NEW YORK, May 3, 2011 /PRNewswire-FirstCall/ -- Avon
Products, Inc. (NYSE: AVP) today reported first-quarter 2011 total
revenue of $2.6 billion, 7% higher
than that of first-quarter 2010. Constant-dollar sales rose 4% in
the first quarter as foreign exchange contributed 3% to growth.
Total units declined 1%, while price/mix rose 5% during the
quarter. Active Representatives declined 1% in the quarter.
Acquisitions contributed approximately 2% to revenue growth in the
first quarter.
”We are pleased with the early progress against our commitment
to return the business to mid-single digit revenue growth and
deliver 50-70 basis points of operating margin expansion in 2011,”
said Andrea Jung, Avon’s Chairman
and Chief Executive Officer. “We are squarely focused on
restoring growth in Brazil and
Russia in the second half, and
ensuring execution in gross margin improvement and cost
control."
Avon’s Beauty sales increased 8% year over year, with gains in
all categories during the first quarter of 2011: 10% growth in
fragrance, 6% in color, 7% in skincare, and 8% in personal care.
Constant-dollar growth of 4% in Beauty was driven by gains of 6% in
fragrance, 2% in color, 4% in skincare, and 5% in personal
care.
First-quarter 2011 gross margin of 63.9% was 210 basis points
above that of the prior-year quarter. On an adjusted basis, it
increased by 80 basis points due to benefits from favorable foreign
exchange and effective price management, partially offset by mix
and higher commodity costs.
Selling, general and administrative expense in the quarter
increased as a percent of revenue by 50 basis points versus
first-quarter 2010 on a reported and adjusted basis, primarily due
to higher distribution costs.
As planned, lower advertising was offset by a higher investment
in Representative Value Proposition (“RVP”) during the first
quarter of 2011. Within this rebalancing, advertising was
$82 million for the quarter, down 15%
or $14 million from a year ago,
primarily due to reductions in China. Avon
invested an incremental $30 million
in RVP in the first quarter in Sales Leadership, higher incentives,
and Service Model Transformation.
First-quarter 2011 costs associated with the company’s 2005 and
2009 restructuring programs were $15
million pre-tax, or $0.02 per
share after-tax, compared with $5
million pre-tax, or $0.01 per
share after-tax in the prior-year period.
First-quarter 2011 operating profit of $247 million was up 29% compared with the
year-ago quarter and operating margin was 9.4%, up 160 basis points
year over year. Adjusted operating profit was up 11%, and adjusted
operating margin was 9.9%, up 30 basis points from a year ago. The
increase was primarily due to the higher gross margin.
First-quarter 2011’s effective tax rate was 32.3%, compared with
66.2% in the year-ago quarter. Excluding the impact from
restructuring costs, the first-quarter 2011 rate was 32.8%.
Excluding the impact of Venezuelan special items and restructuring
costs, the first-quarter 2010 tax rate was 33.6%.
Income from continuing operations in the first quarter of 2011
was $152 million, or $0.35 per share, compared with $43 million, or $0.10 per share, in the year-ago quarter.
Adjusted income from continuing operations was $161 million, or $0.37 per share, compared with $144 million, or $0.33 per share, in the year-ago first
quarter.
With regards to cash flow, operating activities used
$32 million of cash during the first
quarter of 2011 compared with a $10
million source of cash in the same period of 2010, as higher
net income was offset by a $75
million contribution to the U.S. pension plan and higher
inventory levels. At quarter end, Avon’s net debt was $2.1 billion, up $146
million from the year-end level. Capital expenditure was
$55 million for the quarter in line
with the prior-year period.
First-Quarter Regional Results
Latin America’s first-quarter 2011 revenue was up 16% year over
year, or up 11% in constant dollars, with strong growth in most of
our large markets. Brazil was up
11%, or 2% in constant dollars, as progress made in service
recovery throughout the quarter was not yet reflected in our
top-line results. Mexico was up
23%, or 16% in constant dollars, primarily driven by growth in
Active Representatives. Venezuela
was up 39% on both a reported and constant-dollar basis. The
region’s Active Representatives grew 4% and units sold were up 6%.
