Avon 2015 Annual Report Download - page 98
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
net assets to be contributed into NewCo, including certain pension and postretirement benefit plan liabilities and amounts in AOCI
associated with the North America business, which were primarily unrecognized losses associated with our U.S. defined benefit pension
plan, and costs to sell, as compared to the implied value of our ownership interests in NewCo which will be $43. The actual total loss on sale
will be dependent on a number of factors including discount rates and the actual return on plan assets. Post-separation, the Company will
account for its ownership interests in NewCo using the equity method of accounting, which will result in the Company recognizing its
proportionate share of NewCo’s income or loss.
NewCo will enter into a perpetual, irrevocable royalty-free licensing agreement with the Company for the use of the Avon brand and certain
other intellectual property. There will also be transition services agreements which include, among other things, information technology,
human resources and supply chain services and other commercial agreements, including research and development and manufacturing.
The major classes of financial statement components comprising the loss on discontinued operations, before tax for North America are
shown below:
Year ended December 31,
2015 2014 2013
Total revenue $1,012.5 $1,203.4 $1,458.2
Cost of sales 404.0 492.4 599.7
Selling, general and administrative
expenses(1) 606.2 745.2 971.1
Operating income (loss)(1) 2.3 (34.2) (112.6)
Other expense items 3.2 2.4 2.7
Loss from discontinued operations, before
tax(1) (.9) (36.6) (115.3)
Loss on sale of discontinued operations,
before tax (340.0) – –
Loss from discontinued operations, before
tax(1) $ (340.9) $ (36.6) $ (115.3)
(1) Includes a capitalized software impairment charge of $117.2 during 2013, as discussed below.
7553_fin.pdf 88