COTY INC. (Form: 10-Q, Received: 05/10/2017 17:31:37)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2017
				OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE TRANSITION PERIOD FROM TO
			COMMISSION FILE NUMBER 001-35964

COTY INC.

(Exact name of registrant as specified in its charter)



Delaware		13-3823358
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

350 Fifth Avenue, New York, NY		10118
(Address of principal executive offices)		(Zip Code)

(212) 389-7300

Registrant’s telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



	Large accelerated filer ý		Accelerated filer ¨
	Non-accelerated filer ¨		(Do not check if a smaller reporting company)
			Smaller reporting company ¨
			Emerging growth company ¨
	If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

At May 3, 2017 , 747,638,332 shares of the registrant’s Class A Common Stock, $0.01 par value, were outstanding.

COTY INC.

INDEX TO FORM 10-Q



		Page
Part I:	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2017 and 2016	1
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2017 and 2016	2
	Condensed Consolidated Balance Sheets as of March 31, 2017 and June 30, 2016	3
	Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests for the nine months ended March 31, 2017 and 2016	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2017 and 2016	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 4.	Controls and Procedures	64

Part II:	OTHER INFORMATION
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 6.	Exhibits	66

Signatures		67

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data )

(Unaudited )



	Three Months Ended March 31,						Nine Months Ended March 31,
	2017			2016			2017			2016
Net revenues	$	2,032.1		$	950.7		$	5,409.0		$	3,273.5
Cost of sales	816.1			369.0			2,153.2			1,280.4
Gross profit	1,216.0			581.7			3,255.8			1,993.1
Selling, general and administrative expenses	1,092.4			494.2			2,741.5			1,493.9
Amortization expense	102.6			20.9			219.0			59.0
Restructuring costs	155.8			6.6			179.0			79.3
Acquisition-related costs	57.7			37.0			275.1			98.3
Asset impairment charges	—			—			—			5.5
Operating (loss) income	(192.5		)	23.0			(158.8		)	257.1
Interest expense, net	60.8			25.1			159.1			55.7
Loss on early extinguishment of debt	—			—			—			3.1
Other (income) expense, net	(0.5		)	6.6			0.2			30.4
(Loss) income before income taxes	(252.8		)	(8.7		)	(318.1		)	167.9
(Benefit) provision for income taxes	(93.4		)	11.6			(220.6		)	(42.5		)
Net (loss) income	(159.4		)	(20.3		)	(97.5		)	210.4
Net income attributable to noncontrolling interests	3.5			2.4			14.2			12.1
Net income attributable to redeemable noncontrolling interests	1.3			4.1			5.7			10.4
Net (loss) income attributable to Coty Inc.	$	(164.2	)	$	(26.8	)	$	(117.4	)	$	187.9
Net (loss) income attributable to Coty Inc. per common share:
Basic	$	(0.22	)	$	(0.08	)	$	(0.19	)	$	0.54
Diluted	(0.22		)	(0.08		)	(0.19		)	0.53
Weighted-average common shares outstanding:
Basic	747.3			337.9			607.9			347.8
Diluted	747.3			337.9			607.9			356.9

Cash dividend declared per common share	$	0.125		$	—		$	0.525		$	0.250

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)



	Three Months Ended March 31,						Nine Months Ended March 31,
	2017			2016			2017			2016
Net (loss) income	$	(159.4	)	$	(20.3	)	$	(97.5	)	$	210.4
Other comprehensive income (loss):
Foreign currency translation adjustment	87.1			57.4			(9.2		)	38.6
Net unrealized derivative gains on cash flow hedges, net of taxes of $(1.8) and $1.0, and $(10.5) and $0.3 during the three and nine months ended, respectively	3.0			(21.9		)	44.9			(14.6		)
Pension and other post-employment benefits (losses) adjustment, net of tax of nil and nil, and $(5.8) and nil during the three and nine months ended, respectively	—			—			10.1			0.2
Total other comprehensive income, net of tax	90.1			35.5			45.8			24.2
Comprehensive (loss) income	(69.3		)	15.2			(51.7		)	234.6
Comprehensive income attributable to noncontrolling interests:
Net income	3.5			2.4			14.2			12.1
Foreign currency translation adjustment	0.3			1.2			(0.2		)	0.9
Total comprehensive income attributable to noncontrolling interests	3.8			3.6			14.0			13.0
Comprehensive income attributable to redeemable noncontrolling interests:
Net income	1.3			4.1			5.7			10.4
Foreign currency translation adjustment	—			0.2			—			0.2
Total comprehensive income attributable to redeemable noncontrolling interests	1.3			4.3			5.7			10.6
Comprehensive (loss) income attributable to Coty Inc.	$	(74.4	)	$	7.3		$	(71.4	)	$	211.0

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data )

(Unaudited)



	March 31, 2017			June 30, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	767.0		$	372.4
Restricted cash	25.0			—
Trade receivables—less allowances of $81.7 and $35.2, respectively	1,380.9			682.9
Inventories	1,034.3			565.8
Prepaid expenses and other current assets	380.4			206.8
Deferred income taxes	158.6			110.5
Total current assets	3,746.2			1,938.4
Property and equipment, net	1,555.8			638.6
Goodwill	8,111.8			2,212.7
Other intangible assets, net	8,968.8			2,050.1
Deferred income taxes	100.9			15.7
Other noncurrent assets	289.8			180.1
TOTAL ASSETS	$	22,773.3		$	7,035.6
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,456.5		$	921.4
Accrued expenses and other current liabilities	1,558.7			748.4
Short-term debt and current portion of long-term debt	193.0			161.8
Income and other taxes payable	9.7			18.7
Deferred income taxes	39.8			4.9
Total current liabilities	3,257.7			1,855.2
Long-term debt, net	6,909.3			3,936.4
Pension and other post-employment benefits	603.6			230.6
Deferred income taxes	1,480.2			339.2
Other noncurrent liabilities	385.5			233.8
Total liabilities	12,636.3			6,595.2
COMMITMENTS AND CONTINGENCIES (Note 22)
REDEEMABLE NONCONTROLLING INTERESTS	506.4			73.3
EQUITY:
Preferred Stock, $0.01 par value; 20.0 shares authorized, 4.2 and 1.7 issued and outstanding at March 31, 2017 and June 30, 2016, respectively	—			—
Class A Common Stock, $0.01 par value; 1,000.0 and 800.0 shares authorized, 812.6 and 138.7 issued and 747.6 and 75.1 outstanding, at March 31, 2017 and June 30, 2016, respectively	8.1			1.4
Class B Common Stock, $0.01 par value; 0.0 and 262.0 shares authorized, 0.0 and 262.0 issued and outstanding at March 31, 2017 and June 30, 2016, respectively	—			2.6
Additional paid-in capital	11,391.5			2,038.4
Accumulated deficit	(154.4		)	(37.0		)
Accumulated other comprehensive loss	(193.7		)	(239.7		)
Treasury stock—at cost, shares: 65.0 and 63.6 at March 31, 2017 and June 30, 2016, respectively	(1,441.8		)	(1,405.5		)
Total Coty Inc. stockholders’ equity	9,609.7			360.2
Noncontrolling interests	20.9			6.9
Total equity	9,630.6			367.1
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	22,773.3		$	7,035.6

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND

REDEEMABLE NONCONTROLLING INTERESTS

For the Nine Months Ended March 31, 2017

(In millions, except per share data)

(Unaudited)



	Preferred Stock			Class A Common Stock			Class B Common Stock					Additional Paid-in			(Accumulated			Accumulated Other Comprehensive			Treasury Stock				Total Coty Inc. Stockholders’			Noncontrolling			Total			Redeemable Noncontrolling
	Shares	Amount		Shares	Amount		Shares		Amount			Capital			Deficit)			Loss			Shares	Amount			Equity			Interests			Equity			Interests
BALANCE—July 1, 2016	1.7	$	—	138.7	$	1.4	262.0		$	2.6		$	2,038.4		$	(37.0	)	$	(239.7	)	63.6	$	(1,405.5	)	$	360.2		$	6.9		$	367.1		$	73.3
Issuance of Class A Common Stock for business combination				409.7	4.1							9,624.5													9,628.6						9,628.6
Issuance of Preferred Stock	2.5	—
Conversion of Class B to Class A Common Stock				262.0	2.6		(262.0	)	(2.6		)	—													—						—
Purchase of Class A Common Stock																					1.4	(36.3		)	(36.3		)				(36.3		)
Exercise of employee stock options and restricted stock units and related tax benefits				2.2	—							19.5													19.5						19.5
Share-based compensation expense												15.2													15.2						15.2
Dividends												(281.2		)											(281.2		)				(281.2		)
Net (loss) income															(117.4		)								(117.4		)	14.2			(103.2		)	5.7
Other comprehensive (loss) income																		46.0							46.0			(0.2		)	45.8			—
Distribution to noncontrolling interests, net																																		(7.5		)
Redeemable noncontrolling interest due to business combination (Note 3)																																		410.9
Adjustment of redeemable noncontrolling interests to redemption value												(24.9		)											(24.9		)				(24.9		)	24.9
Adjustment to repurchase of redeemable noncontrolling interests																																		(0.9		)
BALANCE—March 31, 2017	4.2	$	—	812.6	$	8.1	—		$	—		$	11,391.5		$	(154.4	)	$	(193.7	)	65.0	$	(1,441.8	)	$	9,609.7		$	20.9		$	9,630.6		$	506.4

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND

REDEEMABLE NONCONTROLLING INTERESTS

For the Nine Months Ended March 31, 2016

(In millions, except per share data)

(Unaudited)



	Preferred Stock			Class A Common Stock			Class B Common Stock			Additional Paid-in			(Accumulated			Accumulated Other Comprehensive			Treasury Stock				Total Coty Inc. Stockholders’			Noncontrolling			Total			Redeemable Noncontrolling
	Shares		Amount	Shares	Amount		Shares	Amount		Capital			Deficit)			Loss			Shares	Amount			Equity			Interests			Equity			Interests
BALANCE—July 1, 2015	1.9		—	134.0	$	1.3	262.0	$	2.6	$	2,044.4		$	(193.9	)	$	(274.0	)	35.2	$	(610.6	)	$	969.8		$	14.9		$	984.7		$	86.3
Cancellation of Preferred Stock	(0.2	)								(0.1		)											(0.1		)				(0.1		)
Purchase of Class A Common Stock																			25.9	(727.9		)	(727.9		)				(727.9		)
Reclassification of Class A Common Stock from liability to APIC										13.8													13.8						13.8
Exercise of employee stock options and restricted stock units and related tax benefits				3.9	0.1					36.7													36.8						36.8
Series A Preferred share-based compensation expense										1.1													1.1						1.1
Share-based compensation expense										17.3													17.3						17.3
Dividends										(89.7		)											(89.7		)				(89.7		)
Net income													187.9										187.9			12.1			200.0			10.4
Other comprehensive loss																23.1							23.1			0.9			24.0			0.2
Distribution to noncontrolling interests, net																										(16.3		)	(16.3		)	(6.6		)
Adjustment of redeemable noncontrolling interests to redemption value										11.3													11.3						11.3			(11.3		)
BALANCE—March 31, 2016	1.7		—	137.9	$	1.4	262.0	$	2.6	$	2,034.8		$	(6.0	)	$	(250.9	)	61.1	$	(1,338.5	)	$	443.4		$	11.6		$	455.0		$	79.0

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



	Nine Months Ended March 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(97.5	)	$	210.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	414.9			171.0
Asset impairment charges	—			5.5
Deferred income taxes	(298.3		)	(102.6		)
Provision for bad debts	23.3			1.9
Provision for pension and other post-employment benefits	44.7			9.3
Share-based compensation	19.1			18.4
Loss on early extinguishment of debt	—			3.1
Other	(0.6		)	13.1
Change in operating assets and liabilities, net of effects from purchase of acquired companies:
Trade receivables	(216.2		)	(0.9		)
Inventories	172.6			25.0
Prepaid expenses and other current assets	(6.5		)	10.9
Accounts payable	339.3			50.4
Accrued expenses and other current liabilities	345.4			39.9
Income and other taxes payable	3.1			(31.0		)
Other noncurrent assets	9.9			8.8
Other noncurrent liabilities	(46.5		)	12.1
Net cash provided by operating activities	706.7			445.3
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(324.0		)	(115.1		)
Payment for business combinations, net of cash acquired	(742.6		)	(897.3		)
Proceeds from sale of asset	10.5			—
Payments related to loss on foreign currency contracts	—			(29.6		)
Net cash used in investing activities	(1,056.1		)	(1,042.0		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt, original maturity more than three months	9.5			17.0
Repayments of short-term debt, original maturity more than three months	(9.7		)	(22.2		)
Net (repayments) proceeds from short-term debt, original maturity less than three months	(48.7		)	6.1
Proceeds from revolving loan facilities	1,809.4			1,590.0
Repayments of revolving loan facilities	(1,624.4		)	(620.0		)
Proceeds from term loans	1,075.0			2,979.6
Repayments of term loans	(95.7		)	(2,474.7		)
Dividend paid	(279.2		)	(89.0		)
Net proceeds from issuance of Class A Common Stock and Series A Preferred Stock and related tax benefits	19.5			36.8
Payments for purchases of Class A Common Stock held as Treasury Stock	(36.3		)	(727.9		)
Net proceeds from foreign currency contracts	3.8			8.9
Payments for mandatorily redeemable noncontrolling interests	—			(1.7		)
Purchase of additional noncontrolling interests	(9.8		)	—
Distributions to noncontrolling interests and redeemable noncontrolling interests	(7.5		)	(23.5		)
Payment of deferred financing fees	(24.8		)	(56.3		)
Other	—			(1.4		)
Net cash provided by financing activities	781.1			621.7
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(12.1		)	0.3
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	419.6			25.3
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period	372.4			341.3
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period	$	792.0		$	366.6
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

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Cash paid during the period for interest	$	132.9	$	57.8
Cash paid during the period for income taxes, net of refunds received	63.6		89.0
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
Accrued capital expenditure additions	$	70.8	$	39.5
Non-cash Common Stock issued for business combination	9,628.6		—
Non-cash debt assumed for business combination	1,943.0		—
Non-cash capital contribution associated with special share purchase transaction	—		13.8
Non-cash redeemable noncontrolling interest for business combinations	410.9		—

See notes to Condensed Consolidated Financial Statements

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COTY INC. & SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

(Unaudited)

1. DESCRIPTION OF BUSINESS

Coty Inc. and its subsidiaries (collectively, the “Company” or “Coty”) manufacture, market, sell and distribute branded beauty products, including fragrances, color cosmetics, hair care products and skin & body related products. Coty is a global beauty company and a new leader and challenger in the beauty industry.

On October 1, 2016, the Company completed its acquisition of certain assets and liabilities related to The Procter & Gamble Company’s (“P&G”) global fine fragrances, salon professional, cosmetics and retail hair color businesses, along with select hair styling brands (the “P&G Beauty Business”). The P&G Beauty Business manufactures, markets and sells various branded beauty products globally including professional and retail hair care, coloring and styling products, fine fragrances and color cosmetics primarily through salons, mass merchandisers, grocery stores, drug stores, department stores and distributors. Refer to Note 3—Business Combinations.

After the closing of the P&G Beauty Business acquisition, the Company reorganized its business into three new divisions: the Luxury division, focused on prestige fragrances, premium skin care and premium cosmetics; the Consumer Beauty division, focused on color cosmetics, retail hair coloring and styling products, mass fragrance, mass skin care and body care; and the Professional Beauty division, focused on hair and nail care products for professionals. In this new organizational structure, each division has full end-to-end responsibility to optimize consumers’ beauty experience in the relevant categories and channels. The three divisions also comprise the Company’s operating and reportable segments.

