax
assets related to the Company's current-year, U.S.-based operating
results, as a result of the valuation allowance recorded in
fourth-quarter 2014. This caused an approximate 22 point
negative impact on our 2015 Adjusted effective tax rate.
- Net loss was $146 million,
or a loss of $0.33 per diluted share,
compared with a net loss of $167
million, or a loss of $0.38
per diluted share, for the first quarter of 2014. Adjusted net
income was $17 million, or
$0.04 per diluted share, compared
with Adjusted net income of $52
million, or $0.12 per diluted
share, for the first quarter of 2014.
- Foreign currency has impacted the Company's financial
results as shown in the table below:
Approximate Impact
of Foreign Currency
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|
|
|
|
|
|
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|
First-Quarter
2015
|
|
|
Estimated
impact
($ in millions)
|
|
Estimated
impact
on diluted EPS
|
Total
revenue
|
|
(19) pts
|
|
|
Adjusted operating
profit - transaction
|
|
$
(45)
|
|
$
(0.07)
|
Adjusted operating
profit - translation
|
|
(90)
|
|
(0.13)
|
Total Adjusted
operating profit
|
|
$
(135)
|
|
$
(0.20)
|
Adjusted operating
margin
|
|
(450)
bps
|
|
|
Revaluation of
working capital
|
|
$
(10)
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|
$
(0.01)
|
Adjusted diluted
EPS
|
|
|
|
$
(0.21)
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First-Quarter 2015 Cash Flow Review
- Net cash used by operating activities was $198 million for the three months ended
March 31, 2015, compared with net
cash used of $113 million for the
same period in 2014. Operating cash flow during 2015 was
unfavorably impacted by the $67
million payment to the SEC in connection with the FCPA
settlement and lower cash-related earnings (including the
unfavorable impact of foreign currency translation), partially
offset by lower payments for employee incentive compensation.
- The overall net cash used during the three months ended
March 31, 2015 was $292 million, compared with overall net cash used
of $313 million for the same period
in 2014.
Adjustments to First-Quarter 2015 GAAP Results to Arrive at
Adjusted Results
During the first quarter of 2015, the following items had an
aggregate impact of $0.37 per diluted
share on the financial results:
- Effective February 12, 2015, the
Company began utilizing the SIMADI rate to remeasure its Venezuelan
operations. The change to the SIMADI rate resulted in an
approximate $106 million negative
impact on operating profit, a benefit of approximately $4 million in other expense, net, and an
approximate $1 million negative
impact in income taxes. The negative impact on operating profit
includes an impairment charge of approximately $90 million to reflect the write-down of the
Venezuela long-lived assets.
- The Company recorded costs to implement restructuring within
operating profit of approximately $33
million pre-tax, primarily related to cost savings
initiatives.
- The Company recorded a non-cash income tax charge of
approximately $31 million associated
with an additional valuation allowance to reduce the Company's U.S.
deferred tax assets.
First-Quarter 2015 Regional Highlights (As compared with
first-quarter 2014)
THREE MONTHS ENDED
MARCH 31, 2015
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REGIONAL
RESULTS
|
|
|
Revenue
|
|
Active
Reps
|
|
Average
Order C$
|
|
Units
Sold
|
|
Price/Mix
C$
|
Revenue &
Drivers
|
|
US$
|
|
C$
|
|
|
|
|
|
|
% var. vs
1Q14
|
|
% var. vs
1Q14
|
|
% var.