First-quarter operating profit was up 59%. Operating margin was
12.3%, or up 320 basis points from the first quarter of 2010. On an
adjusted basis, Latin America’s first-quarter operating profit was
up 6% and the operating margin was 12.1%, down 120 basis points
from a year ago. The decline in operating margin was primarily
driven by higher bad debt expense, higher distribution costs due to
the transition to a new facility in Brazil, and increased investment in RVP.
First-quarter revenue in North
America was down 2% in both reported and constant dollars.
The acquisition of Silpada Designs, Inc. (“Silpada”) had a
favorable impact on first-quarter revenue of approximately 8
percentage points. Active Representatives were down 6%. Units sold
declined 14% compared with a year ago. Silpada contributed 2
percentage points to Active Representatives and 1 percentage point
to unit growth in the quarter. North America’s first-quarter
operating profit was down 36%. Operating margin was 5.4%, down 300
basis points versus last year’s quarter. Adjusted operating profit
was down 18%, with an adjusted operating margin of 7.7%, down 150
basis points, reflecting fixed overhead with lower revenues,
partially offset by improved bad debt. Silpada added 20 basis
points to the North America
adjusted operating margin.
In Central & Eastern
Europe, first-quarter revenue was flat year over year, or
down 1% in constant dollars, reflecting continued macroeconomic
pressures in this region and a decline in Active Representatives.
Russia was up 3% on a reported
basis and up 1% in constant dollars. The region’s Active
Representatives were down 4% and units sold were down 1% in the
quarter. Operating profit was up 12% versus the 2010 quarter. The
region’s operating margin was 18.7%, up 200 basis points from the
prior-year quarter. First-quarter 2011 adjusted operating profit
was up 6%. Adjusted operating margin was 18.0%, up 90 basis points,
due primarily to improvement in gross margin.
Western Europe, Middle East & Africa’s first-quarter
revenue increased 16% versus the prior-year quarter, or up 15% in
constant dollars, driven by an increase in Active Representatives.
The acquisition of Liz Earle Beauty Co. Limited had a favorable
impact on first-quarter revenue of approximately 4 percentage
points. On a reported basis, U.K. revenue was flat, Turkey rose 14%, and South Africa rose 63%. In constant dollars,
revenue growth was down 1% in the U.K., up 18% in Turkey, and up 49% in South Africa. The region’s Active
Representatives grew 10% year over year and units sold increased
7%. Operating profit was up 54% versus the prior-year quarter.
Operating margin was 9.8%, up 240 basis points from the prior-year
quarter. First-quarter 2011 adjusted operating profit was up 59%
with an adjusted operating margin of 9.6%, up 260 basis points, due
to overhead leverage, and improved gross margin, which benefited
from favorable foreign exchange.
Asia Pacific, which now
includes our business in China,
reported a first-quarter revenue decline of 6% year over year, or
12% in constant dollars. Revenues in Philippines rose 7%, or 2% in constant
dollars. China declined 32%, or
35% in constant dollars, reflecting the continued transition away
from a hybrid model to one which focuses on direct selling. The
region’s Active Representatives declined 14% and units sold
decreased by 11%, primarily reflecting double-digit declines in
both indicators in China.
Operating profit was up 33% versus the 2010 quarter. The region’s
operating margin was 8.8%, up 260 basis points, and adjusted
operating profit was up 34% versus the 2010 quarter. China reported a modest operating profit
compared with a loss for the same period last year. The region’s
adjusted operating margin was 8.5%, up 250 basis points from last
year’s first quarter, benefiting from lower incentives and
suspended advertising in China
during this transition phase.
Avon will conduct a conference
call at 9:00 A.M. today to discuss
the quarter 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: 57603823). The call and related slide
presentation will be webcast live at www.avoninvestor.com and can
be accessed or downloaded from that site for a period of one year.
Avon will be filing its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2011 today. Please refer to the Form
10-Q for additional information on Avon’s results for the
quarter.