The Company operates on a fiscal year basis with a year-end of June 30 . Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2017 ” refer to the fiscal year ending June 30, 2017 .

The Company’s revenues generally increase during the second fiscal quarter as a result of increased demand associated with the holiday season. Accordingly, the Company’s financial performance, working capital requirements, cash flow and borrowings experience seasonal variability during the three to six months preceding this season.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim Condensed Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and include consolidated domestic and international subsidiaries. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these unaudited interim Condensed Consolidated Financial Statements and accompanying footnotes should be read in conjunction with the Company’s Consolidated Financial Statements as of and for the year ended June 30, 2016 . In the opinion of management, all adjustments, of a normal recurring nature, considered necessary for a fair presentation have been included in the Condensed Consolidated Financial Statements. The results of operations for the three and nine months ended March 31, 2017 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending June 30, 2017 . All dollar amounts (other than per share amounts) in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated.

Restricted Cash

Restricted cash represents funds that are not readily available for general purpose cash needs due to contractual limitations. Restricted cash is classified as a current or long-term asset based on the timing and nature of when or how the cash is expected to be used or when the restrictions are expected to lapse. As of March 31, 2017 and June 30, 2016, the Company had restricted cash of $25.0 and $0.0 , respectively, included in Restricted cash in the Condensed Consolidated Balance Sheets. The restricted cash balance as of March 31, 2017 provides collateral for certain bank guarantees on rent, customs and duty accounts. Restricted cash is included as a component of Cash, cash equivalents, and restricted cash in the Condensed Consolidated Statement of Cash Flows.

Customer Loans

Following the closing of the P&G Beauty Business acquisition, the Company now provides loans to certain customers to help finance salon openings, renovations and other improvements. In exchange for this financing, customers become contractually obligated to purchase products from the Company. Certain customer loans may be provided at favorable rates, including interest-free or with below-market interest rates. Customer loans are initially recorded at fair value not to exceed the face value of the loan. The fair value is based on a market based measurement using published market interest rates in the

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country of loan origin. The difference between the face value (generally the amount advanced) and fair value of the loan at origination is reported as a reduction in net sales in the Condensed Consolidated Statements of Operations. The value of the loan after initial recognition is reduced for principal repayments, net of any allowances for uncollectibility. Customer loan payments are allocated between principal and related interest, as appropriate. Payments are received either in the form of scheduled cash payments or via partial or complete offset against rebates or other allowances earned by customers from product purchases. Allowances for uncollectible loans are recorded based on management’s assessment of objective evidence of potential uncollectibility. The portion of customer loans due within one year, net of an allowance for uncollectible loans was $15.9 as of March 31, 2017 and is recorded within Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheet. The portion of customer loans due in greater than one year, net of an allowance for uncollectible loans was $17.0 as of March 31, 2017 and is recorded within Other noncurrent assets in the Condensed Consolidated Balance Sheet.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, the market value of inventory, the fair value of acquired assets and liabilities associated with acquisitions, the fair value of share-based compensation, the fair value of the Company’s reporting units, and the assessment of goodwill, other intangible assets and long-lived assets for impairment, the valuation of redeemable noncontrolling interests, income taxes and pension and post-employment benefits. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the Condensed Consolidated Financial Statements in future periods.

Recently Adopted Accounting Pronouncements

In November 2016, the FASB issued authoritative guidance amending the classification and presentation of restricted cash on the statement of cash flows. The amendments will require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company early adopted this guidance in the second quarter of fiscal 2017 and has applied a retrospective transition method for each period presented. Accordingly, restricted cash and restricted cash equivalents has been reclassified as a component of Cash, cash equivalents, and restricted cash in the Condensed Consolidated Statement of Cash Flows for all periods presented.

In April 2015, the FASB issued authoritative guidance on the treatment of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this guidance as of the first quarter ended September 30, 2016. With respect to the Company’s Revolving Credit Facility (as defined in Note 13 - Debt), the Company has elected to classify unamortized debt issuance costs within the liability section of the balance sheet (as a contra-liability). In circumstances where the unamortized debt issuance costs exceeds the outstanding balance of the Coty Revolving Credit Facility or the Galleria Revolving Credit Facility, the amount of unamortized debt issuance costs exceeding the outstanding balance will be reclassified to assets. The Company has applied the change in accounting principle with retrospective application to prior periods. As such, the amounts previously reported as Other noncurrent assets and Long-term debt, net in the Condensed Consolidated Balance Sheet as of June 30, 2016 were decreased by $64.6 , respectively, for the reclassification of debt issuance costs from assets to liabilities. The change in accounting principle does not have an impact on the Company’s Condensed Consolidated Statements of Operations, Statements of Cash Flows and Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests.

In April 2015, the FASB issued authoritative guidance to clarify the accounting treatment for fees paid by a customer in cloud computing arrangements. Under the revised guidance, if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The revised guidance will not change a customer’s accounting for service contracts. The Company adopted this guidance as of the first quarter ended September 30, 2016 on a prospective basis. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

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Recently Issued Accounting Pronouncements

In May 2017, the FASB issued authoritative guidance regarding changes to terms or conditions of share-based payment awards that require an entity to apply modification accounting. Under this amendment, an entity should not account for the effects of a modification if all of the following conditions are met: i) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified and original award (immediately before modification) is the same; ii) the vesting conditions of the modified and original award (immediately before modification) are the same; iii) the classification of the modified and original award (immediately before modification) as an equity or a liability instrument is the same. Early adoption is permitted and the amendment will be effective for the Company in fiscal 2019. The Company is currently evaluating the impact this guidance will have on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued authoritative guidance that requires an employer to report the service cost component of an employee benefits plan in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost as defined in the current guidance are required to be presented in the income statement separately from the service cost component and outside the subtotal of income from operations, if one is presented. If separate line item or items are not used, the line item or items used in the income statement to present the other components of net periodic benefit cost must be disclosed. The amendment allows only the service cost component to be eligible for capitalization, when applicable. Early adoption is permitted and the amendment will be effective for the Company in fiscal 2019. The Company is currently evaluating the impact this guidance will have on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued authoritative guidance that simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. Under this amendment, an entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendment also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform step two of the goodwill impairment test. Early adoption is permitted and the amendment will be effective for the Company in fiscal 2021. The Company does not expect this guidance to impact the Company’s Consolidated Financial Statements.

In October 2016, the FASB issued authoritative guidance that amends accounting guidance for intra-entity transfer of assets other than inventory to require the recognition of taxes when the transfer occurs. The amendment will be effective for the Company in fiscal 2019 with early adoption permitted as of the beginning of an annual reporting period for which financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact this guidance will have on the Company’s Consolidated Financial Statements.

In August 2016, the FASB issued authoritative guidance that changes the classification and presentation of certain items within the statement of cash flows including but not limited to debt prepayment or debt extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. The amendment will be effective for the Company in fiscal 2019 with early adoption permitted. The Company is currently evaluating the effect that this guidance will have on the Company’s Consolidated Financial Statements.

In June 2014, and as further amended, the FASB issued authoritative guidance that implements a common revenue model that will enhance comparability across industries and require enhanced disclosures. The new standard introduces a five step principles based process to determine the timing and amount of revenue ultimately expected to be received. The standard will be effective for the Company in fiscal 2019 with either retrospective or modified retrospective treatment applied. Early adoption is permitted for the Company beginning in fiscal 2018. The Company is in the early stages and has an implementation team in place that is performing a comprehensive evaluation of the impact this standard will have on its Consolidated Financial Statements and related disclosures. The Company has selected the modified retrospective transition method, but has not yet determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued authoritative guidance requiring that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in its balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The amendment will be effective for the Company in fiscal 2020 with early adoption permitted. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company has not yet started its analysis of the impact this standard will have on the Company’s Consolidated Financial Statements.

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3. BUSINESS COMBINATIONS

P&G Beauty Business Acquisition

On October 1, 2016, pursuant to the Transaction Agreement (as defined below), the Company completed the Transactions (as defined below) and acquired the P&G Beauty Business in order to further strengthen the Company’s position in the global beauty industry. The purchase price was $11,570.4 and consisted of $9,628.6 of total equity consideration and $1,941.8 of assumed debt.

The P&G Beauty Business acquisition was completed pursuant to the Transaction Agreement, dated July 8, 2015 (the “Transaction Agreement”), by and among the Company, P&G, Galleria Co. (“Galleria”) and Green Acquisition Sub Inc., a wholly-owned subsidiary of the Company (“Merger Sub”). On October 1, 2016, (i) Merger Sub was merged with and into Galleria, with Galleria continuing as the surviving corporation and a direct, wholly-owned subsidiary of the Company (the “Merger”) and (ii) each share of Galleria common stock was converted into the right to receive one share of the Company’s common stock (the Merger, together with the other transactions contemplated by the Transaction Agreement, the “Transactions”).

The Company issued 409.7 million shares of common stock to the former holders of Galleria common stock, together with cash in lieu of fractional shares. Immediately after consummation of the Merger, approximately 54% of the fully-diluted shares of the Company’s common stock was held by pre-Merger holders of Galleria common stock, and approximately 46% of the fully-diluted shares of the Company’s common stock was held by pre-Merger holders of the Company’s common stock. Coty Inc. is considered to be the acquiring company for accounting purposes.

The Company estimated the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information currently available. The Company is still evaluating the fair value of the assets and liabilities assumed in the Transactions. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized.

The following table summarizes the estimated allocation of the purchase price to the net assets of the P&G Beauty Business as of the October 1, 2016 acquisition date:



	Estimated fair value as previously reported ^(a)			Measurement period adjustments ^(b)			Estimated fair value adjusted			Estimated useful life (in years)
Cash and cash equivalents	$	387.6		$	—		$	387.6
Inventories	506.7			(38.3		)	468.4
Property, plant and equipment	770.4			(8.0		)	762.4			3 - 40
Goodwill	5,081.8			60.2			5,142.0			Indefinite
Trademarks — indefinite	1,890.0			—			1,890.0			Indefinite
Trademarks — finite	879.1			5.6			884.7			10 - 30
Customer relationships	1,795.8			11.3			1,807.1			1.5 - 17
License agreements	1,836.0			1.0			1,837.0			10 - 30
Product formulations	183.8			—			183.8			5 - 29
Other net working capital	65.8			(27.6		)	38.2
Net other assets	54.9			(5.3		)	49.6
Unfavorable contract liabilities	(130.0		)	—			(130.0		)
Pension liabilities	(394.9		)	(9.8		)	(404.7		)
Tax indemnification liability	(55.0		)	—			(55.0		)
Deferred tax liability, net	(1,301.6		)	10.9			(1,290.7		)
Total purchase price	$	11,570.4		$	—		$	11,570.4

^(a) As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2016.

^(b) The Company recorded measurement period adjustments in the third quarter of fiscal 2017 to account for a decrease of $38.3 in the estimated fair value of the P&G Beauty Business inventory primarily related to a decrease in the inventory step-up due to updated valuation assumptions. The measurement period adjustments of $17.9 related to finite-lived trademarks, customer relationships and license

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agreements was a result of the decrease in the estimated fair value of inventory acquired. Additional measurement period adjustments were recorded as a result of obtaining new facts and circumstances about certain acquired assets and liabilities that existed as of the acquisition date, primarily related to working capital. All measurement period adjustments were offset against goodwill.

Goodwill is primarily attributable to the anticipated company-specific synergies and economies of scale expected from the operations of the combined company. The synergies include certain cost savings, operating efficiencies, and leverage of the acquired brand recognition to be achieved as a result of the Transactions. Goodwill is not expected to be deductible for tax purposes. Goodwill of $351.6 , $4,276.5 , and $513.9 is allocated to the Luxury, Consumer Beauty and Professional Beauty segments, respectively. The allocation of goodwill to segments was based on the relative fair values of synergies.

For the three months ended March 31, 2017 , Net revenues and Net income of the P&G Beauty Business included in the Company’s Condensed Consolidated Statements of Operations were $975.7 and $55.7 , respectively. For the nine months ended March 31, 2017 , Net revenues and Net income of the P&G Beauty Business included in the Company’s Condensed Consolidated Statements of Operations from the date of acquisition were $2,086.9 and $110.9 , respectively. Net income for the three and nine months ended March 31, 2017 was impacted by the amortization of certain asset values based on the estimated fair values of the acquired assets as determined during the initial purchase accounting, such as the amortization of inventory step-up. Such amortization activity had an impact to Net income for the three and nine months ended March 31, 2017 of $(9.5) and $(37.6) , net of tax, respectively.

The Company recognized acquisition-related costs of $52.0 and $35.1 during the three months ended March 31, 2017 and 2016 , respectively and $264.4 and $91.1 for the nine months ended March 31, 2017 and 2016 , respectively, which were included in Acquisition-related costs in the Condensed Consolidated Statements of Operations.

ghd Acquisition

On November 21, 2016, the Company completed the acquisition of 100% of the equity interest of Lion/Gloria Topco Limited which held the net assets of ghd (“ghd”) which stands for “Good Hair Day”, a premium brand in high-end hair styling appliances, pursuant to a sale and purchase agreement. The ghd acquisition is expected to further strengthen the Company’s professional hair category and is included in the Professional Beauty segment’s results after the acquisition date. The total cash consideration paid net of acquired cash and cash equivalents was £430.2 million , the equivalent of $531.5 , at the time of closing, which was funded through cash on hand and available debt.

The Company estimated the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information currently available. The Company is still evaluating the fair value of the assets and liabilities assumed from the ghd acquisition. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized.

The following table summarizes the estimated allocation of the purchase price to the net assets of ghd as of the November 21, 2016 acquisition date:



	Estimated fair value as previously reported ^(a)			Measurement period adjustments ^(b)			Estimated fair value adjusted			Estimated useful life (in years)
Cash and cash equivalents	$	7.1		$	—		$	7.1
Inventories	79.8			—			79.8
Property, plant and equipment	11.3			—			11.3			3 - 10
Goodwill	175.5			(7.4		)	168.1			Indefinite
Indefinite-lived other intangibles assets	163.8			—			163.8			Indefinite
Customer relationships	44.2			(7.6		)	36.6			11 - 24
Technology	138.6			8.0			146.6			11 - 16
Other net working capital	(7.4		)	7.1			(0.3		)
Net other assets	0.9			—			0.9
Deferred tax liability, net	(75.3		)	(0.1		)	(75.4		)
Total purchase price	$	538.5		$	—		$	538.5

^(a) As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2016.

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^(b) The Company recorded measurement period adjustments in the third quarter of fiscal 2017 to account for a decrease to customer relationships of $7.6 and an increase to technology of $8.0 due to changes in valuation assumptions and an increase in the estimated other net working capital of $7.1 as of the November 21, 2016 acquisition date. These adjustments were offset against Goodwill.

Goodwill is not expected to be deductible for tax purposes. The goodwill is attributable to expected synergies resulting from integrating ghd’s products into the Company’s existing sales channels.

For the three months ended March 31, 2017 , Net revenues and Net income (loss) of ghd included in the Company’s Condensed Consolidated Statements of Operations were $45.2 and $(41.6) , respectively. For the nine months ended March 31, 2017 , Net revenues and Net income (loss) of ghd included in the Company’s Condensed Consolidated Statements of Operations from the date of acquisition were $89.6 and $(47.9) , respectively. Net income for the three and nine months ended March 31, 2017 was impacted by the amortization of certain asset values based on the estimated fair values of acquired assets as determined during the initial purchase accounting, such as the amortization of inventory step-up. Such amortization activity had an impact to Net income (loss) for the three and nine months ended March 31, 2017 of $(26.0) and $(39.8) , net of tax, respectively.