vs
1Q14
|
|
% var. vs
1Q14
|
|
% var. vs
1Q14
|
|
% var. vs
1Q14
|
Latin
America
|
$
|
836.8
|
(22)%
|
|
3%
|
|
(2)%
|
|
5%
|
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(3)%
|
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6%
|
Europe, Middle East
& Africa
|
|
550.7
|
(16)
|
|
9
|
|
8
|
|
1
|
|
9
|
|
-
|
North
America
|
|
242.1
|
(18)
|
|
(17)
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|
(17)
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|
-
|
|
(25)
|
|
8
|
Asia
Pacific
|
|
164.6
|
(1)
|
|
2
|
|
(2)
|
|
4
|
|
(2)
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|
4
|
Total from
operations
|
|
1,794.2
|
(18)
|
|
1
|
|
(1)
|
|
2
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|
(2)
|
|
3
|
Global and
other
|
|
-
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
$
|
1,794.2
|
(18)%
|
|
1%
|
|
(1)%
|
|
2%
|
|
(2)%
|
|
3%
|
|
|
|
|
2015
GAAP
|
|
Adjusted
Operating
Profit (Loss) in US$
|
|
Adjusted Operating
Margin
|
Operating
Profit/Margin
|
Operating
(Loss) Profit US$
|
Operating
Margin US$
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Change
in US$
|
|
Change
in C$
|
Latin
America
|
$
|
(43.3)
|
(5.2)%
|
|
$
|
65.9
|
|
$
|
87.2
|
|
7.9%
|
|
8.2%
|
|
(30) bps
|
|
130 bps
|
Europe, Middle East
& Africa
|
|
38.6
|
7.0
|
|
|
44.3
|
|
|
69.6
|
|
8.0
|
|
10.6
|
|
(260)
|
|
(80)
|
North
America
|
|
(13.2)
|
(5.5)
|
|
|
(7.2)
|
|
|
(2.9)
|
|
(3.0)
|
|
(1.0)
|
|
(200)
|
|
(210)
|
Asia
Pacific
|
|
7.9
|
4.8
|
|
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16.7
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|
|
8.0
|
|
10.1
|
|
4.8
|
|
530
|
|
530
|
Total from
operations
|
|
(10.0)
|
(0.6)
|
|
|
119.7
|
|
|
161.9
|
|
6.7
|
|
7.4
|
|
(70)
|
|
80
|
Global and
other
|
|
(27.6)
|
-
|
|
|
(17.8)
|
|
|
(28.4)
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
$
|
(37.6)
|
(2.1)%
|
|
$
|
101.9
|
|
$
|
133.5
|
|
5.7%
|
|
6.1%
|
|
(40) bps
|
|
140 bps
|
|
|
|
First-Quarter 2015 Regional Highlights
- Latin America revenue
was down 22%, but up 3% in constant dollars, negatively impacted by
approximately 1 point, due to Value Added Tax ("VAT") credits
recognized in Brazil in
first-quarter 2014 that did not recur in 2015. Constant-dollar
revenue growth was primarily driven by higher average order, which
benefited from the inflationary impact on pricing. Active
Representatives declined, primarily due to declines in Venezuela and Argentina resulting from a difficult operating
environment.
- Brazil revenue was down
17%, or relatively unchanged in constant dollars, negatively
impacted by approximately 2 points, due to VAT credits recognized
in Brazil in first-quarter 2014
that did not recur in 2015. Constant-dollar beauty sales grew,
partially benefiting from new product launches. This market
continues to be impacted by the difficult economic environment and
high levels of competition.
- Mexico revenue was down
12%, or 1% in constant dollars, as a result of weaker Fashion &
Home sales. However, Mexico grew
Active Representatives.
- Europe, Middle East & Africa revenue was down 16%, but up 9% in
constant dollars, primarily driven by an increase in Active
Representatives, led by strength in Russia.
- Russia revenue was down
29%, or up 26% in constant dollars, primarily driven by an increase
in Active Representatives from sustained momentum in recruiting and
retention.
- U.K. revenue was down 7%, or up 1% in constant dollars,
primarily due to higher average order.
- North America revenue
was down 18%, or down 17% in constant dollars, primarily driven by
a decline in Active Representatives.
- Asia Pacific revenue
was down 1%, but up 2% in constant dollars, primarily driven by
the Philippines due to higher
average order.
