Results of Operations by Quarter (Unaudited)



2016	First			Second			Third			Fourth			Year
Total revenue	$	1,306.5		$	1,434.3		$	1,408.8		$	1,568.1		$	5,717.7
Gross profit	787.7			869.3			857.9			945.8			3,460.7
Operating profit⁽¹⁾	7.8			95.1			112.0			107.0			321.9
(Loss) income from continuing operations, before taxes⁽²⁾	(158.1		)	71.9			74.6			42.8			31.2
(Loss) income from continuing operations, net of tax⁽³⁾	(155.8		)	35.8			36.3			(9.7		)	(93.4		)
Loss from discontinued operations, net of tax	(9.6		)	(2.6		)	(.7		)	(1.1		)	(14.0		)
Net (income) loss attributable to noncontrolling interests	(.5		)	(.2		)	.4			.1			(.2		)
Net (loss) income attributable to Avon	$	(165.9	)	$	33.0		$	36.0		$	(10.7	)	$	(107.6	)

(Loss) earnings per common share from continuing operations
Basic	$	(.38	)	$	.07		$	.07		$	(.03	)	$	(.25	)	(4)
Diluted	(.38		)	.07			.07			(.03		)	(.25		)	(4)



2015	First			Second			Third			Fourth			Year
Total revenue	$	1,552.1		$	1,564.9		$	1,436.2		$	1,607.3		$	6,160.5
Gross profit	940.4			953.9			877.2			943.6			3,715.1
Operating (loss) profit⁽¹⁾	(32.9		)	89.7			45.3			62.9			165.0
(Loss) income from continuing operations, before taxes⁽²⁾	(76.7		)	61.2			31.0			7.2			22.7
(Loss) income from continuing operations, net of tax⁽³⁾	(142.6		)	28.9			(668.0		)	(14.8		)	(796.5		)
(Loss) income from discontinued operations, net of tax	(3.8		)	.8			(29.0		)	(317.1		)	(349.1		)
Net income attributable to noncontrolling interests	(.9		)	(.9		)	—			(1.5		)	(3.3		)
Net (loss) income attributable to Avon	$	(147.3	)	$	28.8		$	(697.0	)	$	(333.4	)	$	(1,148.9	)

(Loss) earnings per common share from continuing operations
Basic	$	(.33	)	$	.06		$	(1.51	)	$	(.04	)	$	(1.81	)	(4)
Diluted	(.33		)	.06			(1.51		)	(.04		)	(1.81		)	(4)

(1) Operating profit (loss) was impacted by the following:



2016	First		Second		Third			Fourth		Year
Costs to implement restructuring initiatives:
Cost of sales	$	—	$	.3	$	—		$	.3	$	.6
Selling, general and administrative expenses	46.8		9.1		14.0			6.9		76.8
Total costs to implement restructuring initiatives	$	46.8	$	9.4	$	14.0		$	7.2	$	77.4
Legal settlement	$	—	$	—	$	(27.2	)	$	—	$	(27.2	)

2015	First		Second		Third			Fourth		Year
Costs to implement restructuring initiatives:
Cost of sales	$	—	$	—	$	—		$	—	$	—
Selling, general and administrative expenses	27.2		2.9		(1.9		)	20.9		49.1
Total costs to implement restructuring initiatives	$	27.2	$	2.9	$	(1.9	)	$	20.9	$	49.1
Venezuelan special items	$	106.4	$	6.2	$	5.7		$	1.9	$	120.2
Pension settlement charge	$	—	$	—	$	6.2		$	1.1	$	7.3
Other items	$	—	$	—	$	—		$	3.1	$	3.1
Asset impairment and other charges	$	—	$	—	$	—		$	6.9	$	6.9

In addition to the items impacting operating profit (loss) above:


(2)	(Loss) income from continuing operations, before taxes during 2016 was impacted by:

•

the deconsolidation of our Venezuelan operations. As a result of the change to the cost method of accounting, in the first quarter of 2016 we recorded a loss of $120.5 in other expense, net. The loss was comprised of $39.2 in net assets of the Venezuelan business and $81.3 in accumulated foreign currency translation adjustments within AOCI associated with foreign currency movements before Venezuela was accounted for as a highly inflationary economy;