The Company recognized acquisition-related costs of $3.1 and $4.9 during the three and nine months ended March 31, 2017 , respectively, which are included in Acquisition-related costs in the Condensed Consolidated Statements of Operations.

Younique Acquisition

On February 1, 2017, the Company completed its acquisition of 60% of the membership interest in Foundation, LLC (“Foundation”) which held the net assets of Younique, LLC, a Utah limited liability company (“Younique”), for cash consideration of $600.0 , net of acquired cash and debt assumed. The existing Younique membership holders contributed their 100% membership interest in Younique to Foundation in exchange for a 40% membership interest in Foundation and $600.0 of cash consideration. The purchase consideration is subject to normal working capital adjustments. Younique is expected to strengthen the Consumer Beauty division’s color cosmetics and skin and body care product offerings. The acquisition was funded with a combination of cash on hand and borrowings under available debt facilities. The Company accounts for the noncontrolling interest portion of the acquisition as a redeemable noncontrolling interest. Refer to Note 21 — Noncontrolling Interests and Redeemable Noncontrolling Interests for information regarding valuation method and significant assumptions used to calculate the fair value.

The Company estimated the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information currently available. The Company is still evaluating the fair value of the assets and liabilities assumed from the Younique acquisition. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized.

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The following table summarizes the estimated allocation of the purchase price to the net assets of Younique as of the February 1, 2017 acquisition date:



	Estimated fair value			Estimated useful life (in years)
Cash and cash equivalents	$	17.5
Inventories	106.5
Property, plant and equipment	64.1			3 - 7
Goodwill	559.5			Indefinite
Trademark — finite	121.0			20
Product formulations	0.6			5
Customer relationships	184.0			9 - 15
Other net working capital	(24.8		)
Short-term and long-term debt	(1.2		)
Total equity value	1,027.2

Redeemable noncontrolling interest	410.9
Net cash and debt acquired	16.3
Total purchase price	$	600.0

Goodwill is expected to be deductible for tax purposes. The goodwill is attributable to expected synergies resulting from certain manufacturing and supply chain cost savings.

For the three and nine months ended March 31, 2017 , Net revenues and Net income (loss) of Younique were included in the Company’s Condensed Consolidated Statements of Operations from the date of acquisition were $79.6 and $(1.4) , respectively. Net income for the three and nine months ended March 31, 2017 was impacted by the amortization of certain asset values based on the estimated fair values of the acquired assets as determined during the initial purchase accounting, such as the amortization of inventory step-up. Such amortization activity had an impact to Net income (loss) for the three and nine months ended March 31, 2017 of $(17.6) , net of tax.

The Company recognized acquisition-related costs of $0.1 and $0.8 during the three and nine months ended March 31, 2017 , respectively, which are included in Acquisition-related costs in the Condensed Consolidated Statements of Operations.

Brazil Acquisition

On February 1, 2016, the Company completed the acquisition of 100% of the net assets of the personal care and beauty business of Hypermarcas S.A. (the “Brazil Acquisition”) pursuant to a share purchase agreement in order to further strengthen its position in the Brazilian beauty and personal care market. The total consideration of R$3,599.5 million , the equivalent of $901.9 , at the time of closing, was paid during fiscal 2016.

The Company has finalized the valuation of assets acquired and liabilities assumed for the Brazil Acquisition. The Company recognized certain measurement period adjustments as disclosed below during the quarter ended September 30, 2016. The measurement period for the Brazil Acquisition was closed as of September 30, 2016.

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The following table summarizes the allocation of the purchase price to the net assets acquired as of the February 1, 2016 acquisition date:



	Estimated fair value as previously reported ^(a)			Measurement period adjustments ^(b)			Estimated fair value as adjusted			Estimated useful life (in years)
Cash and cash equivalents	$	11.1		$	—		$	11.1
Inventories	45.6			—			45.6
Property, plant and equipment	95.4			—			95.4			2 - 40
Goodwill	553.7			(16.6		)	537.1			Indefinite
Trademarks — indefinite	147.1			—			147.1			Indefinite
Trademarks — finite	10.3			—			10.3			5 - 15
Customer relationships	44.6			—			44.6			13 - 28
Product formulations	12.8			—			12.8			3
Other net working capital	0.7			—			0.7
Net other assets	2.1			(0.7		)	1.4
Deferred tax liability, net	(21.5		)	17.3			(4.2		)
Total purchase price	$	901.9		$	—		$	901.9

^(a) As previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

^(b) The Company recorded measurement period adjustments in the first quarter of fiscal 2017 to account for a $0.7 asset retirement obligation, as well as a net decrease in net deferred tax liability of $17.3 as of the February 1, 2016 acquisition date. These adjustments were offset against Goodwill.

The Company has completed the local tax requirements allowing approximately $500.0 of goodwill and $44.6 of customer relationships assets to be tax deductible.

The Company recognized acquisition-related costs of $0.0 and $1.1 during the three and nine months ended March 31, 2017 , respectively, and $1.7 and $2.3 during the three and nine months ended March 31, 2016, respectively which are included in Acquisition-related costs in the Condensed Consolidated Statements of Operations.

Unaudited Pro Forma Information

The unaudited pro forma financial information in the table below summarizes the combined results of the Company and the P&G Beauty Business, Younique and the Brazil Acquisition (the “Pro Forma Acquisitions”) as though the companies had been combined on July 1, 2015. The three and nine months ended March 31, 2017 and 2016 include pro forma adjustments for all the Pro Forma Acquisitions.

The pro forma adjustments include incremental amortization of intangible assets and depreciation adjustment of property, plant and equipment, based on preliminary values of each asset as well as costs related to financing the Pro Forma Acquisitions. The unaudited pro forma information also includes non-recurring acquisition-related costs as well as amortization of the inventory step-up. Pro forma adjustments were tax-effected at the Company’s statutory rates. For the pro forma basic and diluted earnings per share calculation, 409.7 million shares issued in connection with the P&G Beauty Business acquisition were considered as if issued on July 1, 2015. The pro forma information is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the Pro Forma Acquisitions had taken place on July 1, 2015 or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings. The pro forma information for the three months ended March 31, 2017 and 2016 and nine months ended March 31, 2017 and 2016, respectively, are as follows:

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	Three Months Ended March 31,						Nine Months Ended March 31,
	2017 ^(a)			2016 ^(b)			2017 ^(a)		2016 ^(b)
Pro forma Net revenues	$	2,063.7		$	2,070.4		$	6,647.9	$	7,049.4
Pro forma Net income (loss)	(77.5		)	(28.6		)	68.9		126.0
Pro forma Net income (loss) attributable to Coty Inc.	(89.7		)	(47.2		)	37.4		102.6
Pro forma Net income (loss) attributable to Coty Inc. per common share:
Basic	$	(0.12	)	$	(0.06	)	$	0.05	$	0.14
Diluted	$	(0.12	)	$	(0.06	)	$	0.05	$	0.13

^(a) For the three and nine months ended March 31, 2017 , the pro forma information excluded $62.2 and $378.9 of non-recurring acquisition-related costs and $34.5 and $71.0 of amortization of inventory step up, respectively.


^(b)	For the three months ended March 31, 2016 , the pro forma information excluded $64.8 of non-recurring acquisition-related costs and $4.9 of amortization of inventory step up. For the nine months ended March 31, 2016 , the pro forma information included $54.7 of non-recurring acquisition-related costs and $104.1 of amortization of inventory step up.

4. SEGMENT REPORTING

Operating and reportable segments (referred to as “segments”) reflect the way the Company is managed and for which separate financial information is available and evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company has designated its Chief Executive Officer as the CODM.

In connection with the Company’s acquisition of the P&G Beauty Business, the Company realigned its operations and determined management’s internal and external reporting based on the following three divisions – Luxury, Consumer Beauty and Professional Beauty. The new organizational structure is category focused, putting the consumer first, by specifically targeting how and where they shop and what and why they purchase. Each division has full end-to-end responsibility to optimize consumers’ beauty experience in the relevant categories and channels. The Company has determined that its three divisions are its operating segments and reportable segments. The operating and reportable segments are:

Luxury — focused on prestige fragrances, premium skin care and premium cosmetics;

Consumer Beauty — focused on color cosmetics, retail hair coloring and styling products, mass fragrance, mass skin care and body care;

Professional Beauty — focused on hair and nail care products for professionals.

Additionally, in connection with the Company’s acquisition of the P&G Beauty Business, the Company reorganized its geographical structure into three regions: North America (Canada and the United States), Europe and ALMEA (Asia, Latin America, the Middle East, Africa and Australia).

As a result of this change in segment reporting, the Company restated prior period results, by segment, to conform to current period presentation. Prior to the realignment, the Company operated and managed its business as four operating and reportable segments: Fragrances, Color Cosmetics, Skin & Body Care, and the Brazil Acquisition.

Certain revenues and shared costs and the results of corporate initiatives are being managed outside of the three segments by Corporate. The items within Corporate relate to corporate-based responsibilities and decisions and are not used by the CODM to measure the underlying performance of the segments. Corporate primarily includes restructuring costs, costs related to acquisition activities and certain other expense items not attributable to ongoing operating activities of the segments.

With the exception of goodwill and acquired intangible assets, the Company does not identify or monitor assets by segment. The Company does not present assets by reportable segment since various assets are shared between reportable segments. The allocation of goodwill and acquired intangible assets by segment is presented in Note 10.

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	Three Months Ended March 31,						Nine Months Ended March 31,
SEGMENT DATA	2017			2016			2017			2016
Net revenues:
Luxury	$	634.6		$	405.9		$	1,918.6		$	1,433.4
Consumer Beauty	988.6			488.5			2,562.2			1,653.7
Professional Beauty	408.9			56.3			928.2			186.4
Total	$	2,032.1		$	950.7		$	5,409.0		$	3,273.5
Operating (loss) income:
Luxury	$	60.9		$	29.7		$	203.6		$	206.1
Consumer Beauty	63.0			39.2			178.6			210.2
Professional Beauty	(18.2		)	12.8			81.5			53.4
Corporate	(298.2		)	(58.7		)	(622.5		)	(212.6		)
Total	$	(192.5	)	$	23.0		$	(158.8	)	$	257.1
Reconciliation:
Operating (loss) income	$	(192.5	)	$	23.0		$	(158.8	)	$	257.1
Interest expense, net	60.8			25.1			159.1			55.7
Loss on early extinguishment of debt	—			—			—			3.1
Other (income) expense, net	(0.5		)	6.6			0.2			30.4
(Loss) income before income taxes	$	(252.8	)	$	(8.7	)	$	(318.1	)	$	167.9



	Three Months Ended March 31,				Nine Months Ended March 31,
GEOGRAPHIC DATA	2017		2016		2017		2016
Net revenues:
North America	$	685.1	$	311.1	$	1,727.4	$	1,072.8
Europe	848.4		402.0		2,429.4		1,494.8
ALMEA	498.6		237.6		1,252.2		705.9
Total	$	2,032.1	$	950.7	$	5,409.0	$	3,273.5



Long-lived assets:	March 31, 2017		June 30, 2016
United States ^(a)	$	13,472.8	$	2,688.7
Switzerland	1,917.2		508.0
All other	3,246.4		1,713.6
Total	$	18,636.4	$	4,910.3

^(a) Includes the intangible assets recognized as part of the P&G Beauty Business acquisition which have not been allocated geographically out of the United States as of March 31, 2017. The Company is currently in the process of determining the geographic allocation of these intangible assets.

The table above presents long-lived assets, by our major countries and all other countries. A major country is defined as a group of subsidiaries within a country with combined long-lived assets greater than 10% of consolidated long-lived assets or as otherwise deemed significant. Long-lived assets include property and equipment, goodwill and other intangible assets.

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Presented below are the revenues associated with Company’s product categories:



	Three Months Ended March 31,				Nine Months Ended March 31,
PRODUCT CATEGORY	2017		2016		2017		2016

Fragrance	32.1	%	43.8	%	38.5	%	48.6	%
Color Cosmetics	31.4		39.6		28.9		34.9
Skin & Body Care	10.0		16.6		12.4		16.5
Hair Care	26.5		—		20.2		—
Total Coty Inc.	100.0	%	100.0	%	100.0	%	100.0	%

5. RESTRUCTURING COSTS

Restructuring costs for the three and nine months ended March 31, 2017 and 2016 are presented below:



	Three Months Ended March 31,					Nine Months Ended March 31,
	2017			2016		2017		2016
Global Integration Activities	$	156.5		$	—	$	170.1	$	—
Acquisition Integration Program	(0.7		)	1.4		3.9		47.0
Organizational Redesign	(0.1		)	4.6		4.4		28.0
Other Restructuring	0.1			0.6		0.6		4.3
Total	$	155.8		$	6.6	$	179.0	$	79.3

Global Integration Activities

In connection with the acquisition of the P&G Beauty Business, the Company anticipates that it will incur restructuring and related costs aimed at integrating and optimizing the combined organization (“Global Integration Activities”).

Of the expected costs, the Company incurred $183.7 related to approved initiatives in the nine months ended March 31, 2017 :



	Cost of sales ^(a)		Selling, general and administrative ^(b)		Restructuring		Total
Nine months ended March 31,	$	8.1	$	5.5	$	170.1	$	183.7

^(a) Primarily related to inventory buyback associated with the conversion of P&G distributors and accelerated depreciation.

^(b) Other business realignment costs, including legal and consulting costs.

The related liability balance and activity for the Global Integration Activities restructuring costs are presented below:



	Severance and Employee Benefits			Third-Party Contract Terminations		Other Exit Costs			Total Program Costs
Balance—July 1, 2016	$	—		$	—	$	—		$	—
Restructuring charges	158.7			10.6		0.8			170.1
Acquisition ^(a)	1.8			—		10.0			11.8
Payments	(6.6		)	—		(2.1		)	(8.7		)
Effect of exchange rates	(0.9		)	—		—			(0.9		)
Balance—March 31, 2017	$	153.0		$	10.6	$	8.7		$	172.3

^(a) The Company incurred exit and disposal costs primarily related to an acquired lease, as well as employee separations initiated as a result of the P&G Beauty Business acquisition.

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The Company currently estimates that the total remaining accrual of $172.3 will result in cash expenditures of approximately $32.9 , $111.4 , $22.5 and $5.5 in fiscal 2017, 2018, 2019 and 2020, respectively.

Acquisition Integration Program

In the first quarter of fiscal 2016, the Company’s Board of Directors (the “Board”) approved an expansion to a restructuring program in connection with the acquisition of the Bourjois brand (the “Acquisition Integration Program”). Actions associated with the program were initiated after the acquisition of Bourjois and are expected to be substantially completed by the end of fiscal 2017. The Company anticipates the Acquisition Integration Program will result in pre-tax restructuring and related costs of approximately $65.0 , all of which will result in cash payments. The Company incurred $61.5 of restructuring costs life-to-date as of March 31, 2017 , which have been recorded in Corporate.

Restructuring costs in the Company’s Condensed Consolidated Statements of Operations for the three months ended September 30, 2016 included a curtailment gain of $1.8 , recognized in connection with involuntary employee terminations as part of the Acquisition Integration Program. This gain resulted in a corresponding decrease to the net pension liability as of March 31, 2017 . Refer to Note 16 — Employee Benefit Plans for further information.