Full-Year 2015 Outlook
The Company continues to expect constant-dollar revenue to be up
modestly in 2015 as compared with 2014. However, based on recent
foreign currency rates, revenue in reported dollars is expected to
be negatively impacted by foreign currency translation, which is
now expected to have an approximate 17 point negative impact
(compared with the previous outlook of an approximate 12 point
negative impact). The Company now expects Constant-dollar Adjusted
operating margin to be approximately 50 basis points lower than
2014. While the Company expects to be able to offset the additional
foreign currency transaction costs, the approximate 50 basis point
decline is due to the new Industrial Production Tax ("IPI") law on
cosmetics in Brazil, which is
effective May 1, 2015. In addition,
the strengthening U.S. dollar is expected to cause a larger
negative impact from foreign currency translation than originally
anticipated on the Company's Adjusted operating margin in reported
dollars. As a result, the Company now expects Adjusted operating
margin in reported dollars to be down approximately 200 basis
points as compared with 2014, due to the expected impact from
foreign currency translation and IPI.*
Conference Call
Avon will conduct a conference
call at 9:00 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: 20365308). 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 March 31, 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,
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 U.S. GAAP
but which have been adjusted to exclude certain items. Other
adjusted financial measures that we refer to include Constant $
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 The definition for our "Active Representatives"
performance metric is as follows:
This metric is a measure of Representative activity based on
the number of unique Representatives submitting at least one order
in a sales campaign, totaled for all campaigns in the related
period. To determine the growth or decline in Active
Representatives, this calculation is compared to the same
calculation in the corresponding period of the prior year. Orders
in China are excluded from this
metric as our business in China is
predominantly retail. Liz Earle is
also excluded from this calculation as they do not distribute
through the direct-selling channel.
The definition for our "Average Order" performance metric is as
follows:
This metric is a measure of Representative productivity. The
calculation of the growth or decline in average order is the
difference of the year-over-year change in revenue on a Constant $
basis and the change in Active Representatives. The growth or
decline in Average Order may be impacted by a combination of
factors such as inflation, units, product mix, and/or
pricing.
Forward-Looking Statements
* The marked paragraphs contain 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 concern our
outlook and expected results, pricing and cost reduction actions,
and the impact of foreign currency and taxes. 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. 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 INCOME
|
(Unaudited)
|
(In millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three Months
Ended
|
|
Percent
|
|
|
|
|
|
March
31
|
|
Change
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
|
1,762.5
|
|
$
|
2,141.7
|
|
(18)%
|
|
Other
revenue
|
|
|
|
31.7
|
|
|
41.9
|
|
|
|
Total
revenue
|
|
|
|
1,794.2
|
|
|
2,183.6
|
|
(18)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
707.3
|
|
|
955.4
|
|
|
|
Selling, general and
administrative expenses
|
|
|
1,124.5
|
|
|
1,279.1
|
|
|
|
Operating
loss
|
|
|
|
(37.6)
|
|
|
(50.9)
|
|
26%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
28.6
|
|
|
27.5
|
|
|
|
Interest
income
|
|
|
|
(3.0)
|
|
|
(3.8)
|
|
|
|
Other expense,
net
|
|
|
|
19.4
|
|
|
66.4
|
|
|
|
Total other
expenses
|
|
|
45.0
|
|
|
90.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before
taxes
|
|
|
|
(82.6)
|
|
|
(141.0)
|
|
41%
|
|
Income
taxes
|
|
|
|
(63.8)
|
|
|
(26.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
(146.4)
|
|
|
(167.2)
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
|
(0.9)
|
|
|
(1.1)
|
|
|
|
Net loss attributable
to Avon
|
|
$
|
(147.3)
|
|
$
|
(168.3)
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share:(3)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(0.33)
|
|
$
|
(0.38)
|
|
13%
|
|
Diluted
|
|
|
|
|
(0.33)
|
|
|
(0.38)
|
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
434.9
|
|
|
434.1
|
|
|
|
Diluted
|
|
|
|
|
434.9
|
|
|
434.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
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 ($145.3) and ($166.3) for the three months
ended March 31, 2015 and 2014, respectively.
