Avon 2007 Annual Report Download - page 41

$117.0 associated with restructuring charges, and additional cash
payments associated with other costs to implement restructuring
initiatives. To a lesser extent, unfavorable working capital levels in
inventory and accounts receivable contributed to the decrease in
net cash provided by operating activities. These decreases in oper-
ating cash flow were partially offset by favorable working capital
levels in accounts payable and lower payments associated with
incentive compensation as compared to 2005.
Net Cash Used by Investing Activities
Net cash used by investing activities in 2007 was $79.3 higher
than in 2006 resulting from higher capital expenditures during
2007 and from payments associated with an acquisition of a
licensee in Egypt during 2007, partially offset by the acquisition
of the remaining minority interest in our two joint venture sub-
sidiaries in China for approximately $39 during 2006.
Capital expenditures during 2007 were $278.5 compared with
$174.8 in 2006. The increase in capital spending was primarily
driven by spending in 2007 for capacity expansion, the con-
struction of a new distribution facility in North America and
information systems (including the continued development of the
ERP system). Plant construction, expansion and modernization
projects were in progress at December 31, 2007, with an esti-
mated cost to complete of approximately $308. Capital
expenditures in 2008 are currently expected to be in the range of
$350 to $400 and will be funded by cash from operations. These
expenditures will include investments for capacity expansion,
modernization of existing facilities, the construction of new dis-
tribution facilities in Latin America and information systems
(including the continued development of the ERP system).
Net cash used by investing activities in 2006 was $135.2 lower
than in 2005 resulting from lower capital expenditures due to
fewer major construction projects during 2006, and the 2005
purchase of the Avon direct-selling business from our licensee in
Colombia for $154.0, partially offset by the 2006 acquisition of
the remaining minority interest in our two joint venture sub-
sidiaries in China for approximately $39.
Capital expenditures during 2006 were $174.8 compared with
$206.8 in 2005. The decrease in capital spending was primarily
driven by spending in 2005 for our global research and
development facility, capacity expansion and an enterprise
resource planning (“ERP”) system.
Net Cash Used by Financing Activities
Net cash used by financing activities in 2007 was $106.7 higher
than in 2006, mainly driven by higher repurchases of common
stock during 2007, partially offset by higher short-term borrow-
ings and higher proceeds from stock option exercises during 2007.
Net cash used by financing activities in 2006 was $263.7 higher
than in 2005, mainly driven by higher borrowings during 2005 and
lower proceeds from stock option exercises during 2006, partially
offset by lower repurchases of common stock during 2006.
We purchased approximately 17.3 million shares of Avon
common stock for $666.8 during 2007, as compared to approx-
imately 11.6 million shares of Avon common stock for $355.1
during 2006 and approximately 22.9 million shares of Avon
common stock for $728.0 during 2005, under our previously
announced share repurchase programs and through acquisition
of stock from employees in connection with tax payments upon
vesting of restricted stock units. As noted previously, we com-
pleted our $1,000.0 share repurchase program in December
2007 and in October 2007, the Board of Directors authorized
the repurchase of $2,000.0 of our common stock over a five-
year period, which began in December 2007 following com-
pletion of the previous $1,000.0 share repurchase program.
We increased our quarterly dividend payments to $.185 per
share in 2007 from $.175 per share in 2006. In February 2008,
our Board approved an increase in the quarterly dividend to
$.200 per share.
A V O N 2007 35