The related liability balance and activity for the Acquisition Integration Program costs are presented below:



	Severance and Employee Benefits			Third-Party Contract Terminations			Other Exit Costs			Total Program Costs
Balance—July 1, 2016	$	35.7		$	7.6		$	0.1		$	43.4
Restructuring charges	0.8			—			6.6			7.4
Payments	(8.7		)	(3.7		)	(2.0		)	(14.4		)
Changes in estimates	(0.8		)	(0.9		)	—			(1.7		)
Effect of exchange rates	(1.0		)	(0.1		)	(0.4		)	(1.5		)
Balance—March, 31, 2017	$	26.0		$	2.9		$	4.3		$	33.2

The Company currently estimates that the total remaining accrual of $33.2 will result in cash expenditures of approximately $4.5 , $26.1 , $1.3 and $1.3 in fiscal 2017, 2018, 2019 and 2020, respectively.

Organizational Redesign

During the fourth quarter of fiscal 2014, the Board approved a program associated with a new organizational structure (“Organizational Redesign”) that aims to reinforce the Company’s growth path and strengthen its position as a new global leader and challenger in the beauty industry. The Company anticipates that the Organizational Redesign will result in pre-tax restructuring and related costs of $145.0 to $180.0 , all of which will result in cash payments. The Company anticipates substantial completion of all project activities by the end of fiscal 2017, with the remaining costs primarily charged to Corporate. The Company incurred $110.5 of restructuring costs life-to-date as of March 31, 2017 , which have been recorded in Corporate. The Company incurred $35.3 of other business realignment costs life-to-date as of March 31, 2017 which have been primarily reported in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations in Corporate.

The related liability balance and activity for the Organizational Redesign costs are presented below:



	Severance and Employee Benefits			Third-Party Contract Terminations		Other Exit Costs			Total Program Costs
Balance—July 1, 2016	$	33.6		$	0.4	$	0.5		$	34.5
Restructuring charges	6.2			—		—			6.2
Payments	(27.6		)	—		(0.2		)	(27.8		)
Changes in estimates	(1.8		)	—		—			(1.8		)
Effect of exchange rates	—			—		(0.2		)	(0.2		)
Balance—March, 31, 2017	$	10.4		$	0.4	$	0.1		$	10.9

The Company currently estimates that the total remaining accrual of $10.9 will result in cash expenditures of $6.0 and $4.9 in fiscal 2017 and 2018, respectively.

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Other Restructuring

Other restructuring primarily relates to the Company’s programs to integrate supply chain and selling activities, which were substantially completed during fiscal 2016 with cash payments expected to continue through fiscal 2018. The Company incurred expenses of $0.6 and $4.3 during the nine months ended March 31, 2017 and 2016 , respectively. The related liability balances were $4.5 and $6.2 at March 31, 2017 and June 30, 2016 , respectively. The Company currently estimates that the total remaining accrual of $4.5 will result in cash expenditures of approximately $3.2 and $1.3 in fiscal 2017 and 2018, respectively.

In connection with the acquisition of the P&G Beauty Business, the Company assumed restructuring liabilities of approximately $8.8 at October 1, 2016. The Company estimates that the remaining accrual of $7.1 at March 31, 2017 will result in cash expenditures of $4.9 and $2.2 in fiscal 2017 and 2018, respectively.

6. ACQUISITION-RELATED COSTS

Acquisition-related costs, which are expensed as incurred, represent non-restructuring costs directly related to acquiring and integrating an entity, for both completed and contemplated acquisitions and can include finder’s fees, legal, accounting, valuation, other professional or consulting fees, and other internal costs which can include compensation related expenses for dedicated internal resources. The Company recognized acquisition-related costs of $57.7 and $37.0 for the three months ended March 31, 2017 and 2016 , respectively, and $275.1 and $98.3 for the nine months ended March 31, 2017 and 2016 , respectively, which have been recorded in Acquisition-related costs in the Condensed Consolidated Statements of Operations.

7. INCOME TAXES

The effective income tax rate for the three months ended March 31, 2017 and 2016 was 36.9% and (133.3)% , respectively, and 69.3% and (25.3)% for the nine months ended March 31, 2017 and 2016, respectively.

The effective tax rate for the three months ended March 31, 2017 includes an increase in the accrual for unrecognized tax benefits, the expiration of foreign statutes of limitation and audit settlements.

The effective income tax rate for the three months ended March 31, 2016 includes the impact of additional U.S. losses with minimal tax benefit, the decrease in the accrual for unrecognized tax benefits, audit settlements and the expiration of foreign statutes of limitation.

The effective tax rate for the nine months ended March 31, 2017 includes the release of a valuation allowance in the US as a result of the P&G Beauty Business acquisition of $111.2 . The negative effective income tax rate for the nine months ended March 31, 2016 was primarily the result of the net impact of the settlements with the Internal Revenue Service (“IRS”) as described below.

The effective income tax rate for the nine months ended March 31, 2016 included the final settlement with the IRS in connection with the 2004 - 2012 examination periods. The settlement primarily related to the acquisition of the Calvin Klein fragrance business. In connection with the settlement, the Company recognized a tax benefit of approximately $193.9 of which $164.2 was mainly due to the recognition of additional deferred tax assets related to the basis of the Calvin Klein trademark, and approximately $29.7 resulted from the reduction of gross unrecognized tax benefits. Of the $193.9 tax benefit, $113.0 was offset by a valuation allowance due to on-going operating losses in the U.S.

There was an increase of $1,042.6 in deferred tax liability for the nine months ended March 31, 2017 compared to fiscal year ended June 30, 2016. The increase was primarily due to the acquisition of the P&G Beauty Business and the step up in the book basis of certain assets.

As of March 31, 2017 and June 30, 2016 , the gross amount of UTBs was $237.4 and $228.9 , respectively. As of March 31, 2017 , the total amount of UTBs that, if recognized, would impact the effective income tax rate was $226.6 . As of March 31, 2017 and June 30, 2016 , the liability associated with UTBs, including accrued interest and penalties, was $154.7 and $131.9 , respectively, which was recorded in Income and other taxes payable and Other non-current liabilities in the Condensed Consolidated Balance Sheets. The total interest and penalties recorded in the Condensed Consolidated Statements of Operations related to UTBs for the three months ended March 31, 2017 and 2016 was $(0.6) and $0.7 , and for the nine months ended March 31, 2017 and 2016 was $0.4 and $2.7 , respectively. The total gross accrued interest and penalties recorded in the Condensed Consolidated Balance Sheets as of March 31, 2017 and June 30, 2016 was $10.6 and $9.9 , respectively. On the basis of the information available as of March 31, 2017 , it is reasonably possible that a decrease of up to $9.0 in UTBs may occur within 12 months as a result of projected resolutions of global tax examinations and a potential lapse of the applicable statutes of limitations.

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8. INVENTORIES

Inventories as of March 31, 2017 and June 30, 2016 are presented below:



	March 31, 2017		June 30, 2016
Raw materials	$	241.9	$	159.8
Work-in-process	34.0		9.5
Finished goods	758.4		396.5
Total inventories	$	1,034.3	$	565.8

9. PROPERTY AND EQUIPMENT, NET

Property and equipment, net as of March 31, 2017 and June 30, 2016 are presented below:



	March 31, 2017			June 30, 2016
Land, buildings and leasehold improvements	$	623.7		$	284.8
Machinery and equipment	812.3			523.1
Marketing furniture and fixtures	427.8			295.2
Computer equipment and software	469.6			346.7
Construction in progress	244.6			79.6
Property and Equipment, gross	2,578.0			1,529.4
Accumulated depreciation and amortization	(1,022.2		)	(890.8		)
Property and equipment, net	$	1,555.8		$	638.6

Depreciation and amortization expense of property and equipment totaled $82.0 and $37.1 for the three months ended March 31, 2017 and 2016 , respectively, and $195.9 and $111.9 for the nine months ended March 31, 2017 and 2016 , respectively, and are recorded in Cost of sales and Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

10. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

Goodwill as of March 31, 2017 and June 30, 2016 is presented below:



	Luxury			Consumer Beauty			Professional Beauty			Total
Gross balance at June 30, 2016	$	1,294.5		$	1,288.2		$	270.8		$	2,853.5
Accumulated impairments	(403.7		)	(237.1		)	—			(640.8		)
Net balance at June 30, 2016	$	890.8		$	1,051.1		$	270.8		$	2,212.7

Changes during the period ended March 31, 2017:
Measurement Period Adjustments ^(a)	4.2			33.4			(1.4		)	36.2
Acquisitions ^(b)	347.4			4,786.0			683.4			5,816.8
Foreign currency translation	4.8			37.0			4.3			46.1

Gross balance at March 31, 2017	$	1,650.9		$	6,144.6		$	957.1		$	8,752.6
Accumulated impairments	(403.7		)	(237.1		)	—			(640.8		)
Net balance at March 31, 2017	$	1,247.2		$	5,907.5		$	957.1		$	8,111.8

^(a) Includes measurement period adjustments in connection with the Brazil Acquisition, P&G Beauty Business and ghd acquisitions (Refer to Note 3 — Business Combinations).

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^(b) Includes goodwill resulting from the P&G Beauty Business, ghd and Younique acquisitions during the nine months ended March 31, 2017 (Refer to Note 3 — Business Combinations).

As described in Note 4 — Segment Reporting, the Company changed its segments during the second quarter ended December 31, 2016. As a result, the Company allocated goodwill to the new segments using a relative fair value approach. In addition, the Company completed an assessment of any potential goodwill impairment for all reporting units immediately prior to the reallocation and determined that no impairment existed. Further, the Company recast the goodwill and indefinite-lived intangible asset tables for the new segments.

Other Intangible Assets, net

Other intangible assets, net as of March 31, 2017 and June 30, 2016 are presented below:



	March 31, 2017		June 30, 2016
Indefinite-lived other intangible assets	$	3,442.8	$	1,417.0
Finite-lived other intangible assets, net	5,526.0		633.1
Total Other intangible assets, net	$	8,968.8	$	2,050.1

The changes in the carrying amount of indefinite-lived other intangible assets are presented below:



	Luxury			Consumer Beauty			Professional Beauty			Total
Gross balance at June 30, 2016	$	401.2		$	551.5		$	662.1		$	1,614.8
Accumulated impairments	(118.8		)	(75.9		)	(3.1		)	(197.8		)
Net balance at June 30, 2016	282.4			475.6			659.0			1,417.0

Changes during the period ended March 31, 2017:
Acquisitions ^(a)	—			1,390.0			663.8			2,053.8
Foreign currency translation	(10.9		)	(14.2		)	(2.9		)	(28.0		)

Gross balance at March 31, 2017	390.3			1,927.3			1,323.0			3,640.6
Accumulated impairments	(118.8		)	(75.9		)	(3.1		)	(197.8		)
Net balance at March 31, 2017	$	271.5		$	1,851.4		$	1,319.9		$	3,442.8

^(a) Includes Indefinite-lived other intangible assets resulting from the P&G Beauty Business and ghd acquisitions during the nine months ended March 31, 2017 (Refer to Note 3 — Business Combinations).

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Intangible assets subject to amortization are presented below:



	Cost		Accumulated Amortization			Accumulated Impairment			Net
June 30, 2016
License agreements	$	798.3	$	(532.2	)	$	—		$	266.1
Customer relationships	611.7		(274.2		)	(5.5		)	332.0
Trademarks	128.3		(108.6		)	—			19.7
Product formulations	48.0		(32.7		)	—			15.3
Total	$	1,586.3	$	(947.7	)	$	(5.5	)	$	633.1
March 31, 2017
License agreements ^(a)	$	2,542.7	$	(585.5	)	$	—		$	1,957.2
Customer relationships ^(a)	2,633.5		(389.4		)	(5.5		)	2,238.6
Trademarks ^(a)	1,133.0		(131.2		)	—			1,001.8
Product formulations and technology ^(a)	380.6		(52.2		)	—			328.4
Total	$	6,689.8	$	(1,158.3	)	$	(5.5	)	$	5,526.0

^(a) Includes License agreements, Customer relationships, Trademarks, and Product formulations and technology of $1,837.0 , $2,027.7 , $1,005.7 and $331.0 , respectively resulting from the P&G Beauty Business, ghd and Younique acquisitions during the nine months ended March 31, 2017 (Refer to Note 3 — Business Combinations).

Amortization expense totaled $102.6 and $20.9 , for the three months ended March 31, 2017 and 2016 , respectively, and $219.0 and $59.0 for the nine months ended March 31, 2017 and 2016 , respectively.

Intangible assets subject to amortization are amortized principally using the straight-line method and have the following weighted-average remaining lives:



Description
License agreements	25.9 years
Customer relationships	13.5 years
Trademarks	23.5 years
Product formulations and technology	11.1 years

As of March 31, 2017 , the remaining weighted-average life of all intangible assets subject to amortization is 19.6 years .

The estimated aggregate amortization expense for each of the following fiscal years ending June 30 is presented below:



2017, remaining	$	104.4
2018	403.3
2019	359.9
2020	354.7
2021	346.0
2022	329.0

License Agreements

The Company records assets for license agreements (“licenses”) acquired in transactions accounted for as business combinations. These licenses provide the Company with the exclusive right to manufacture and market on a worldwide and/or regional basis certain of the Company’s products which comprise a significant portion of the Company’s revenues. These licenses have initial terms covering various periods. Certain licenses provide for automatic extensions ranging from 2 to 18 year terms, at the Company’s discretion.

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11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of March 31, 2017 and June 30, 2016 are presented below:



	March 31, 2017		June 30, 2016
Advertising, marketing and licensing	$	430.2	$	180.2
Customer returns, discounts, allowances and bonuses	306.5		164.8
Compensation and other compensation related benefits	270.6		157.5
Restructuring costs	183.4		60.8
VAT, sales and other non-income taxes	58.4		36.2
Tax indemnification liability	55.0		—
Acquisition-related costs	39.4		42.4
Deferred income	25.3		3.8
Interest	17.4		9.4
Audit and consulting	9.1		6.3
Lease related liabilities	4.4		3.7
Derivative liabilities	3.0		20.9
Other	156.0		62.4
Total accrued expenses and other current liabilities	$	1,558.7	$	748.4

12. OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities as of March 31, 2017 and June 30, 2016 are presented below:



	March 31, 2017		June 30, 2016
Noncurrent income tax liabilities	$	154.2	$	131.9
Unfavorable contract liabilities	108.2		—
Deferred rent	47.5		47.2
Restructuring	44.6		23.5
Other	31.0		31.2
Total other noncurrent liabilities	$	385.5	$	233.8

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13. DEBT

The Company’s debt balances consisted of the following as of March 31, 2017 and June 30, 2016 , respectively:



	March 31, 2017			June 30, 2016
Short-term debt	$	3.4		$	19.8
Galleria Credit Agreement
Galleria Revolving Credit Facility due September 2021	—			—
Galleria Term Loan A Facility due September 2021	944.3			—
Galleria Term Loan B Facility due September 2023	1,000.0			—
Coty Credit Agreement
Coty Revolving Credit Facility due October 2020	825.0			670.0
Coty Term Loan A Facility due October 2020	1,806.3			1,883.6
Coty Term Loan A Facility due October 2021	962.8			—
Coty Term Loan B Facility due October 2022	1,641.6			1,596.0
Other long-term debt and capital lease obligations	1.4			0.7
Total debt	7,184.8			4,170.1
Less: Short-term debt and current portion of long-term debt	(193.0		)	(161.8		)
Total Long-term debt	6,991.8			4,008.3
Less: Unamortized debt issuance costs ^{(a) (b)}	(71.7		)	(64.6		)
Less: Discount on Long-term debt	(10.8		)	(7.3		)
Total Long-term debt, net	$	6,909.3		$	3,936.4

^(a) Consists of unamortized debt issuance costs of $18.8 and $22.7 for the Coty Revolving Credit Facility, $34.9 and $30.3 for the Coty Term Loan A Facility and $11.6 and $11.6 for the Coty Term Loan B Facility as of March 31, 2017 and June 30, 2016, respectively.