Avon, the company for
women, is a leading global beauty company, with over $10 billion in annual revenue. As the world's
largest direct seller, Avon
markets to women in more than 100 countries through approximately
6.5 million independent Avon Sales Representatives. Avon's product line includes beauty products,
as well as fashion and home products, and features such
well-recognized brand names as Avon Color, ANEW, Skin-So-Soft,
Advance Techniques, Avon Naturals, and mark. Learn more
about Avon and its products at
www.avoncompany.com.
Footnote
(1) “Adjusted” items refer to financial results
presented in accordance with US GAAP that have been adjusted to
exclude the impact of Venezuelan special items and restructuring
costs, as described below, under “Non-GAAP Financial Measures.”
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. We refer to these adjusted growth rates as Constant $
growth, which is a non- GAAP financial measure. We believe this
measure provides 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 present gross margin, selling, general and administrative
expenses as a percentage of revenue, 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 have provided a
quantitative reconciliation of the difference between the non-GAAP
financial measure and the financial measure calculated and reported
in accordance with GAAP. 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
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
and 2) costs and charges related to Venezuela being designated as a highly
inflationary economy and the subsequent devaluation of its currency
(“Venezuelan special 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 Statement of Income caused
by the devaluation of the Venezuelan currency on monetary assets
and liabilities, such as cash, receivables and payables; deferred
tax assets and liabilities; and nonmonetary assets, such as
inventory and prepaid expenses. For nonmonetary 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 2.15 and the revised official
exchange rate of 4.30.
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 are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as
“estimate,” “project,” “forecast,” “plan,” “believe,” “may,”
“expect,” “anticipate,” “intend,” “planned,” “potential,” “can,”
“expectation” and similar expressions, or the negative of those
expressions, may identify forward-looking statements. Such
forward-looking statements are based on management’s reasonable
current assumptions and expectations. 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 implement the key initiatives of, and realize
the gross and operating margins and projected benefits (in the
amounts and time schedules we expect) from, our global business
strategy, including our multi-year restructuring initiatives,
product mix and pricing strategies, enterprise resource planning,
customer service initiatives, product line simplification program,
sales and operation planning process, strategic sourcing
initiative, outsourcing strategies, zero-overhead-growth
philosophy, Internet platform and technology strategies,
information technology and related system enhancements and cash
management, tax, foreign currency hedging and risk management
strategies;
- our ability to realize the anticipated benefits (including any
projections concerning future revenue and operating margin
increases) from our multi-year restructuring initiatives or other
strategic initiatives on the time schedules or in the amounts that
we expect, and our plans to invest these anticipated benefits ahead
of future growth;
- the possibility of business disruption in connection with our
multi-year restructuring initiatives or other strategic
initiatives;
- our ability to realize sustainable growth from our investments
in our brand and the direct-selling channel;
- our ability to transition our business in North America, including optimizing our
product portfolio and enhancing field fundamentals;
- a general economic downturn, a recession globally or in one or
more of our geographic regions, such as North America, or sudden disruption in
business conditions, and the ability of our broad-based geographic
portfolio to withstand an economic downturn, recession, cost
inflation, competitive or other market pressures, or
conditions;
- the effect of political, legal, tax and regulatory risks
imposed on us, our operations or our Representatives, including
foreign exchange or other restrictions, adoption, interpretation
and enforcement of foreign laws including 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;
- our ability to effectively implement initiatives to reduce
inventory levels in the time period and in the amounts we
expect;
- our ability to achieve growth objectives or maintain rates of
growth, particularly in our largest markets and developing and
emerging markets, such as Brazil
or Russia;
- our ability to successfully identify new business opportunities
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;
- the effect of rising silver prices on our recently acquired
Silpada business;
- 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, foreign exchange restrictions and
the potential effect of such factors on our business, results of
operations and financial condition;
- our ability to successfully transition and evolve our business
in China in connection with the
development and evolution of the direct selling business in that
market, our ability to operate using a direct-selling model
permitted in that market and our ability to retain and increase the
number of Active Representatives there over a sustained period of
time;
- general economic and business conditions in our markets,
including social, economic and political uncertainties in the
international markets in our portfolio;
- any developments in or consequences of investigations and
compliance reviews, and any litigation related thereto, including
the ongoing internal investigation and compliance reviews of
Foreign Corrupt Practices Act and related 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;
- information technology systems outages, disruption in our
supply chain or manufacturing and distribution operations, or 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 and large scale power outages;
- the risk of product or ingredient shortages resulting from our
concentration of sourcing in fewer suppliers;
- the quality, safety and efficacy of our products;
- the success of our research and development activities;
- our ability to attract and retain key personnel and
executives;
- competitive uncertainties in our markets, including competition
from companies in the cosmetics, fragrances, skin care and
toiletries industry, some of which are larger than we are and have
greater resources;
- our ability 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 the Representative and consumer experience and increase
Representative productivity through Service Model Transformation
and other investments 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;
- the impact of the 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 protect our intellectual property rights;
- the risk of an adverse outcome in any material pending and
future litigations or with respect to the legal status of
Representatives;
- our ratings, our access to cash and financing and ability to
secure financing at attractive rates; and
- 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.