|
AVON PRODUCTS,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31
|
|
December
31
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
668.9
|
|
$
|
960.5
|
Accounts receivable,
net
|
|
|
|
509.4
|
|
|
563.5
|
Inventories
|
|
|
|
|
824.5
|
|
|
822.2
|
Prepaid expenses and
other
|
|
|
|
589.9
|
|
|
618.3
|
Total current
assets
|
|
|
|
2,592.7
|
|
|
2,964.5
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, at cost
|
|
|
2,065.4
|
|
|
2,292.6
|
Less accumulated
depreciation
|
|
|
|
(1,007.6)
|
|
|
(1,061.6)
|
Property, plant and
equipment, net
|
|
|
1,057.8
|
|
|
1,231.0
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
235.6
|
|
|
249.3
|
Other
assets
|
|
|
|
|
986.2
|
|
|
1,052.0
|
Total
assets
|
|
|
|
$
|
4,872.3
|
|
$
|
5,496.8
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Debt maturing within
one year
|
|
|
$
|
378.8
|
|
$
|
137.1
|
Accounts
payable
|
|
|
|
|
820.0
|
|
|
895.4
|
Accrued
compensation
|
|
|
|
167.2
|
|
|
210.5
|
Other accrued
liabilities
|
|
|
|
461.4
|
|
|
598.8
|
Sales and taxes other
than income
|
|
|
152.0
|
|
|
168.6
|
Income
taxes
|
|
|
|
|
27.4
|
|
|
36.8
|
Total current
liabilities
|
|
|
|
2,006.8
|
|
|
2,047.2
|
Long-term
debt
|
|
|
|
|
2,208.2
|
|
|
2,463.9
|
Employee benefit
plans
|
|
|
|
478.4
|
|
|
501.8
|
Long-term income
taxes
|
|
|
|
78.7
|
|
|
77.8
|
Other
liabilities
|
|
|
|
|
87.5
|
|
|
100.8
|
Total
liabilities
|
|
|
|
|
4,859.6
|
|
|
5,191.5
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
|
|
187.8
|
|
|
187.6
|
Additional
paid-in-capital
|
|
|
|
2,206.1
|
|
|
2,207.9
|
Retained
earnings
|
|
|
|
|
3,529.3
|
|
|
3,702.9
|
Accumulated other
comprehensive loss
|
|
|
(1,333.6)
|
|
|
(1,217.6)
|
Treasury stock, at
cost
|
|
|
|
(4,592.8)
|
|
|
(4,591.0)
|
Total
Avon shareholders' (deficit) equity
|
|
(3.2)
|
|
|
289.8
|
Noncontrolling
interests
|
|
|
|
15.9
|
|
|
15.5
|
Total shareholders'
equity
|
|
|
|
12.7
|
|
|
305.3
|
Total liabilities
and shareholders' equity
|
$
|
4,872.3
|
|
$
|
5,496.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
March
31
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
$
|
(146.4)
|
|
$
|
(167.2)
|
Adjustments to
reconcile net loss to net cash used by operating
activities:
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
31.8
|
|
|
35.4
|
Amortization
|
|
|
|
|
|
9.5
|
|
|
11.6
|
Provision for
doubtful accounts
|
|
|
|
38.7
|
|
|
50.8
|
Provision for
obsolescence
|
|
|
|
|
15.7
|
|
|
26.4
|
Share-based
compensation
|
|
|
|
|
(0.1)
|
|
|
11.5
|
Foreign exchange
losses
|
|
|
|
|
6.4
|
|
|
8.3
|
Deferred income
taxes
|
|
|
|
|
28.4
|
|
|
(10.4)
|
Charge for Venezuelan
monetary assets and liabilities
|
|
|
(4.2)
|
|
|
53.7
|
Charge for Venezuelan
non-monetary assets
|
|
|
101.7
|
|
|
115.7
|
Other
|
|
|
|
|
|
|
9.0
|
|
|