^(b) Consists of unamortized debt issuance costs of $3.1 and $0.0 for the Galleria Term Loan A Facility and $3.3 and $0.0 for the Galleria Term Loan B Facility as of March 31, 2017 and June 30, 2016, respectively. Unamortized debt issuance costs of $4.9 for the Galleria Revolving Credit Facility were classified as Other noncurrent assets in the Condensed Consolidated Balance Sheets as of March 31, 2017 .

Coty Credit Agreement

On October 27, 2015, the Company entered into a Credit Agreement (the “Coty Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. The Coty Credit Agreement provides for senior secured credit facilities comprised of (i) a revolving credit facility in an aggregate principal amount up to $1,500.0 (the “Coty Revolving Credit Facility”) which includes up to $80.0 in swingline loans available for short term borrowings, (ii) a $1,750.0 term loan A facility (“Coty Term Loan A Facility”) and (iii) a term loan B facility comprising of a $500.0 tranche and a €665.0 million tranche (“Coty Term Loan B Facility”). The Coty Term Loan B Facility was issued at a 0.50% discount.

On April 8, 2016, the Company entered into an Incremental Assumption Agreement and Amendment No. 1 (the “Incremental Credit Agreement”) to the Coty Credit Agreement. The Incremental Credit Agreement provides for an additional €140.0 million in commitments under the Coty Term Loan A Facility and an additional €325.0 million in commitments under the Coty Term Loan B Facility of the Coty Credit Agreement (the “Incremental Term Loans”). The terms of the €140.0 million and €325.0 million portions of the Incremental Term Loans are substantially the same as the respective existing Coty Term Loan A Facility and Euro denominated portion of the Coty Term Loan B Facility.

On October 28, 2016, the Company entered into an Incremental Assumption Agreement and Refinancing Amendment (the “Incremental and Refinancing Agreement”), which amended the Coty Credit Agreement. The Incremental and Refinancing Agreement provides for: (i) an additional Coty Term Loan A Facility in aggregate principal amount of $975.0 in commitments (the “Incremental Term A Facility”), (ii) an additional Coty Term Loan B Facility in aggregate principal amount of $100.0 in commitments (the “Incremental Term B Facility”) and (iii) a refinancing of the previously existing USD and Euro denominated Coty Term Loan B Facility loans (the “Refinancing Facilities”) under the Coty Credit Agreement.

The loans made under the Incremental Term A Facility have terms that are substantially identical to the existing Coty Term Loan A Facility except that the loans will mature on the date that is five years after October 28, 2016. The loans under the Incremental Term B Facility and the Refinancing Facilities have substantially identical terms as the term B loans existing under the Coty Credit Agreement prior to effectiveness of the Incremental and Refinancing Agreement, except that, among other things: (i) the interest rate with respect to the USD denominated tranche of the Refinancing Facilities and the Incremental Term

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B Facility will be, at the Company’s option, either the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 2.50% or an alternate base rate (“ABR”) equal to the highest of (1) JPMorgan Chase Bank N.A.’s prime rate, (2) the federal funds rate plus 0.50% and (3) one-month LIBOR plus 1.0% , in each case plus an applicable margin of 1.50% and (ii) the LIBOR floor with respect to the LIBOR loans under the Incremental Term B Facility and the Refinancing Facilities is 0.00% .

The Company recognized $12.4 of deferred debt issuance costs in connection with the Incremental and Refinancing Agreement.

The Coty Credit Agreement is guaranteed by Coty Inc.’s wholly-owned domestic subsidiaries and secured by a first priority lien on substantially all of the assets of Coty Inc. and its wholly-owned domestic subsidiaries, in each case subject to certain carve outs and exceptions.

Galleria Credit Agreement

On October 1, 2016, at the closing of the Transactions, the Company assumed the debt facilities available under the Galleria Credit Agreement (the “Galleria Credit Agreement”) which was initially entered into by Galleria on January 26, 2016. The Galleria Credit Agreement provides for the senior secured credit facilities comprised of (i) a $2,000.0 five year term loan A facility (“Galleria Term Loan A Facility”), (ii) a $1,000.0 seven year term loan B facility (“Galleria Term Loan B Facility”) and (iii) a $1,500.0 five year revolving credit facility (“Galleria Revolving Facility”). The Galleria Term Loan B Facility was issued at a 0.5% discount. In connection with the closing of the Transactions, the Company assumed $1,941.8 of aggregate debt outstanding consisting of $944.3 Galleria Term Loan A Facility, $995.0 Galleria Term Loan B Facility, net of a discount and $0.0 outstanding under the Galleria Revolving Facility, as well as $2.5 in assumed fees payable. At the closing of the Transactions, the remaining unused loan commitments for the Galleria Term Loan A Facility expired.

The Company recognized $12.4 of deferred debt issuance costs in connection with the Galleria Credit Agreement.

The Galleria Credit Agreement is guaranteed by Coty Inc. and its wholly-owned domestic subsidiaries (other than Galleria) and secured by a first priority lien on substantially all of the assets of Coty Inc. and its wholly-owned domestic subsidiaries, in each case subject to certain carve outs and exceptions.

Interest Terms:

The Galleria Credit Agreement facilities will bear interest at rates equal to, at the Company’s option, either:


•	the LIBOR of the applicable qualified currency plus the applicable margin; or


•	ABR plus the applicable margin.

In the case of the Galleria Term Loan A Facility and Galleria Revolving Facility, the applicable margin means a percentage per annum to be determined in accordance with a leverage-based pricing grid below:



Pricing Tier	Total Net Leverage Ratio:	LIBOR plus:	Alternative Base Rate Margin:
1.0	Greater than or equal to 5.00:1	2.000%	1.000%
2.0	Less than 5.00:1 but greater than or equal to 4.00:1	1.750%	0.750%
3.0	Less than 4.00:1 but greater than or equal to 2.75:1	1.500%	0.500%
4.0	Less than 2.75:1 but greater than or equal to 2.00:1	1.250%	0.250%
5.0	Less than 2.00:1 but greater than or equal to 1.50:1	1.125%	0.125%
6.0	Less than 1.50:1	1.000%	—%

In the case of the Galleria Term Loan B Facility, the applicable margin means 3.00% per annum, in the case of LIBOR loans, and 2.00% per annum, in the case of ABR loans. With respect to the Galleria Term Loan B Facility, in no event will (i) LIBOR be deemed to be less than 0.75% per annum and (ii) ABR be deemed to be less than 1.75% per annum.

Scheduled Amortization

Beginning in the second quarter of fiscal 2018 and ending at maturity, the Company will make quarterly repayments of 1.25% and 0.25% of the initial aggregate Galleria Term Loan A Facility and Galleria Term Loan B Facility, respectively. The remaining balance of the initial aggregate Galleria Term Loan A Facility and Galleria Term Loan B Facility amount will be payable on the maturity date for each facility, respectively.

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Fair Value of Debt



	March 31, 2017				June 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Galleria Credit Agreement	$	1,944.3	$	1,949.0	$	—	$	—
Coty Credit Agreement	5,235.7		5,244.9		4,149.6		4,106.9

The Company uses the market approach to value the Coty Credit Agreement and the Galleria Credit Agreement. The Company obtains market values for comparable instruments from independent pricing services and infers the fair value of these debt instruments. Based on the assumptions used to value these liabilities at fair value, these debt instruments are categorized a Level 2 in the fair value hierarchy.

Debt Maturities Schedule

Aggregate maturities of the Company’s long-term debt, including current portion of long-term debt and excluding capital lease obligations as of March 31, 2017, are presented below:



Fiscal Year Ending June 30
2017, remaining	$	40.0
2018	203.2
2019	217.5
2020	217.5
2021	2,445.2
Thereafter	4,056.6
Total	$	7,180.0

Debt Covenants

The Company is required to comply with certain affirmative and negative covenants contained within the Coty Credit Agreement and the Galleria Credit Agreement (collectively the “Agreements”). The Agreements include a financial covenant that requires the Company to maintain a total net leverage ratio (as defined therein), equal to or less than 5.25 to 1.00 for each fiscal quarter through June 30, 2017 subject to certain agreed step-downs thereafter. In the four fiscal quarters following the closing of any material acquisition (as defined in the Agreements respectively), including the fiscal quarter in which such material acquisition occurs, the maximum total net leverage ratio shall be the lesser of (i) 5.95 to 1.00 and (ii) 1.00 higher than the otherwise applicable maximum total net leverage ratio for such quarter (as described in the prior sentence). Immediately after any such four fiscal quarter period, there shall be at least two consecutive fiscal quarters during which the Company's total net leverage ratio is no greater than the maximum total net leverage ratio that would otherwise have been required in the absence of such material acquisition, regardless of whether any additional material acquisitions are consummated during such period. As of March 31, 2017 , the Company was in compliance with all covenants within the Agreements.

14. LEASE COMMITMENTS

The Company leases various buildings and equipment. The leases generally provide for payment of additional rent based upon increases in items such as real estate taxes and insurance. Certain lease agreements have renewal options for periods typically ranging between two and five years . Certain lease agreements have escalation clauses for rent, which have been straight-lined over the life of the respective lease agreements. The minimum rental lease commitments for non-cancellable operating leases as of March 31, 2017 are presented below:



Fiscal Year Ending June 30
2017, remaining	$	32.6
2018	124.0
2019	110.4
2020	94.4
2021	81.6
Thereafter	375.2
	818.2
Less: sublease income	(32.3		)
Total minimum payments required	$	785.9

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The Company incurred rent expense of $42.9 and $20.5 relating to operating leases during the three months ended March 31, 2017 and 2016 respectively and $103.6 and $60.2 during the nine months ended March 31, 2017 and 2016 respectively.

15. INTEREST EXPENSE, NET

Interest expense, net for the three and nine months ended March 31, 2017 and 2016 is presented below:



	Three Months Ended March 31,						Nine Months Ended March 31,
	2017			2016			2017			2016
Interest expense	$	59.0		$	33.1		$	157.9		$	73.4
Foreign exchange (gains) losses, net of derivative contracts ^(a)	2.6			(6.2		)	3.8			(14.9		)
Interest income	(0.8		)	(1.8		)	(2.6		)	(2.8		)
Total interest expense, net	$	60.8		$	25.1		$	159.1		$	55.7

^(a) During the nine months ended March 31, 2016 the Company recorded a gain of $11.1 related to short-term forward contracts to exchange Euros for U.S. Dollars related to the Euro tranche of the Coty Term Loan B Facility debt issued during the quarter. These short-term forward contracts were entered into to facilitate the repayment of the Company’s then existing U.S. Dollar denominated term loans as part of the Company’s fiscal 2016 debt refinancing. Fluctuations in exchange rates between the dates the short-term forward contracts were entered into and the settlement date resulted in a gain upon settlement of $11.1 included within Foreign exchange (gains) losses, net of derivative contracts for the nine months ended March 31, 2016.

16. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost for pension plans and other post-employment benefit plans recognized in the Condensed Consolidated Statements of Operations are presented below for the three and nine months ended March 31, 2017 and 2016 :



	Three Months Ended March 31,
	Pension Plans											Other Post- Employment Benefits
	U.S.					International						U.S.						International				Total
	2017		2016			2017			2016			2017			2016			2017		2016		2017			2016
Service cost	$	—	$	—		$	15.4		$	1.7		$	0.3		$	0.3		$	0.3	$	—	$	16.0		$	2.0
Interest cost	0.2		0.8			2.0			0.9			0.4			0.5			0.1		—		2.7			2.2
Expected return on plan assets	—		(0.6		)	(2.6		)	(0.3		)	—			—			—		—		(2.6		)	(0.9		)
Amortization of prior service cost (credit)	—		—			0.1			0.1			(1.5		)	(1.4		)	—		—		(1.4		)	(1.3		)
Amortization of net loss	0.4		0.3			1.1			0.8			—			—			—		—		1.5			1.1
Settlement loss recognized	—		—			—			—			—			—			—		—		—			—
Net periodic benefit cost (credit)	$	0.6	$	0.5		$	16.0		$	3.2		$	(0.8	)	$	(0.6	)	$	0.4	$	—	$	16.2		$	3.1



	Nine Months Ended March 31,
	Pension Plans												Other Post- Employment Benefits
	U.S.						International						U.S.						International				Total
	2017			2016			2017			2016			2017			2016			2017		2016		2017			2016
Service cost	$	—		$	—		$	24.5		$	5.1		$	0.9		$	0.9		$	0.6	$	—	$	26.0		$	6.0
Interest cost	1.5			2.4			4.7			2.7			1.2			1.5			0.2		—		7.6			6.6
Expected return on plan assets	(0.9		)	(1.8		)	(4.4		)	(0.9		)	—			—			—		—		(5.3		)	(2.7		)
Amortization of prior service cost (credit)	—			—			0.3			0.3			(4.5		)	(4.2		)	—		—		(4.2		)	(3.9		)
Amortization of net loss	1.4			0.9			3.3			2.4			—			—			—		—		4.7			3.3
Settlement loss recognized	15.9			—			—			—			—			—			—		—		15.9			—
Net periodic benefit cost (credit)	$	17.9		$	1.5		$	28.4		$	9.6		$	(2.4	)	$	(1.8	)	$	0.8	$	—	$	44.7		$	9.3

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U.S. Del Laboratories, Inc. Pension Plan Settlement

The Company settled obligations to U.S. Del Laboratories, Inc. pension plan (the “Plan”) participants during the first and second quarters of fiscal year 2017 resulting in the recognition of pre-tax settlement losses of $15.9 , included in Selling, general and administrative expenses in the Condensed Consolidated Statement of Operations for the nine months ended March 31, 2017 . The settlement occurred in two phases as described below. In the first phase, lump sum payments were made to a group of plan participants and in the second phase, the Company transferred the remainder of the Plan’s obligation to a third-party insurance company by purchasing annuity contracts. As of December 31, 2016 the Plan had been fully terminated as a result of these actions.

In the first phase, which occurred during the three months ended September 30, 2016, the Plan’s assets and benefit obligation were remeasured, immediately prior to lump sum payments, using a discount rate of 3.7% compared to 3.8% as of June 30, 2016. As a result of the re-measurement, the net pension liability decreased by $2.9 as compared to the June 30, 2016 net pension liability. The net pension liability decrease was primarily a result of differences in interest rate and mortality assumptions used by Company to measure the plan liability as of June 30, 2016 compared to those assumptions used to determine lump sum benefits to be paid to participants, as mandated by the IRS. The decrease in the Plan’s net pension liability resulted in a corresponding increase in other comprehensive (loss) income for the three months ended September 30, 2016. In connection with this partial settlement the Company recognized a pre-tax settlement loss of $3.1 , during the three months ended September 30, 2016, due to accelerated recognition of losses previously deferred within accumulated other comprehensive loss.

In the second phase, which occurred during the three months ended December 31, 2016, the Company transferred the remainder of the Plan’s pension obligation to a third-party insurance provider by purchasing annuity contracts. The settlement was facilitated by a cash contribution of $8.8 followed by liquidation of the Plan’s assets totaling $47.0 at the settlement date. As a result of this transaction the Company recognized a pre-tax settlement loss of $12.8 , during the three months ended December 31, 2016, due to accelerated recognition of losses previously deferred within accumulated other comprehensive loss.