Additional information identifying such factors is contained in
Item 1A of our 2010 Form 10-K for the year ended
December 31, 2010. 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
|
|
|
|
|
|
March
31
|
|
Change
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
2,591.5
|
|
$
2,416.5
|
|
7%
|
|
Other revenue
|
|
|
37.6
|
|
29.8
|
|
|
|
Total
revenue
|
|
|
2,629.1
|
|
2,446.3
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
949.8
|
|
934.7
|
|
|
|
Selling, general and
administrative expenses
|
|
1,432.8
|
|
1,320.1
|
|
|
|
Operating
profit
|
|
|
246.5
|
|
191.5
|
|
29%
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
22.7
|
|
21.8
|
|
|
|
Interest income
|
|
|
(4.8)
|
|
(4.9)
|
|
|
|
Other expense, net
|
|
|
3.7
|
|
48.3
|
|
|
|
Total other
expenses
|
|
21.6
|
|
65.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations, before tax
|
|
224.9
|
|
126.3
|
|
78%
|
|
Income taxes
|
|
|
(72.7)
|
|
(83.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
|
152.2
|
|
42.7
|
|
256%
|
|
Discontinued operations, net of
tax
|
|
(8.6)
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
143.6
|
|
43.3
|
|
|
|
Net loss attributable to
noncontrolling interest
|
|
-
|
|
(0.8)
|
|
|
|
Net income attributable to
Avon
|
|
$
143.6
|
|
$
42.5
|
|
238%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
Basic EPS from continuing
operations
|
|
$
.35
|
|
$
.10
|
|
250%
|
|
Basic EPS from
discontinued operations
|
|
$
(.02)
|
|
$
-
|
|
|
|
Basic EPS attributable to
Avon
|
|
$
.33
|
|
$
.10
|
|
230%
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
.35
|
|
$
.10
|
|
250%
|
|
Diluted EPS from
discontinued operations
|
|
$
(.02)
|
|
$
-
|
|
|
|
Diluted EPS attributable
to Avon
|
|
$
.33
|
|
$
.10
|
|
230%
|
|
|
|
|
|
|
|
|
|
|
AVON
PRODUCTS, INC.