7.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
|
(27.6)
|
|
|
(41.7)
|
Inventories
|
|
|
|
|
|
(73.1)
|
|
|
(97.8)
|
Prepaid expenses and
other
|
|
|
|
|
(6.7)
|
|
|
(23.2)
|
Accounts payable and
accrued liabilities
|
|
|
|
(149.1)
|
|
|
(29.1)
|
Income and other
taxes
|
|
|
|
|
(14.1)
|
|
|
(21.5)
|
Noncurrent assets and
liabilities
|
|
|
|
(18.0)
|
|
|
(42.9)
|
Net cash used by
operating activities
|
|
|
|
(198.1)
|
|
|
(112.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
|
|
|
(22.4)
|
|
|
(29.6)
|
Disposal of
assets
|
|
|
|
|
|
2.4
|
|
|
2.6
|
Purchases of
investments
|
|
|
|
|
(4.6)
|
|
|
(5.8)
|
Proceeds from sale of
investments
|
|
|
|
|
0.6
|
|
|
6.2
|
Net cash used by
investing activities
|
|
|
|
(24.0)
|
|
|
(26.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
Cash
dividends
|
|
|
|
|
|
(26.2)
|
|
|
(28.7)
|
Debt, net (maturities
of three months or less)
|
|
|
|
(6.3)
|
|
|
1.8
|
Repayment of
debt
|
|
|
|
|
|
(2.9)
|
|
|
(10.6)
|
Net proceeds from
exercise of stock options
|
|
|
|
-
|
|
|
0.2
|
Repurchase of common
stock
|
|
|
|
|
(1.9)
|
|
|
(6.5)
|
Net cash used by
financing activities
|
|
|
|
(37.3)
|
|
|
(43.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and equivalents
|
|
(32.2)
|
|
|
(129.8)
|
Net decrease in cash
and equivalents
|
|
|
|
(291.6)
|
|
|
(312.8)
|
Cash and equivalents
at beginning of year
|
|
|
|
960.5
|
|
|
1,107.9
|
Cash and equivalents
at end of period
|
|
|
$
|
668.9
|
|
$
|
795.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
SUPPLEMENTAL
SCHEDULE
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CATEGORY SALES
(US$)
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Three months
ended
March 31
|
|
US$
|
|
C$
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
% var. vs
1Q14
|
|
% var.
vs
1Q14
|
Beauty:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Skincare
|
|
|
|
|
|
|
|
$
|
532.7
|
|
$
|
644.9
|
|
(17)%
|
|
1%
|
Fragrance
|
|
|
|
|
|
|
|
|
423.2
|
|
513.2
|
|
(18)
|
|
7
|
Color
|
|
|
|
|
|
|
|
|
336.5
|
|
401.2
|
|
(16)
|
|
2
|
Total
Beauty
|
|
|
|
|
|
|
|
|
1,292.4
|
|
1,559.3
|
|
(17)
|
|
3
|
Fashion &
Home:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fashion
(jewelry/watches/apparel/footwear/accessories/children's)
|
|
|
|
|
|
288.7
|
|
|
344.4
|
|
(16)
|
|
(3)
|
Home (gift &
decorative products/housewares/entertainment &
leisure/children's/nutrition)
|
|
|
181.4
|
|
|
238.0
|
|
(24)
|
|
(3)
|
Total Fashion &
Home
|
|
|
|
|
|
|
|
|
470.1
|
|
|
582.4
|
|
(19)
|
|
(3)
|
Net sales
|
|
|
|
|
|
|
|
|
1,762.5
|
|
2,141.7
|
|
(18)
|
|
2
|
Other
revenue
|
|
|
|
|
|
|
|
|
31.7
|
|
|
41.9
|
|
(24)
|
|
(18)
|
Total
revenue
|
|
|
|
|
|
|
|
$
|
1,794.2
|
|
$
|
2,183.6
|
|
(18)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