During the three months ended September 30, 2016, the Company recognized a curtailment gain of $1.8 in connection with involuntary employee terminations as part of the Acquisition Integration Program, which significantly reduced the expected years of future service of employees within one of the Company’s international pension plans. The curtailment gain is included in Restructuring costs in the Company’s Condensed Consolidated Statements of Operations for the nine months ended March 31, 2017 . Refer to Note 5 - Restructuring Costs for further information about the Acquisition Integration Program.

P&G Beauty Business Employee Benefit Plans

In connection with the P&G Beauty Business acquisition, the Company assumed certain international pension and other post-employment benefit plan obligations and assets. The following is a summary of the preliminary fair value of the acquired pension and other post-employment plan obligations and assets as of the October 1, 2016 acquisition date:



	Pension Plans			Other Post-Employment Benefits			Total
Benefit obligation	$	545.9		$	15.4		$	561.3
Fair value of plan assets	156.2			0.4			156.6
Funded status	$	(389.7	)	$	(15.0	)	$	(404.7	)

With respect to the acquired pension and other post-employment benefit plans, amounts recognized in the Company’s Condensed Consolidated Balance Sheet as of October 1, 2016 are presented below:



	Pension Plans			Other Post-Employment Benefits			Total
Noncurrent assets	$	—		$	—		$	—
Current liabilities	(0.9		)	—			(0.9		)
Noncurrent liabilities	(388.8		)	(15.0		)	(403.8		)
Funded Status	(389.7		)	(15.0		)	(404.7		)
Net amount recognized	$	(389.7	)	$	(15.0	)	$	(404.7	)

The accumulated benefit obligation for the defined benefit pension plans acquired was $479.1 as of October 1, 2016.

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Pension plans acquired with accumulated benefit obligations in excess of plan assets and projected benefit obligations in excess of plan assets as of October 1, 2016 are presented below:



	Pension plans with accumulated benefit obligations in excess of plan assets		Pension plans with projected benefit obligations in excess of plan assets
Projected benefit obligation	$	545.9	$	545.9
Accumulated benefit obligation	479.1		479.1
Fair value of plan assets	156.2		156.2

Pension and Other Post-Employment Benefit Assumptions

The weighted-average assumptions used to determine the Company’s projected benefit obligation above are presented below:



	Pension Plans		Other Post-Employment Benefits
Discount rates	1.1	%	1.6	%
Future compensation growth rates	2.5	%	4.2	%

The weighted-average assumptions used to determine the Company’s net periodic benefit cost for the three months ended March 31, 2017 are presented below:



	Pension Plans		Other Post-Employment Benefits
Discount rates	1.1	%	1.6	%
Future compensation growth rates	2.5	%	4.2	%
Expected long-term rates of return on plan assets	4.4	%	6.0	%

Asset Allocations

The target asset allocations for the acquired P&G Beauty Business pension plans as of March 31, 2017 and by asset category are presented below:



	Target		% of Plan Assets
			October 1, 2016
Equity securities	56.3	%	32.9	%
Fixed income securities	35.7	%	20.8	%
Cash and other investments	8.1	%	46.3	%

Contributions

The Company plans to contribute approximately $16.0 to fund the acquired pension plans in fiscal 2017.

17. DERIVATIVE INSTRUMENTS

Derivative and non-derivative financial instruments which are designated as hedging instruments:

The accumulated gain (loss) on foreign currency borrowings classified as net investment hedges in the foreign currency translation adjustment component of Accumulated other comprehensive income (loss) (“AOCI/(L)”) was $26.6 and $(2.5) as of March 31, 2017 and June 30, 2016, respectively.

The amount of gains and losses recognized in Other comprehensive income (loss) (“OCI”) in the Condensed Consolidated Balance Sheets related to the Company’s derivative and non-derivative financial instruments which are designated as hedging instruments for the three and nine months ended March 31, 2017 and 2016 is presented below:

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Gain (Loss) Recognized in OCI	Three Months Ended March 31,						Nine Months Ended March 31,
	2017			2016			2017			2016
Foreign exchange forward contracts	$	(0.9	)	$	(2.1	)	$	(0.3	)	$	5.5
Interest rate swap contracts	2.8			(22.1		)	48.1			(19.6		)
Net investment hedge	(9.0		)	(26.1		)	29.1			(17.0		)

As of March 31, 2017 , all of the Company’s remaining foreign currency forward contracts designated as hedges were highly effective. The accumulated gain (loss) on derivative instruments classified as cash flow hedges in AOCI/(L), net of tax, was $16.0 and $(28.9) as of March 31, 2017 and June 30, 2016 , respectively. The estimated net loss related to these effective hedges that is expected to be reclassified from AOCI/(L) into earnings, net of tax, within the next twelve months is $1.2 .

The amount of gains and losses reclassified from AOCI/(L) to the Condensed Consolidated Statements of Operations related to the Company’s derivative financial instruments which are designated as hedging instruments during the three and nine months ended March 31, 2017 and 2016 is presented below:



Condensed Consolidated Statements of Operations Classification of Gain (Loss) Reclassified from AOCI/(L)	Three Months Ended March 31,						Nine Months Ended March 31,
	2017			2016			2017			2016
Foreign exchange forward contracts:
Net revenue	$	0.5		$	1.7		$	2.1		$	4.5
Cost of sales	(1.5		)	0.3			(1.2		)	0.4
Interest rate swap contracts:
Interest expense	$	(1.9	)	$	(3.3	)	$	(8.5	)	$	(4.1	)

Derivatives not designated as hedging:

The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments during the three and nine months ended March 31, 2017 and 2016 is presented below:



Condensed Consolidated Statements of Operations Classification of Gain (Loss) Recognized in Operations	Three Months Ended March 31,						Nine Months Ended March 31,
	2017			2016			2017		2016
Selling, general and administrative expenses	$	(2.3	)	$	(0.1	)	(1.9	)	1.2
Interest expense, net	(5.9		)	(39.3		)	4.1		(15.6	)
Other (expense) income, net ^(a)	(0.1		)	(5.4		)	(0.5	)	(29.6	)

^(a) During the three and nine months ended March 31, 2016, the Company recognized $5.4 and $29.6 of realized losses, respectively, on foreign currency forward contracts related to an advance payment for the Brazil Acquisition.

18. EQUITY

Common Stock

As of March 31, 2017 , the Company’s common stock consisted of Class A Common Stock with a par value of $0.01 per share. The holders of Class A Common Stock are entitled to one vote per share. Prior to September 30, 2016, the Company had Class B Common Stock outstanding, which had special voting rights.

On September 29, 2016, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation amending the Amended and Restated Certificate of Incorporation of the Company to increase the number of authorized shares of Class A Common Stock from 800.0 million shares to 1,000.0 million shares.

Prior to October 1, 2016, the Company was a majority-owned subsidiary of JAB Cosmetics B.V. (“JABC”). Both JABC and the shares of the Company held by JABC are indirectly controlled by Lucresca SE, Agnaten SE and JAB Holdings B.V. (“JAB”). On August 1, 2016, JABC, began to purchase the Company’s Class A Common Stock in open market purchases on the New York Stock Exchange. During the nine months ended March 31, 2017, JABC acquired 2.6 million shares of Class A Common Stock. The Company did not receive any proceeds from these stock purchases conducted by JABC.

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On September 30, 2016, JABC converted all of its shares of Class B Common Stock of the Company into shares of Class A Common Stock of the Company. The Company issued approximately 262.0 million shares of Class A Common Stock to JABC upon the conversion of JABC’s shares of Class B Common Stock.

On October 1, 2016 the Company issued 409.7 million shares of Class A Common Stock in connection with the closing of the Transactions as described in Note 3 — Business Combinations.

As of March 31, 2017 , total authorized shares of Class A Common Stock was 1,000.0 million and total outstanding shares of Class A Common Stock was 747.6 million . As of March 31, 2017 , the Company was no longer a majority-owned subsidiary of JAB.

Preferred Stock

As of March 31, 2017 , the Company’s preferred stock consisted of Series A Preferred Stock with a par value of $0.01 per share. The Series A Preferred Stock is not entitled to receive any dividends and has no voting rights except as required by law. Series A Preferred Stock were accounted for partially as a liability and partially as equity as of March 31, 2017 .

On November 25, 2016, the Company sold 1.0 million shares of Series A Preferred Stock for $0.01 par value to Camillo Pane (“Mr. Pane”), the Company’s Chief Executive Officer. Under the terms provided in the subscription agreement, the holder of the vested Series A Preferred Stock is entitled to exchange the Series A Preferred Stock into either cash or shares, at the election of the Company, equal to the fair market value of a share of Class A Common Stock based on the 10-day trailing average closing price on the date of conversion less $22.34 . If the holder does not exchange the vested Series A Preferred Stock by a certain expiration date, the Company must automatically exchange the Series A Preferred Stock into cash or shares, at the election of the Company. Additionally, Mr. Pane is entitled to a cash bonus of $2.60 per share upon exchanging shares of Series A Preferred stock if the market value of Class A Common Stock on the date of conversion exceeds $22.34 .

On December 21, 2016, the Company filed with the Secretary of State of the State of Delaware (i) a Certificate of Retirement with respect to 5,493,894 shares of Series A Preferred Stock previously retired, cancelled and redeemed by the Company and (ii) filed a Certificate of Increase to increase the number of shares designated as Series A Preferred Stock from 3,506,106 to 6,506,106 .

On February 16, 2017, the Company sold 0.5 million shares of Series A Preferred Stock for $0.01 par value to Sebastien Froidefond (“Mr. Froidefond”), the Company’s Chief Human Resources Officer. Under the terms provided in the subscription agreement, the holder of the vested Series A Preferred Stock is entitled to exchange the Series A Preferred Stock into either cash or shares, at the election of the Company, equal to the fair market value of a share of Class A Common Stock based on the 10-day trailing average closing price on the date of conversion less $22.66 . If the holder does not exchange the vested Series A Preferred Stock by a certain expiration date, the Company must automatically exchange the Series A Preferred Stock into cash or shares, at the election of the Company. Additionally, Mr. Froidefond is entitled to a cash bonus of $2.62 per share upon exchanging shares of Series A Preferred Stock if the market value of Class A Common Stock on the date of conversion exceeds $22.66 .

On March 27, 2017, the Company sold 1.0 million shares of Series A Preferred Stock for $0.01 par value to Lambertus J.H. Becht (“Mr. Becht”), the Company’s Chairman of the Board. Under the terms provided in the subscription agreement, the Series A Preferred Stock immediately vests on the grant date and the holder is entitled to exchange the vested Series A Preferred Stock after the fifth anniversary of the grant date into either cash or shares, at the election of the Company equal to the fair market value of a share of Class A Common Stock based on the 10-day trailing average closing price on the date of conversion less $22.39 . If the holder does not exchange the vested Series A Preferred Stock by a certain expiration date, the Company must automatically exchange the Series A Preferred Stock into cash or shares, at election of the Company. The Company requires shareholder approval to settle the conversion in shares. The award is accounted for as a liability as of March 31, 2017 and recorded an expense of $3.6 in Selling, general and administrative expense on the Condensed Consolidated Statements of Operations.

As of March 31, 2017 , total authorized shares of Series A Preferred Stock are 6.5 million and total outstanding shares of Series A Preferred Stock are 4.2 million . Of the 4.2 million outstanding shares of Series A Preferred Stock, 1.0 million shares vested on March 27, 2017, 1.7 million shares vest on April 15, 2020, 1.0 million shares vest on November 25, 2021 and 0.5 million shares vest on February 16, 2022. As of March 31, 2017 , the Company classified $1.1 Series A Preferred Stock as equity, and $4.7 as a liability recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheet.

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Treasury Stock - Share Repurchase Program

On February 3, 2016, the Board authorized the Company to repurchase up to $500.0 of its Class A Common Stock (the “Incremental Repurchase Program”). Subject to certain restrictions on repurchases of shares through September 30, 2018 imposed by the tax matters agreement, dated October 1, 2016, as amended, between the Company and P&G entered into in connection with the P&G Beauty Business acquisition, repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its Class A Common Stock, and general market conditions. For the three and nine months ended March 31, 2017 , the Company has repurchased nil and 1.4 million shares, respectively, of its Class A Common Stock. The shares were purchased in multiple transactions at prices ranging from $25.35 to $27.40 . The aggregate fair value of shares repurchased during the nine months ended March 31, 2017 was $36.3 , and was recorded as an increase to Treasury stock in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests. As of March 31, 2017, the Company had $396.8 remaining under the Incremental Repurchase Program.

Dividend s

On August 1, 2016, the Company declared an annual cash dividend of $0.275 per share, or $93.4 on its Common Stock, restricted stock units (the “RSUs”) and phantom units. Of the $93.4 , $92.4 was paid on August 19, 2016 to holders of record of Common Stock on August 11, 2016. The remaining $1.0 is payable upon settlement of the RSUs and phantom units outstanding as of August 11, 2016.

On December 9, 2016, the Company declared a quarterly cash dividend of $0.125 per share, or $94.0 on its Common Stock, RSUs and phantom units. Of the $94.0 , $93.4 was paid on December 28, 2016 to holders of record of Common Stock on December 19, 2016. The remaining $0.6 is payable upon settlement of the RSUs and phantom units outstanding as of December 19, 2016.

On February 9, 2017, the Company declared a quarterly cash dividend of $0.125 per share, or $94.0 on its Common Stock, RSUs and phantom units. Of the $94.0 , $93.4 was paid on March 10, 2017 to holders of record of Common Stock on February 28, 2017. The remaining $0.6 is payable upon settlement of the RSUs and phantom units outstanding as of February 28, 2017.

Additionally, the Company decreased the dividend accrual recorded in a prior period by $0.2 to adjust for accrued dividends on RSUs no longer expected to vest, which was recorded as an increase to APIC in the Condensed Consolidated Balance Sheet as of March 31, 2017 . Total accrued dividends on unvested RSUs and phantom units of $1.0 and $2.8 are included in Accrued expense and other current liabilities and Other noncurrent liabilities, respectively, in the Condensed Consolidated Balance Sheet as of March 31, 2017 .

Accumulated Other Comprehensive Loss



	Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments						Pension and Other Post-Employment Benefit Plans			Total
	Gain (Loss) on Cash Flow Hedges			Gain (Loss) on Net Investment Hedges			Other Foreign Currency Translation Adjustments			Pension and Other Post-Employment Benefit Plans			Total
Balance—July 1, 2016	$	(28.9	)	$	(2.5	)	$	(164.0	)	$	(44.3	)	$	(239.7	)
Other comprehensive (loss) income before reclassifications	40.7			29.1			(38.1		)	0.4			32.1
Net amounts reclassified from AOCI/(L)	4.2			—			—			9.7			13.9
Net current-period other comprehensive (loss) income	44.9			29.1			(38.1		)	10.1			46.0
Balance—March 31, 2017	$	16.0		$	26.6		$	(202.1	)	$	(34.2	)	$	(193.7	)

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	Losses on Cash Flow Hedges			Foreign Currency Translation Adjustments						Pension and Other Post-Employment Benefit Plans			Total
	Losses on Cash Flow Hedges			Loss on Net Investment Hedge			Foreign Currency Translation Adjustments			Pension and Other Post-Employment Benefit Plans			Total
Balance—July 1, 2015	$	(0.1	)	$	—		$	(249.3	)	$	(24.6	)	$	(274.0	)
Other comprehensive (loss) income before reclassifications	(14.7		)	(17.0		)	54.5			0.2			23.0
Net amounts reclassified from AOCI/(L)	0.1			—			—			—			0.1
Net current-period other comprehensive (loss) income	(14.6		)	(17.0		)	54.5			0.2			23.1
Balance—March 31, 2016	$	(14.7	)	$	(17.0	)	$	(194.8	)	$	(24.4	)	$	(250.9	)

19. SHARE-BASED COMPENSATION PLANS

Total share-based compensation expense was $10.4 and $12.4 for the three months ended March 31, 2017 and 2016, respectively, $22.7 and $29.3 for the nine months ended March 31, 2017 and 2016 , respectively, which is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. As of March 31, 2017 , the total unrecognized share-based compensation expense related to unvested stock options, Series A Preferred Stock, and restricted and other share awards is $27.1 , $5.2 and $61.8 , respectively. The unrecognized share-based compensation expense related to unvested stock options, Series A Preferred stock, and restricted and other share awards is expected to be recognized over a weighted-average period of 4.62 , 4.02 and 3.20 years, respectively.

