Avon 2013 Annual Report Download - page 125

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2012 First(1) Second(1) Third Fourth Year
Total revenue $2,540.4 $2,558.2 $2,510.6 $2,952.2 $10,561.4
Gross profit 1,545.7 1,608.5 1,539.4 1,764.7 6,458.3
Operating profit(2) 72.7 128.9 110.6 212.8 525.0
Income from continuing operations, before taxes(3) 42.0 93.0 82.3 211.4 428.7
Income (loss) from continuing operations, net of tax(4) 28.2 65.1 36.2 (36.2) 93.3
Loss from discontinued operations, net of tax (.6) (2.4) (3.6) (124.9) (131.5)
Net income attributable to noncontrolling interests (1.1) (1.1) (1.0) (1.1) (4.3)
Net income (loss) attributable to Avon $ 26.5 $ 61.6 $ 31.6 $ (162.2) $ (42.5)
Earnings (loss) per share from continuing operations
Basic $ .06 $ .15 $ .08 $ (.08) $ .20(5)
Diluted $ .06 $ .15 $ .08 $ (.08) $ .20(5)
(1) As discussed in Note 1, Description of the Business and Summary of Significant Accounting Policies, we recorded out-of-period adjustments in 2012 that
related to prior periods.
2012
During the first quarter of 2012, we recorded an out-of-period adjustment which decreased earnings by approximately $14 before tax ($10 after tax) which
related to 2011 and was associated with bad debt expense in our South Africa operations.
During the second quarter of 2012, we recorded an out-of-period adjustment which increased earnings by approximately $5 before tax ($3 after tax) which
related to prior years and was associated with vendor liabilities in North America. During the second quarter of 2012, we recorded an out-of-period
adjustment which decreased earnings by approximately $4 before tax ($4 after tax) which related to prior years and was associated with brochure costs in
Poland.
In addition to the adjustments previously mentioned, in 2012, we also recorded out-of-period adjustments in the aggregate of approximately $1 before tax
($5 after tax) that related to prior years.
We evaluated the out-of-period adjustments in 2012, both individually and in the aggregate, in relation to the quarterly and annual periods in which they
originated and the annual period in which they were corrected, and concluded that these adjustments were not material to the consolidated annual
financial statements for all impacted periods.
(2) Operating profit (loss) was impacted by the following:
2013 First Second Third Fourth Year
Costs to implement restructuring initiatives:
Cost of sales $ (.6) $ (.3) $ – $ – $ (.9)
Selling, general and administrative expenses 20.9 8.7 (.2) 37.4 66.8
Total costs to implement restructuring initiatives $ 20.3 $ 8.4 $ (.2) $ 37.4 $ 65.9
Venezuelan special items $ 13.3 $ 16.5 $ 14.9 $ 4.9 $ 49.6
FCPA accrual $ – $ 12.0 $ – $ 77.0 $ 89.0
Asset impairment and other charges $ – $ – $ 42.1 $117.2 $159.3
2012 First Second Third Fourth Year
Costs to implement restructuring initiatives:
Cost of sales $ 2.7 $ .7 $ (.2) $ 1.3 $ 4.5
Selling, general and administrative expenses 24.6 37.5 1.8 56.3 120.2
Total costs to implement restructuring initiatives $ 27.3 $ 38.2 $ 1.6 $ 57.6 $124.7
Asset impairment and other charges $ – $ – $ 44.0 $ – $ 44.0
(3) In addition to the items impacting operating profit (loss) above, income (loss) from continuing operations, before taxes during 2013 was impacted by a one-
time, after-tax loss of $50.7 ($34.1 in other expense, net and $16.6 in income taxes) recorded in the first quarter, primarily reflecting the write-down of
monetary assets and liabilities and deferred tax benefits due to the devaluation of Venezuelan currency. Income (loss) from continuing operations, before
taxes during 2013 was also impacted by a loss on extinguishment of debt of $73.0 before tax 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 our Private Notes (as defined in Note 5, Debt and Other Financing), as
well as the write-off of debt issuance costs associated with the early repayment of $380.0 of the outstanding principal amount of the term loan agreement
(as defined in Note 5, Debt and Other Financing). In addition, income (loss) from continuing operations, before taxes during 2013 was impacted by a losson
A V O N 2013 F-55