MARCH 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CTI
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
Special
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
tax items
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
$
|
1,794.2
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,794.2
|
Cost of
sales
|
|
|
|
707.3
|
|
|
-
|
|
|
15.2
|
|
|
-
|
|
|
692.1
|
Selling, general and
administrative expenses
|
|
|
1,124.5
|
|
|
33.1
|
|
|
91.2
|
|
|
-
|
|
|
1,000.2
|
Operating (loss)
profit
|
|
|
|
(37.6)
|
|
|
33.1
|
|
|
106.4
|
|
|
-
|
|
|
101.9
|
(Loss) income before
taxes
|
|
|
(82.6)
|
|
|
33.1
|
|
|
102.2
|
|
|
-
|
|
|
52.7
|
Income
taxes
|
|
|
|
(63.8)
|
|
|
(4.0)
|
|
|
0.8
|
|
|
31.3
|
|
|
(35.8)
|
Net (loss)
income
|
|
|
$
|
(146.4)
|
|
$
|
29.1
|
|
$
|
103.0
|
|
$
|
31.3
|
|
$
|
16.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
(0.33)
|
|
$
|
0.07
|
|
$
|
0.23
|
|
$
|
0.07
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.6%
|
|
|
-
|
|
|
0.8
|
|
|
|
|
|
61.4%
|
SG&A as a % of
revenues
|
|
|
62.7%
|
|
|
(1.8)
|
|
|
(5.1)
|
|
|
|
|
|
55.7%
|
Operating
margin
|
|
(2.1)%
|
|
|
1.8
|
|
|
5.9
|
|
|
|
|
|
5.7%
|
Effective tax
rate
|
|
|
|
(77.2)%
|
|
|
|
|
|
|
|
|
|
|
|
67.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
(LOSS) PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
(43.3)
|
|
$
|
2.8
|
|
$
|
106.4
|
|
|
|
|
$
|
65.9
|
Europe, Middle East
& Africa
|
|
|
38.6
|
|
|
5.7
|
|
|
-
|
|
|
|
|
|
44.3
|
North
America
|
|
(13.2)
|
|
|
6.0
|
|
|
-
|
|
|
|
|
|
(7.2)
|
Asia
Pacific
|
|
7.9
|
|
|
8.8
|
|
|
-
|
|
|
|
|
|
16.7
|
Global and
other
|
|
(27.6)
|
|
|
9.8
|
|
|
-
|
|
|
|
|
|
(17.8)
|
Total
|
|
|
$
|
(37.6)
|
|
$
|
33.1
|
|
$
|
106.4
|
|
|
|
|
$
|
101.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
(5.2)%
|
|
|
0.3
|
|
|
12.7
|
|
|
|
|
|
7.9%
|
Europe, Middle East
& Africa
|
|
|
7.0%
|
|
|
1.0
|
|
|
-
|
|
|
|
|
|
8.0%
|
North
America
|
|
(5.5)%
|
|
|
2.5
|
|
|
-
|
|
|
|
|
|
(3.0)%
|
Asia
Pacific
|
|
4.8%
|
|
|
5.3
|
|
|
-
|
|
|
|
|
|
10.1%
|
Global and
other
|
|
-%
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-%
|
Total
|
|
|
|
(2.1)%
|
|
|
1.8
|
|
|
5.9
|
|
|
|
|
|
5.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in Millions (except
per share data)
|
|
THREE MONTHS ENDED
MARCH 31, 2014
|
|
|
|
|
|
CTI
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
restructuring
|
|
Venezuelan
|
|
FCPA
|
|
Adjusted
|
|
|
|
(GAAP)
|
|
initiatives
|
|
special
items
|
|
accrual
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
$
|
2,183.6
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2,183.6
|
Cost of
sales
|
|
|
|
955.4
|
|
|
-
|
|
|
115.7
|
|
|
-
|
|
|
839.7
|
Selling, general and
administrative expenses
|
|
1,279.1
|
|
|
22.7
|
|
|
-
|
|
|
46.0
|
|
|
1,210.4
|