Restricted Share Units

The Company granted approximately nil and 2.8 million RSUs during the three and nine months ended March 31, 2017 , respectively, with a weighted-average grant date fair value per share of $24.60 , which vests on the fifth anniversary of the grant date. The RSUs granted are accompanied by dividend equivalent rights and, as such, were valued at the closing market price of the Company’s Class A Common Stock on the date of grant. The Company recognized share-based compensation expense of $4.4 and $12.7 for the three and nine months ended March 31, 2017 , respectively. The Company recognized share-based compensation expense of $4.0 and $15.4 for the three and nine months ended March 31, 2016 , respectively.

Series A Preferred Stock

The Company granted 1.5 million and 2.5 million shares of Series A Preferred Stock during the three and nine months ended March 31, 2017 , respectively, which are accounted for partially as a liability and partially as equity. Refer to Note 18 — Equity for additional information about Series A Preferred grants during the period. The Company recognized share-based compensation expense of $4.0 and $3.3 for the three and nine months ended March 31, 2017 , respectively. The Company recognized share-based compensation expense of $0.6 and $1.3 for the three and nine months ended March 31, 2016 , respectively.

The Series A Preferred Stock have previously been accounted for using the Black-Scholes valuation model. During the nine months ended March 31, 2017, the Company granted Series A Preferred Stock that include cash bonus payments tied to the exercise of the awards. Due to the addition of cash bonus payments in connection with the grant of Series A Preferred Stock to certain executives in fiscal 2017, the Company began estimating the fair value of the Series A Preferred Stock using a binomial lattice model to value the equity and cash bonus components of the combined instrument as of March 31, 2017. The lattice structure the Company uses to value the exchange option consists of (i) a common stock lattice that models the possible stock price movements from the valuation date to the maturity date consistent with the stock price and estimated volatility on the valuation date; (ii) a share exchange lattice that calculates the value of the common stock received on conversion; (iii) a cash exchange lattice that calculates the value of the cash bonus; and (iv) a continuation value lattice that tracks the holding value of the combined instrument. The significant assumptions the Company uses in its binomial lattice model are further described below.

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	March 31, 2017
Historical volatility	30.9%
Implied volatility	32.3%
Risk-free rate of return	1.94% - 2.22%
Dividend yield on Class A Common Stock	2.8%
Yield on cash	4.9%

Historical volatility - The Company calculates historical volatility based on volatility of the daily historical prices of the common stock for the longest look-back period with available data.

Implied volatility - The Company calculates implied volatility based on publicly traded at the market options maturing January 2019 that track the Company’s Class A Common Stock.

Risk-free rate of return - The Company bases the risk-free rate of return on the US Constant Maturity Treasury Rate.

Dividend yield on Class A Common Stock - The Company calculates the dividend yield on shares using the annualized dividend rate calculated based on the per share cash dividend paid quarterly and the stock price as of the valuation date.

Yield on cash - The Company calculates the yield of comparable securities with a similar credit rating to the Company.

Non-Qualified Stock Options

The Company granted nil and 8.2 million non-qualified stock options during the three and nine months ended March 31, 2017 , respectively, with a weighted average grant date fair value of $6.42 per share. The options become exercisable five years from the date of the grant. The Company recognized share-based compensation expense of $2.0 and $6.7 for the three and nine months ended March 31, 2017 , respectively. The Company recognized share-based compensation expense of $7.8 and $12.6 for the three and nine months ended March 31, 2016 , respectively.

20. NET INCOME ATTRIBUTABLE TO COTY INC. PER COMMON SHARE

Reconciliation between the numerators and denominators of the basic and diluted EPS computations is presented below:



	Three Months Ended March 31,						Nine Months Ended March 31,
	2017			2016			2017			2016
	(in millions, except per share data)
Net income (loss) attributable to Coty Inc.	$	(164.2	)	$	(26.8	)	$	(117.4	)	$	187.9
Weighted-average common shares outstanding—Basic	747.3			337.9			607.9			347.8
Effect of dilutive stock options and Series A Preferred Stock ^(a)	—			—			—			6.1
Effect of restricted stock and RSUs ^(b)	—			—			—			3.0
Weighted-average common shares outstanding—Diluted	747.3			337.9			607.9			356.9
Net income attributable to Coty Inc. per common share:
Basic	$	(0.22	)	$	(0.08	)	$	(0.19	)	$	0.54
Diluted	(0.22		)	(0.08		)	(0.19		)	0.53

^(a)

For the three and nine months ended March 31, 2017 and the three months ended March 31, 2016 , no outstanding stock options and Series A Preferred Stock with purchase or conversion rights to purchase shares of common stock were included in the computation of diluted loss per share due to the net loss incurred during the respective periods. For the nine months ended March 31, 2016, outstanding stock options and Series A Preferred Stock with purchase or conversion rights to purchase 3.2 million options were excluded in the computation of EPS as their inclusion would be anti-dilutive.


^(b)	For the three and nine months ended March 31, 2017 and the three months ended March 31, 2016 , no RSU were excluded in the computation of diluted loss per share due to the net loss incurred during the period. For the nine months ended March 31, 2016, 0.1 million RSU were excluded in the computation of diluted loss per share as their inclusion would be anti-dilutive.

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21. NONCONTROLLING INTERESTS AND REDEEMABLE NONCONTROLLING INTERESTS

Noncontrolling Interests

The Company has the right to purchase the noncontrolling interests in certain subsidiaries from the noncontrolling interest holders at certain points in time.

In December 2014, the Company gave notice of intent to exercise its right to purchase the noncontrolling interest for 14% of a certain Singapore subsidiary from the noncontrolling interest holder at an estimated purchase price of approximately $10.7 for this 14% . In addition, on September 29, 2015, the Company gave notice of intent to exercise its option to terminate the Shareholders’ Agreement with the noncontrolling interest holder and to purchase the remaining 35% of the noncontrolling interest holder’s interest in the Singapore subsidiary. The noncontrolling interest holder indicated the desire to continue its participation and to retain an equity investment in the joint venture. The Company and the noncontrolling interest holder are exploring alternative options of restructuring the joint venture.

Redeemable Noncontrolling Interests

As of March 31, 2017, the redeemable noncontrolling interests (“RNCI”) consisted of a 33.0% interest in consolidated subsidiaries in the United Arab Emirates and a 40.0% interest in the consolidated subsidiaries related to the Younique acquisition. See Note 3 — Business Combinations.

On February 1, 2017, the Company completed its acquisition of 60% of the membership interest in Foundation which held the net assets of Younique, for cash consideration of $600.0 , net of acquired cash and debt assumed. The existing Younique membership holders contributed their 100% membership interest in Younique to Foundation in exchange for a 40% membership interest in Foundation and $600.0 of cash consideration. The Company accounts for the noncontrolling interest portion of the Foundation as RNCI due to the noncontrolling interest holder’s ability to put their shares to the Company in certain circumstances. The Company recognized $410.9 and $433.6 as the redeemable noncontrolling interest balances as of February 1, 2017 (acquisition date) and March 31, 2017 , respectively.

The Company has the right to purchase the RNCI in Foundation from the RNCI holders (each such right, a “Foundation Call right”) upon the occurrence of certain events that are not in the Company’s control. In addition to the Foundation Call right features, the noncontrolling interest holders of Foundation have the right to sell the noncontrolling interests to the Company upon the occurrence of certain events (each such right, a “Foundation Put right”).

The amount at which the Foundation Put right and Foundation Call right can be exercised is based on a fair value at the exercise date, multiplied by the noncontrolling interest holder’s percentage interest in Foundation. In certain circumstances the Foundation Put right or the Foundation Call right may be exercised at a discount or a premium. Currently management views the possibility of these circumstances occurring as remote. The noncontrolling interests are redeemable outside of the Company’s control and are recorded in the Condensed Consolidated Balance Sheets at the estimated fair value. The Company adjusts Foundation’s RNCI to the fair values at the end of each reporting period with changes recognized as adjustments to APIC.

The Company uses both an income approach and a market approach to estimate the fair value of the Foundation RNCI. The income approach is used to determine the fair value of the Foundation RNCI using a discounted cash flow method, projecting future cash flows of the business, as well as a terminal value, and discounting such cash flows at a rate of return that reflects the relative risk of the cash flows. For the market approach the Company uses a selected multiple based on comparable companies multiplied by the forecasted cash flows. The key estimates and factors used in this approach include, but are not limited to, revenue growth rates and profit margins based on our internal forecasts and the entity specific weighted-average cost of capital used to discount future cash flows.

On February 12, 2016, the Company gave notice of intent to exercise our option to purchase as of June 30, 2016 the noncontrolling interest in a certain Hong Kong subsidiary at the purchase price of $9.8 for the remaining 45% interest. The transaction was effective as of June 30, 2016 and the payment was completed during the three months ended December 31, 2016.

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22. COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is involved, from time to time, in litigation, other regulatory actions and other legal proceedings incidental to its business, including consumer class action, personal injury, intellectual property and advertising claims litigation, among others. While the Company cannot predict any final outcomes relating thereto, management believes that the outcome of current litigation, regulatory actions and legal proceedings will not have a material effect upon its business, results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation, regulatory actions and other legal proceedings, especially those related to the P&G Beauty Business, is ongoing, and could change in light of the discovery of facts with respect to litigation, regulatory actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, arbitrators, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation, regulatory actions and legal proceedings. As the outcomes of such proceedings are unpredictable, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, financial condition, results of operations or cash flows.

Noncontrolling Interests and Redeemable Noncontrolling Interests

Refer to Note 21 — Noncontrolling Interests and Redeemable Noncontrolling Interests for commitments and contingencies related to certain noncontrolling and redeemable controlling interests the Company holds as of March 31, 2017.

23. SUBSEQUENT EVENTS

Burberry Beauty Business

On April 3, 2017, the Company entered in an agreement with Burberry Limited (“Burberry”) to acquire the exclusive long-term global license rights to develop, manufacture, advertise, promote and distribute Burberry Beauty luxury fragrances, cosmetics and skincare (the “Burberry License Agreement”). Upfront consideration for this license will total £130.0 million and is expected to be paid at the commencement of the licensing arrangement, in the second quarter of fiscal 2018. The Company will be required to make annual license fee payments, subject to license fee minimums, to Burberry over the term of the Burberry License Agreement. The Company is also expected to pay to Burberry approximately £50.0 million for inventory at the closing.

Restructuring

As described in Note 5 – Restructuring, in connection with the acquisition of the P&G Beauty Business, the Company is evaluating actions associated with Global Integration Activities. As part of these actions, on May 9, 2017, the Board approved plans to optimize the Company’s global supply chain capabilities. The Company estimates these actions will result in total pre-tax restructuring and related costs of approximately $300.0 , to be incurred over the next two years.

The estimate includes costs for employee termination benefits, costs to exit facilities, and other costs directly related to the restructuring activities. The cash portion of the total pre-tax charges associated with supply chain optimization is expected to be approximately $250.0 .

Quarterly Dividend

On May 10, 2017, the Company announced a quarterly cash dividend of $0.125 per share on its Common Stock, restricted stock units (the “RSUs”) and phantom units. The dividend will be paid on June 13, 2017 to holders of record of Common Stock on May 31, 2017.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following report and analysis of the financial condition and results of operations of Coty Inc. and its consolidated subsidiaries, should be read in conjunction with the information contained in the Condensed Consolidated Financial Statements and related notes included elsewhere in this document, and in our other public filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the fiscal year ended June 30, 2016 (“Fiscal 2016 Form 10-K”). When used in this report, the terms “Coty,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Coty Inc. and its majority and consolidated subsidiaries. The following report contains forward-looking statements regarding, among other things, our future operations and financial performance, expected growth (including revenue declines and trends), our ability to support our planned business operation on a near- and long-term basis, mergers and acquisitions, divestitures, plans, activities, strategic restructuring initiatives, synergies or growth from acquisitions, future dividend payments and our outlook for the second half of fiscal 2017 and all other future reporting periods. These statements are based on certain assumptions and estimates that we consider reasonable and actual results may differ from those contained in any forward-looking statements. See “Risk Factors” and “Forward-Looking Statements” in this Quarterly Report on Form 10-Q for a discussion of the uncertainties, risks and assumptions associated with these statements, as well as any updates to such report as may be included in subsequent reports we file with the SEC. The following report includes certain non-GAAP financial measures. See “Overview—Non-GAAP Financial Measures” for a discussion of non-GAAP financial measures and how they are calculated.

All dollar amounts in the following report are in millions of United States (“U.S.”) dollars, unless otherwise indicated.

OVERVIEW

We are a global beauty company and our strategic vision is to be a new global leader and challenger in the beauty industry. We manufacture, market, sell and distribute branded beauty products, including fragrances, color cosmetics, hair care products and skin & body related products throughout the world.

Operating and Reportable Segments

On October 1, 2016, we acquired certain assets and liabilities related to The Procter & Gamble Company’s global fine fragrances, salon professional, cosmetics and retail hair color businesses, along with select hair styling brands (such brands “P&G Beauty Business”, and such acquisition and the other transactions contemplated by the related acquisition agreement, the “Transactions”). Prior to the Transactions, we operated and managed our business as four operating and reportable segments: Fragrances, Color Cosmetics, Skin & Body Care, and the Brazil Acquisition. Following the close of the Transactions, we reorganized our business into three divisions: Luxury, Consumer Beauty and Professional Beauty, and we determined that our operating and reportable segments would reflect this new divisional structure. As a result of this change in segment reporting, we restated prior period results, by segment, to conform to current period presentation. Certain revenues, shared costs and the results of corporate initiatives are managed outside of our three segments by Corporate.

Our organizational structure is product category focused, putting the consumer first, by specifically targeting how and where they shop and what and why they purchase. Each division has full end-to-end responsibility to optimize the consumers’ beauty experiences in their relevant categories and channels in this new organizational design and translate this into profitable growth.

The new operating and reportable segments are:

Luxury — focused on prestige fragrances, premium skin care and premium cosmetics;

Consumer Beauty — focused on color cosmetics, retail hair coloring and styling products, mass fragrance, mass skin care and body care;

Professional Beauty — focused on hair and nail care products for professionals.

Geographic Structure

Additionally, in connection with the Company’s acquisition of the P&G Beauty Business, the Company reorganized its geographical structure to be North America (Canada and the United States), Europe and ALMEA (Asia, Latin America, the Middle East, Africa and Australia).

Business Overview

We continue to operate in a challenging environment, currently with declines in several of our segments and geographies in which we compete and, particularly for our Consumer Beauty segment, increasing competitive pressure and changing consumer preferences. In particular, declines in the retail nail, color cosmetics and hair color categories in the U.S. and mass fragrance in Western Europe and the U.S. continue to impact our business and financial results.