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(Unaudited)
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
March
31
|
|
December
31
|
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Current Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
1,015.3
|
|
$
1,179.9
|
|
Accounts receivable,
net
|
803.5
|
|
826.3
|
|
Inventories
|
1,293.5
|
|
1,152.9
|
|
Prepaid expenses and
other
|
1,052.7
|
|
1,025.2
|
|
|
Total current assets
|
4,165.0
|
|
4,184.3
|
|
|
|
|
|
|
|
Property, plant and equipment,
at cost
|
2,787.7
|
|
2,750.9
|
|
Less accumulated
depreciation
|
(1,140.8)
|
|
(1,123.5)
|
|
Property, plant and equipment,
net
|
1,646.9
|
|
1,627.4
|
|
|
|
|
|
|
|
Goodwill
|
680.4
|
|
675.1
|
|
Other intangible assets,
net
|
363.7
|
|
368.3
|
|
Other assets
|
1,031.1
|
|
1,018.6
|
|
|
Total assets
|
$
7,887.1
|
|
$
7,873.7
|
|
|
|
|
|
|
|
Liabilities and Shareholders'
Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Debt maturing within one
year
|
$
726.4
|
|
$
727.6
|
|
Accounts payable
|
829.8
|
|
809.8
|
|
Accrued compensation
|
258.7
|
|
293.2
|
|
Other accrued
liabilities
|
751.8
|
|
771.6
|
|
Sales and taxes other than
income
|
228.4
|
|
207.6
|
|
Income taxes
|
113.6
|
|
146.5
|
|
|
Total current
liabilities
|
2,908.7
|
|
2,956.3
|
|
Long-term debt
|
2,391.1
|
|
2,408.6
|
|
Employee benefit
plans
|
492.4
|
|
561.3
|
|
Long-term income
taxes
|
119.1
|
|
128.9
|
|
Other liabilities
|
136.2
|
|
146.0
|
|
|
Total liabilities
|
$
6,047.5
|
|
$
6,201.1
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Common stock
|
$
187.1
|
|
$
186.6
|
|
Additional
paid-in-capital
|
2,043.4
|
|
2,024.2
|
|
Retained earnings
|
4,655.0
|
|
4,610.8
|
|
Accumulated other comprehensive
loss
|
(497.4)
|
|
(605.8)
|
|
Treasury stock, at
cost
|
(4,564.8)
|
|
(4,559.3)
|
|
|
Total Avon shareholders'
equity
|
1,823.3
|
|
1,656.5
|
|
Noncontrolling
Interest
|
16.3
|
|
16.1
|
|
|
Total shareholders'
equity
|
$
1,839.6
|
|
$
1,672.6
|
|
|
Total liabilities and
shareholders'
equity
|
$
7,887.1
|
|
$
7,873.7
|
|
|
|
|
|
|
|
|
|
AVON
PRODUCTS, INC.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
March
31
|
|
|
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating
Activities
|
|
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
|
|
$
152.2
|
|
$
42.7
|
|
Adjustments to reconcile net
income to net cash provided by financing activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
55.4
|
|
43.1
|
|
|
Provision for doubtful
accounts
|
|
|
|
61.7
|
|
52.6
|
|
|
Provision for
obsolescence
|
|
|
|
24.1
|
|
19.1
|
|
|
Share-based
compensation
|
|
|
|
12.0
|
|
20.0
|
|
|
Deferred income taxes
|
|
|
|
|
(19.7)
|
|
19.9
|
|
|
Charge for Venezuelan monetary
assets and liabilities
|
|
-
|
|
46.1
|
|
|
Other
|
|
|
|
|
|
15.8
|
|
18.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
(23.4)
|
|
(54.1)
|
|
|
Inventories
|
|
|
|
|
|
(142.0)
|
|
(60.7)
|
|
|
Prepaid expenses and
other
|
|
|
|
(22.6)
|
|
(13.4)
|
|
|
Accounts payable and accrued
liabilities
|
|
|
(55.3)
|
|
(49.9)
|
|
|
Income and other
taxes
|
|
|
|
|
(19.8)
|
|
(67.8)
|
|
|
Noncurrent assets and
liabilities
|
|
|
|
(70.0)
|
|
(6.7)
|
|
Net cash (used) provided by
operating activities of continuing
operations
|
(31.6)
|
|
9.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing
Activities
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(55.3)
|
|
(56.7)
|
|
Disposal of assets
|
|
|
|
|
3.0
|
|
3.8
|
|
Purchases of
investments
|
|
|
|
|
(0.1)
|
|
(0.3)
|
|
Proceeds from sale of
investments
|
|
|
|
3.0
|
|
6.9
|
|
Acquisitions and other investing
activities
|
|
|
|
-
|
|
(146.1)
|
|