•

a gain on extinguishment of debt of $3.9 before and after tax in the third quarter caused by the deferred gain associated with interest-rate swap agreement terminations, partially offset by the early tender premium paid, the deferred loss associated with treasury lock agreements, deal costs and the write-off of debt issuance costs and discounts associated with the cash tender offers in August 2016;


•	a loss on extinguishment of debt of $1.0 before and after tax in the fourth quarter caused by the premium paid for the repurchases, the write-off of debt issuance costs and discounts and the deferred loss associated with treasury lock agreements, partially offset by the deferred gain associated with interest-rate swap agreement terminations associated with the debt repurchases in October 2016;

•

a loss on extinguishment of debt of $2.9 before and after tax in the fourth quarter caused by the make-whole premium, the deferred loss associated with treasury lock agreements and the write-off of debt issuance costs and discounts and partially offset by the deferred gain associated with interest-rate swap agreement terminations associated with the prepayment of the remaining principal amount of the 4.20% Notes (as defined in Note 6, Debt and Other Financing) and 5.75% Notes (as defined in Note 6, Debt and Other Financing); and


•	a gain on extinguishment of debt of $1.1 before and after tax in the fourth quarter consisting of the discount received for the repurchases, partially offset by the write-off of debt issuance costs and discounts associated with the debt repurchases in December 2016.

(Loss) income from continuing operations, before taxes during 2015 was impacted by:


•	an after-tax benefit of $3.4 (benefit of $4.2 in other expense, net, and a loss of $.8 in income taxes) recorded in the first quarter, primarily reflecting the write-down of net monetary assets due to the change to the SIMADI rate;


•	the gain on sale of Liz Earle of $44.9 before tax ($51.6 after tax), primarily recorded in the third quarter;


•	a loss on extinguishment of debt of $5.5 before and after tax in the third quarter caused by the make-whole premium and the write-off of debt issuance costs and discounts, associated with the prepayment of the 2.375% Notes (as defined in Note 6, Debt and Other Financing); and


•	a charge of $2.5 before and after tax in the second quarter of 2015 associated with the write-off of issuance costs related to our previous $1 billion revolving credit facility.

(3)

(Loss) income from continuing operations, net of tax during 2016 was impacted by a non-cash income tax charge for valuation allowances for deferred tax assets outside of the U.S of $8.6, which was recorded in the fourth quarter, the release of a valuation allowance associated with Russia of $7.1 which was recorded in the second quarter, and an income tax benefit of $29.3 recognized as the result of the implementation of foreign tax planning strategies which was recorded in the first quarter.

(Loss) income from continuing operations, net of tax during 2015 was impacted by an aggregate non-cash income tax charge of $685.1. This was primarily due to additional valuation allowances for U.S. deferred tax assets of $641.6 and $31.3 which were recorded in the third and first quarters of 2015, respectively, partially offset by a partial release of a valuation allowance for deferred tax assets of $3.2 which was recorded in the second quarter of 2015. The additional valuation allowances in the third and first quarters of 2015 was due to the continued strengthening of the U.S. dollar against currencies of some of our key markets and the impact on the benefits from our tax planning strategies associated with the realization of our deferred tax assets. The partial release of the valuation allowance in the second quarter of 2015 was due to the weakening of the U.S. dollar against currencies of some of our key markets. In addition, the non-cash income tax charge was due to valuation allowances for deferred tax assets outside of the U.S. of $15.4, primarily in Russia, which was recorded in the third quarter of 2015, which was largely due to lower earnings, which were significantly impacted by foreign exchange losses on working capital balances. In addition, (loss) income from continuing operations, net of tax during 2015 was impacted by an income tax benefit of $18.7, which was recorded in the fourth quarter of 2015, recognized as a result of the implementation of the initial stages of foreign tax planning strategies.


(4)	The sum of per share amounts for the quarters does not necessarily equal that for the year because the computations were made independently.

See Note 15, Restructuring Initiatives, "Results Of Operations - Consolidated" within MD&A on pages 35 through 47, Note 13, Segment Information, "Venezuela Discussion" within MD&A on pages 41 through 42, Note 1, Description of the Business and Summary of Significant Accounting Policies, Note 12, Employee Benefit Plans, Note 18, Goodwill, Note 17, Contingencies, Note 6, Debt and Other Financing, Note 3, Discontinued Operations and Divestitures and Note 8, Income Taxes, for more information on these items.