Operating (loss)
profit
|
|
|
|
(50.9)
|
|
|
22.7
|
|
|
115.7
|
|
|
46.0
|
|
|
133.5
|
(Loss) income before
taxes
|
|
|
(141.0)
|
|
|
22.7
|
|
|
169.4
|
|
|
46.0
|
|
|
97.1
|
Income
taxes
|
|
|
|
(26.2)
|
|
|
(6.9)
|
|
|
(11.9)
|
|
|
-
|
|
|
(45.0)
|
Net (loss)
income
|
|
|
$
|
(167.2)
|
|
$
|
15.8
|
|
$
|
157.5
|
|
$
|
46.0
|
|
$
|
52.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
(0.38)
|
|
$
|
0.04
|
|
$
|
0.36
|
|
$
|
0.11
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
56.2%
|
|
|
-
|
|
|
5.3
|
|
|
-
|
|
|
61.5%
|
SG&A as a % of
revenues
|
|
|
58.6%
|
|
|
(1.0)
|
|
|
-
|
|
|
(2.1)
|
|
|
55.4%
|
Operating
margin
|
|
(2.3)%
|
|
|
1.0
|
|
|
5.3
|
|
|
2.1
|
|
|
6.1%
|
Effective tax
rate
|
|
|
|
(18.6)%
|
|
|
|
|
|
|
|
|
|
|
|
46.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
(LOSS) PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
(43.4)
|
|
$
|
14.9
|
|
$
|
115.7
|
|
$
|
-
|
|
$
|
87.2
|
Europe, Middle East
& Africa
|
|
|
67.4
|
|
|
2.2
|
|
|
-
|
|
|
-
|
|
|
69.6
|
North
America
|
|
(8.5)
|
|
|
5.6
|
|
|
-
|
|
|
-
|
|
|
(2.9)
|
Asia
Pacific
|
|
7.7
|
|
|
0.3
|
|
|
-
|
|
|
-
|
|
|
8.0
|
Global and
other
|
|
(74.1)
|
|
|
(0.3)
|
|
|
-
|
|
|
46.0
|
|
|
(28.4)
|
Total
|
|
|
$
|
(50.9)
|
|
$
|
22.7
|
|
$
|
115.7
|
|
$
|
46.0
|
|
$
|
133.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
(4.1)%
|
|
|
1.4
|
|
|
10.8
|
|
|
-
|
|
|
8.2%
|
Europe, Middle East
& Africa
|
|
|
10.3%
|
|
|
0.3
|
|
|
-
|
|
|
-
|
|
|
10.6%
|
North
America
|
|
(2.9)%
|
|
|
1.9
|
|
|
-
|
|
|
-
|
|
|
(1.0)%
|
Asia
Pacific
|
|
4.6%
|
|
|
0.2
|
|
|
-
|
|
|
-
|
|
|
4.8%
|
Global and
other
|
|
-%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-%
|
Total
|
|
|
|
(2.3)%
|
|
|
1.0
|
|
|
5.3
|
|
|
2.1
|
|
|
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in the table
above may not necessarily sum because the computations are made
independently.
|
|
|
|
|
|
|
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. 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 investigations ("FCPA
accrual"), and 4) the non-cash income tax charge 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 Income 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 Special tax items include the impact during 2015 on the
provision for income taxes in the Consolidated Statements of Income
due to a non-cash income tax charge associated with an additional
valuation allowance to reduce the Company's U.S. deferred tax
assets to an amount that is "more likely than not" to be realized.
This valuation allowance was due to the continued strengthening of
the U.S. dollar against currencies of some of the Company's key
markets.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/avon-reports-first-quarter-2015-results-300075007.html
SOURCE Avon Products, Inc.