Net cash used by investing
activities of continuing operations
|
|
(49.4)
|
|
(192.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing
Activities
|
|
|
|
|
|
|
|
Cash dividends
|
|
|
|
|
|
(98.7)
|
|
(95.3)
|
|
Debt, net (maturities of three
months or less)
|
|
|
(3.4)
|
|
133.2
|
|
Proceeds from debt
|
|
|
|
|
551.2
|
|
6.1
|
|
Repayment of debt
|
|
|
|
|
(554.6)
|
|
(10.0)
|
|
Proceeds from exercise of stock
options
|
|
|
|
7.3
|
|
7.4
|
|
Excess tax benefit realized from
share-based compensation
|
|
0.7
|
|
0.7
|
|
Repurchase of common
stock
|
|
|
|
(5.8)
|
|
(10.4)
|
|
Net cash (used) provided by
financing activities of continuing operations
|
(103.3)
|
|
31.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating
activities - Disc Ops
|
|
|
-
|
|
1.9
|
|
Cash provided (used) by
investing activities - Disc Ops
|
|
2.3
|
|
(0.1)
|
|
Cash used by financing
activities - Disc Ops
|
|
|
-
|
|
(0.1)
|
|
Net cash provided by
Discontinued Operations
|
|
|
2.3
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and equivalents
|
|
17.4
|
|
(39.4)
|
|
Net change in cash and
equivalents
|
|
|
|
(164.6)
|
|
(188.7)
|
|
Cash and equivalents at
beginning of year (1)
|
|
|
$
1,179.9
|
|
$
1,311.6
|
|
Cash and equivalents at end of
period (2)
|
|
|
|
$
1,015.3
|
|
$
1,122.9
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes cash
and cash equivalents of discontinued operations of $13.5M at
January 1, 2010.
|
|
(2) Includes cash
and cash equivalents of discontinued operations of $10.9M at March
31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
AVON
PRODUCTS, INC.
|
|
SUPPLEMENTAL
SCHEDULE
|
|
(Unaudited)
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED 03/31/11
|
|
|
|
REGIONAL
RESULTS
|
|
|
$ in Millions
|
Total
Revenue US$
|
|
C$
|
|
Units
|
|
Price/Mix
C$
|
|
Active Reps
|
|
Average
Order C$
|
|
|
|
|
% var. vs
1Q10
|
|
% var.
vs
1Q10
|
|
% var.
vs
1Q10
|
|
% var.
vs
1Q10
|
|
% var.
vs
1Q10
|
|
% var.
vs
1Q10
|
|
Latin America
|
$
1,131.4
|
16%
|
|
11%
|
|
6%
|
|
5%
|
|
4%
|
|
7%
|
|
North America
|
512.3
|
(2)
|
|
(2)
|
|
(14)
|
|
12
|
|
(6)
|
|
4
|
|
Central & Eastern
Europe
|
411.8
|
-
|
|
(1)
|
|
(1)
|
|
-
|
|
(4)
|
|
3
|
|
Western Europe, Middle East & Africa
|
346.3
|
16
|
|
15
|
|
7
|
|
8
|
|
10
|
|
5
|
|
Asia Pacific
|
227.3
|
(6)
|
|
(12)
|
|
(11)
|
|
(1)
|
|
(14)
|
|
2
|
|
Total from operations
|
2,629.1
|
7
|
|
4
|
|
(1)
|
|
5
|
|
(1)
|
|
5
|
|
Global and other
|
-
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Total
|
|
$
2,629.1
|
7%
|
|
4%
|
|
(1)%
|
|
5%
|
|
(1)%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
GAAP
Operating
Profit US$
|
% var. vs
1Q10
|
|
2011 GAAP
Operating
Margin US$
|
|
2011
Non-GAAP
Operating
Profit US$ (1)
|
|
2010
Non-GAAP
Operating
Profit US$ (1)
|
|
2011
Non-GAAP
Operating
Margin (1)
|
|
2010
Non-GAAP
Operating
Margin (1)
|
|
Latin America
|
$
139.5
|
59%
|
|
12.3%
|
|
$
137.2
|
|
$
129.4
|
|
12.1%
|
|
13.3%
|
|
North America
|
27.8
|
(36)
|
|
5.4
|
|
39.4
|
|
48.0
|
|
7.7
|
|
9.2
|
|
Central & Eastern
Europe
|
76.9
|
12
|
|
18.7
|
|
74.0
|
|
70.0
|
|
18.0
|
|
17.1
|
|
Western Europe, Middle East
& Africa
|
34.1
|
54
|
|
9.8
|
|
33.2
|
|
20.9
|
|
9.6
|
|
7.0
|
|
Asia Pacific
|
19.9
|
33
|
|
8.8
|
|
19.4
|
|
14.5
|
|
8.5
|
|
6.0
|
|
Total from operations
|
298.2
|
26
|
|
11.3
|
|
303.2
|
|
282.8
|
|
11.5
|
|
11.6
|
|
Global and other
|
(51.7)
|
(12)
|
|
-
|
|
(42.0)
|
|
(47.0)
|
|
-
|
|
-
|
|
Total
|
|
$
246.5
|
29%
|
|
9.4%
|
|
$
261.2
|
|
$
235.8
|
|
9.9%
|
|
9.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CATEGORY
SALES (US$)
|
|
|
Consolidated
|
|
|
|
US$
|
|
C$
|
|
|
|
|
|
% var.
vs
1Q10
|
|
% var.
vs
1Q10
|
|
Beauty (color
cosmetics/fragrances/skincare/personal care)
|
|
$1,874.9
|
|
8%
|
|
4%
|
|
Fashion (fashion
jewelry/watches/apparel/footwear/accessories/childrens)
(2)
|
|
488.0
|
|
8
|
|
5
|
|
Home (gift & decorative
products/housewares/entertainment &
leisure/childrens/nutrition) (2)
|
|
228.6
|
|
4
|
|
(1)
|
|
Net sales
|
|
|
|
|
|
|
|
$2,591.5
|
|
7%
|
|
4%
|
|
Other revenue
|
|
|
|
|
|
|
|
37.6
|
|
26
|
|
24
|
|
Total revenue
|
|
|
|
|
|
|
|
$2,629.1
|
|
7%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
During the third quarter of
2010, items associated with children's products, that were
previously reported in Home, were reclassified into Fashion if such
children's product was Fashion related.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 03/31/11
|
|
|
|
Reported
(GAAP)
|
CTI
restructuring
initiatives
|
Rounding
|
Adjusted
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
Cost of Sales
|
$
949.8
|
$
1.2
|
|
$
948.6
|
|
|
Selling, general and
administrative expenses
|
1,432.8
|
13.5
|
|
1,419.3
|
|
|
Operating profit
|
246.5
|
14.7
|
|
261.2
|
|
|
Income from continuing
operations before
taxes
|
224.9
|
14.7
|
|
239.6
|
|
|
Income taxes
|
(72.7)
|
(5.8)
|
|
(78.5)
|
|
|
Income from continuing
operations
|
$
152.2
|
$
8.9
|
|
$
161.1
|
|
|
|
|
|
|
|
|
|
Diluted EPS from continuing
operations
|
0.35
|
0.02
|
|
0.37
|
|
|
|
|
|
|
|
|
|
Gross margin
|
63.9%
|
-
|
|
63.9%
|
|
|
SG&A as a % of
Revenues
|
54.5%
|
(0.5)
|
|
54.0%
|
|
|
Operating margin
|
9.4%
|
0.6
|
(0.1)
|
9.9%
|
|
|
Effective tax rate
|
32.3%
|
0.4
|
0.1
|
32.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT
|
|
|
|
|
|
|
Latin America
|
$
139.5
|
$
(2.3)
|
|
$
137.2
|
|
|
North America
|
27.8
|
11.6
|
|
39.4
|
|
|
Central & Eastern
Europe
|
76.9
|
(2.9)
|
|
74.0
|
|
|
Western Europe, Middle East
& Africa
|
34.1
|
(0.9)
|
|
33.2
|
|
|
Asia Pacific
|
19.9
|
(0.5)
|
|
19.4
|
|
|
Global and other
|
(51.7)
|
9.7
|
|
(42.0)
|
|
|
Total
|
$
246.5
|
$
14.7
|
|
$
261.2
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
Latin America
|
12.3%
|
(0.2)
|
|
12.1%
|
|
|
North America
|
5.4%
|
2.3
|
|
7.7%
|
|
|
Central & Eastern
Europe
|
18.7%
|
(0.7)
|
|
18.0%
|
|
|
Western Europe, Middle East
& Africa
|
9.8%
|
(0.3)
|
0.1
|
9.6%
|
|
|
Asia Pacific
|
8.8%
|
(0.2)
|
(0.1)
|
8.5%
|
|
|
Global and other
|
-
|
-
|
|
-
|
|
|
Total
|
9.4%
|
0.6
|
(0.1)
|
9.9%
|
|
|
|
|
|
|
|
|
AVON
PRODUCTS, INC.
|
|
SUPPLEMENTAL
SCHEDULE
|
|
NON-GAAP
FINANCIAL MEASURES
|
|
(Unaudited)
|
|
|
|
|
|
$ in Millions (except per share
data)
|
THREE MONTHS
ENDED 03/31/10
|
|
|
Reported
(GAAP)
|
CTI
restructuring
initiatives
|
Venezuelan
special
items
|
Rounding
|
Adjusted
(Non-GAAP)
|
|
|
|
|
|
|
|
|
Cost of Sales
|
$
934.7
|
$
2.5
|
$
29.7
|
|
$
902.5
|
|
Selling, general and
administrative expenses
|
1,320.1
|
2.7
|
9.4
|
|
1,308.0
|
|
Operating profit
|
191.5
|
5.2
|
39.1
|
|
235.8
|
|
Income from continuing operations before taxes
|
126.3
|
5.2
|
85.2
|
|
216.7
|
|
Income taxes
|
(83.6)
|
(1.9)
|
12.7
|
(0.1)
|
(72.9)
|
|
Income from continuing
operations
|
$
42.7
|
$
3.3
|
$
97.9
|
$
(0.1)
|
$
143.8
|
|
|
|
|
|
|
|
|
Diluted EPS from continuing
operations
|
0.10
|
0.01
|
0.23
|
(0.01)
|
0.33
|
|
|
|
|
|
|
|
|
Gross margin
|
61.8%
|
0.1
|
1.2
|
|
63.1%
|
|
SG&A as a % of
Revenues
|
54.0%
|
(0.1)
|
(0.4)
|
|
53.5%
|
|
Operating margin
|
7.8%
|
0.2
|
1.6
|
|
9.6%
|
|
Effective tax rate
|
66.2%
|
0.1
|
(32.7)
|
|
33.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
PROFIT
|
|
|
|
|
|
|
Latin America
|
$
88.0
|
$
2.3
|
$
39.1
|
|
$
129.4
|
|
North America
|
43.7
|
4.3
|
-
|
|
48.0
|
|
Central & Eastern
Europe
|
68.6
|
1.4
|
-
|
|
70.0
|
|
Western Europe, Middle East
& Africa
|
22.2
|
(1.3)
|
-
|
|
20.9
|
|
Asia Pacific
|
15.0
|
(0.5)
|
-
|
|
14.5
|
|
Global and other
|
(46.0)
|
(1.0)
|
-
|
|
(47.0)
|
|
Total
|
$
191.5
|
$
5.2
|
$
39.1
|
|
$
235.8
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
MARGIN
|
|
|
|
|
|
|
Latin America
|
9.1%
|
0.2
|
4.0
|
|
13.3%
|
|
North America
|
8.4%
|
0.8
|
-
|
|
9.2%
|
|
Central & Eastern
Europe
|
16.7%
|
0.3
|
-
|
0.1
|
17.1%
|
|
Western Europe, Middle East
& Africa
|
7.4%
|
(0.4)
|
-
|
|
7.0%
|
|
Asia Pacific
|
6.2%
|
(0.2)
|
-
|
|
6.0%
|
|
Global and other
|
-
|
-
|
-
|
|
-
|
|
Total
|
7.8%
|
0.2
|
1.6
|
|
9.6%
|
|
|
|
|
|
|
|
SOURCE Avon Products, Inc.