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We consistently introduce new products and support new and established products through our focus on strategic advertising and merchandising, which we must continuously develop and evolve in response to new products and shifting consumer preferences in order to offset the gradual decline of products that are later in their lifecycles. The economics of developing, producing, launching, supporting and discontinuing products impact the timing of our sales and operating performance each period. We also continuously evaluate strategic transactions and new brand licenses to enhance our portfolio. During the third quarter of fiscal 2017, we completed the acquisition of a 60% membership interest in Younique, a leading online peer-to-peer social selling platform, which will operate within the Consumer Beauty division. We also entered into an agreement to acquire the exclusive long-term global license rights for Burberry Beauty luxury fragrances, cosmetics and skincare, which will be managed within the Luxury division.

We believe our business has attractive opportunities, including the continued performance of our Professional Beauty segment and improving performance of our Luxury segment. However, in certain categories, our net revenues are declining faster than the category or despite category growth, and we have experienced challenges in our Consumer Beauty segment, including declines in distribution and reduction in shelf space for certain brands. We are focused on addressing those challenges through brand repositioning, innovation, in-store execution and end-to-end digital capabilities. We have also identified our non-core portfolio of brands, representing approximately 6% to 8% of our net revenues, and are exploring alternatives for these brands, including divestiture.

The diversion of resources to closing the Transactions and integrating the P&G Beauty Business, the recent changes in our management teams as we reorganized our business and transitional factors, including significantly higher than expected trade inventory prior to the closing of the Transactions, have negatively impacted our fiscal year-to-date results from certain P&G Beauty Business brands. However, we successfully exited the first stage of our transition services agreement with P&G in our North American business, which positively impacted our quarterly results. We intend to exit the remaining stages of the transition services agreement in stages during the course of calendar year 2017, which may impact our quarterly results due to timing of shipment of orders or unexpected technical or other challenges with such exits.

As previously disclosed in connection with the Transactions, we expect to incur a total of approximately $1.2 billion of operating expenses and approximately $500 million of capital expenditures. Through March 31, 2017, we incurred life-to-date operating expenses and capital expenditures against these estimates of approximately $550 million and $150 million, respectively, and we expect the remaining operating expenses, including any anticipated restructuring activities, and capital expenditures to be incurred in future periods through fiscal 2020. Further, in connection with the Transactions, we are implementing our plan through which we continue to target realizing approximately $750 million of synergies driven by cost, procurement, supply chain and selling, general, and administrative savings over the next four years. We expect to cumulatively generate approximately 20% of the net synergies through fiscal 2017, approximately 50% through fiscal 2018, approximately 80% through fiscal 2019 and the full $750 million through fiscal 2020.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures including Adjusted operating income, Adjusted net income attributable to Coty Inc. and Adjusted net income attributable to our per common share (the “Adjusted Performance Measures”). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in the tables below. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Three Months Ended March 31, 2017 As Compared To Three Months Ended March 31, 2016 ” and “Nine Months Ended March 31, 2017 As Compared To Nine Months Ended March 31, 2016 .” These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Despite the limitations of these non-GAAP financial measures, our management uses the Adjusted Performance Measures as key metrics in the evaluation of our performance and annual budgets and to benchmark performance of our business against our competitors. The following are examples of how these Adjusted Performance Measures are utilized by our management:


•	strategic plans and annual budgets are prepared using the Adjusted Performance Measures;


•	senior management receives a monthly analysis comparing budget to actual operating results that is prepared using the Adjusted Performance Measures; and


•	senior management’s annual compensation is calculated, in part, by using the Adjusted Performance Measures.

In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these Adjusted Performance Measures.

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Our management believes that Adjusted Performance Measures are useful to investors in their assessment of our operating performance and the valuation of the Company. In addition, these non-GAAP financial measures address questions we routinely receive from analysts and investors and, in order to ensure that all investors have access to the same data, our management has determined that it is appropriate to make this data available to all investors. The Adjusted Performance Measures exclude the impact of certain items (as further described below) and provide supplemental information regarding our operating performance. By disclosing these non-GAAP financial measures, our management intends to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We provide disclosure of the effects of these non-GAAP financial measures by presenting the corresponding treatment prepared in conformity with GAAP in our financial statements, and by providing a reconciliation to the corresponding GAAP measure so that investors may understand the adjustments made in arriving at the non-GAAP financial measures and use the information to perform their own analyses.

Adjusted operating income excludes restructuring costs and business structure realignment programs, amortization, acquisition-related costs and acquisition accounting impacts, the impact of accounting modifications from liability plan accounting to equity plan accounting as a result of amended and restated share-based compensation plans, asset impairment charges and other adjustments as described below. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income attributable to Coty Inc. and Adjusted net income attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense as described below and the related tax effects of each of the items used to derive Adjusted net income as such charges are not used by our management in assessing our operating performance period-to-period.

The Adjusted Performance Measures were changed in the fourth quarter of fiscal 2016 to incorporate the exclusion of expense and tax effects associated with the amortization of acquisition-related intangible assets. Our management believes that such amortization is not reflective of the results of operations in a particular year because the intangible assets result from the allocation of the acquisition purchase price to the fair value of identifiable intangible assets acquired. The effect of this exclusion on our non-GAAP presentation was to amend Adjusted operating income in a manner that provides investors with a measure of our operating performance that facilitates period to period comparisons, as well as comparability to our peers. Exclusion of the amortization expense allows investors to compare operating results that are consistent over time for the consolidated company, including newly acquired and long-held businesses, to both acquisitive and nonacquisitive peer companies.

Adjusted Performance Measures reflect adjustments based on the following items:

•

Costs related to acquisition activities: We have excluded acquisition-related costs and acquisition accounting impacts such as those related to transaction costs and costs associated with the revaluation of acquired inventory in connection with business combinations because these costs are unique to each transaction. The nature and amount of such costs vary significantly based on the size and timing of the acquisitions and the maturities of the businesses being acquired. Also, the size, complexity and/or volume of past acquisitions, which often drives the magnitude of such expenses, may not be indicative of the size, complexity and/or volume of any future acquisitions.

•

Restructuring and other business realignment costs: We have excluded costs associated with restructuring and business structure realignment programs to allow for comparable financial results to historical operations and forward-looking guidance. In addition, the nature and amount of such charges vary significantly based on the size and timing of the programs. By excluding the referenced expenses from our non-GAAP financial measures, our management is able to further evaluate our ability to utilize existing assets and estimate their long-term value. Furthermore, our management believes that the adjustment of these items supplement the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

•

Amortization expense: We have excluded the impact of amortization of finite-lived intangible assets, as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplement the GAAP information with a measure that can be used to assess the sustainability of our operating performance. Although we exclude amortization of intangible assets from our non-GAAP expenses, our management believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.


•	Asset impairment charges: We have excluded the impact of asset impairments as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our

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management believes that the adjustment of these items supplement the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

•

Share-based compensation adjustment: We have excluded the impact of the fiscal 2013 accounting modification from liability plan to equity plan accounting for the share-based compensation plans as well as other share-based compensation transactions that are not reflective of the ongoing and planned pattern of recognition for such expense. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” contained in the respective forms filed with the SEC for a full discussion of the share-based compensation adjustment.


•	Interest and other (income) expense: We have excluded foreign currency impacts associated with acquisition-related and debt financing related forward contracts as the nature and amount of such charges are not consistent and are significantly impacted by the timing and size of such transactions.


•	Loss on early extinguishment of debt: We have excluded loss on extinguishment of debt as this represents a non-cash charge, and the amount and frequency of such charges is not consistent and is significantly impacted by the timing and size of debt financing transactions.


•	Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income. The tax impact of the non-GAAP adjustments are based on the tax rates related to the jurisdiction in which the adjusted items are received or incurred.

While acquiring brands and licenses comprises a part of our overall growth strategy, along with targeting organic growth opportunities, we have excluded acquisition-related costs and acquisition accounting impacts in connection with business combinations because these costs are unique to each transaction and the amount and frequency are not consistent and are significantly impacted by the timing and size of our acquisitions. Our management assesses the success of an acquisition as a component of performance using a variety of indicators depending on the size and nature of the acquisition, including:


•	the scale of the combined company by evaluating consolidated and segment financial metrics;


•	the expansion of product offerings by evaluating segment, brand, and geographic performance and the respective strength of the brands;


•	the evaluation of market share expansion in categories and geographies;


•	the earnings per share accretion and substantial incremental free cash flow generation providing financial flexibility for us; and


•	the comparison of actual and projected results, including achievement of projected synergies, post integration; provided that timing for any such comparison will depend on the size and complexity of the acquisition.

Constant Currency

We operate on a global basis, with the majority of our net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented excluding the impact of foreign currency exchange translations to provide a framework for assessing how our underlying businesses performed excluding the impact of foreign currency exchange translations (“constant currency”). Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using prior year foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information we present may not be comparable to similarly titled measures reported by other companies.

Basis of Presentation of Acquisitions

We closed the following acquisitions during the periods presented in this Management’s Discussion and Analysis of Financial Condition and Results of Operations: (i) the P&G Beauty Business during the second quarter of fiscal 2017, (ii) ghd during the second quarter of fiscal 2017, (iii) Younique during the third quarter of fiscal 2017 and (iv) the Brazil Acquisition during the third quarter of fiscal 2016. The Brazil Acquisition closed on February 1, 2016. Due to this timing, the financial results for the Brazil Acquisition for three and nine months ended March 31, 2017 are not comparable to financial results presented in the three and nine months ended March 31, 2016. To maintain a consistent basis between periods, we have excluded the contribution of the brands acquired through the Brazil Acquisition (the “Hypermarcas Brands”) for the first seven months of fiscal 2017 from the discussion of our results where we exclude the impact of recent acquisitions in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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When used herein, the term “Acquisitions” refers collectively to the financial contribution from the P&G Beauty Business, Younique and ghd acquisitions during those periods and the first seven months of contribution in fiscal 2017 from the Hypermarcas Brands.

THREE MONTHS ENDED MARCH 31, 2017 AS COMPARED TO THREE MONTHS ENDED MARCH 31, 2016

NET REVENUES

In the three months ended March 31, 2017 , net revenues increased greater than 100%, or $1,081.4 , to $2,032.1 from $950.7 in the three months ended March 31, 2016 . The acquisition of the P&G Beauty Business comprised 49% of total net revenues for the quarter and the Hypermarcas Brands, ghd and Younique combined comprised 7% of the total net revenues for the quarter. The acquisition of the P&G Beauty Business was the primary driver of the significant increase in total net revenues in all of our segments and geographic regions. The increase in net revenues in the three months ended March 31, 2017 reflects an increase in unit volume of greater than 100% and a positive price and mix impact of 4%, partially offset by a negative foreign currency exchange translations impact of 2%. Excluding the impacts of the Acquisitions and foreign currency exchange translations, total net revenues in the three months ended March 31, 2017 decreased 5%.

Net Revenues by Segment



	Three Months Ended March 31,
(in millions)	2017		2016		Change %
NET REVENUES
Luxury	$	634.6	$	405.9	56	%
Consumer Beauty	988.6		488.5		>100%
Professional Beauty	408.9		56.3		> 100%
Total	$	2,032.1	$	950.7	>100%

Luxury

In the three months ended March 31, 2017 , net revenues from the Luxury segment increased 56% , or $228.7 , to $634.6 from $405.9 in the three months ended March 31, 2016 , primarily due to the impact of the Acquisitions. The acquisition of the P&G Beauty Business comprised 39% of the total net revenues for the segment. Hugo Boss and Gucci fragrances were the largest contributors to net revenues as a result of the acquisition of the P&G Beauty Business. Excluding the impact of the Acquisitions, net revenues from the Luxury segment decreased 4% , or $17.5 , to $388.4 in the three months ended March 31, 2017 from $405.9 in the three months ended March 31, 2016 , reflecting a negative price and mix impact of 5% and a negative foreign currency exchange translations impact of 1%, partially offset by an increase in unit volume of 2%. This decrease primarily reflects lower net revenues from Marc Jacobs and Davidoff fragrances and philosophy skin care products, primarily driven by declines in net revenues from existing product lines. Partially offsetting the decline in net revenues was net revenue growth from the launch of Calvin Klein All during the quarter. The negative price and mix impact primarily reflects a higher volume of relative lower-priced philosophy and Calvin Klein products.

Consumer Beauty

In the three months ended March 31, 2017 , net revenues from the Consumer Beauty segment increased greater than 100%, or $500.1 , to $988.6 from $488.5 in the three months ended March 31, 2016 , primarily due to the impact of the Acquisitions. The acquisition of the P&G Beauty Business, Younique and the Hypermarcas Brands, comprised 43% , 8% and 2% , respectively, of the total net revenues for the segment. CoverGirl and Max Factor cosmetics and the retail product line of Wella and Clairol hair products were the largest contributors to net revenues as a result of the acquisition of the P&G Beauty Business, although a reduction in shelf space and declines in certain of these brands negatively impacted our results. Excluding the impact of the Acquisitions, net revenues from the Consumer Beauty segment decreased 5% , or $25.7 , to $462.8 in the three months ended March 31, 2017 , from $488.5 in the three months ended March 31, 2016 , primarily reflecting a negative price and mix impact of 24%, partially offset by an increase in unit volume of 18% and a positive foreign currency exchange translations impact of 1%. The decrease in net revenues primarily reflects: (i) lower net revenues from mass fragrances, which have been adversely impacted by a negative market trend in the U.S., (ii) lower net revenues from Rimmel and Sally Hansen, primarily as a result of the implementation of a new inventory management system by a key U.S. customer, as well as declines in existing products and (iii) lower net revenues from Astor as a result of a decrease in shelf space in Germany and Eastern Europe, partially offset by higher net revenues from the Hypermarcas Brands. Net revenues from the Hypermarcas Brands were higher in the fiscal 2017 period compared to the fiscal 2016 period as a result of trade term harmonization to conform to our policies, creating a lower net revenue comparison in the prior year period, as well as a result of the strong in-market performance.

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Declines in Sally Hansen also reflect negative market trends in the U.S. The negative price and mix impact primarily reflects a higher level of promotional and discounting activities for several brands in the segment and a higher volume of relatively lower-priced products, such as the Hypermarcas Brands.

Professional Beauty

In the three months ended March 31, 2017 , net revenues from the Professional Beauty segment increased greater than 100%, or $352.6 , to $408.9 from $56.3 in the three months ended March 31, 2016 , primarily due to the impact of the Acquisitions. The acquisition of the P&G Beauty Business and ghd comprised 78% and 11% , respectively, of the total net revenues for the segment. The professional product line of Wella hair products was the largest contributor to net revenues as a result of the P&G Beauty Business acquisition, reflecting the strong performance of the brand. Excluding the impact of the Acquisitions, net revenues from the Professional Beauty segment decreased 18% , or $10.1 to $46.2 in the three months ended March 31, 2017 , from $56.3 in the three months ended March 31, 2016 , primarily reflecting a decrease in unit volume of 9%, a negative price and mix impact of 8% and a negative foreign currency exchange translations impact of 1%. Net revenues in the segment decreased as launch activity for OPI products in the three months ended March 31, 2017 could not offset declines in net revenues from existing lacquer product lines. The negative price and mix impact on OPI primarily reflects unfavorable regional, channel and promotional mix, despite an increase in volume of gel and long wear product lines.

Net Revenues by Geographic Regions

In addition to our reporting segments, net revenues by geographic regions are as follows. We define our geographic regions as North America (comprising Canada and the United States), Europe and ALMEA (comprising Asia, Latin America, the Middle East, Africa and Australia):



	Three Months Ended March 31,
(in millions)	2017		2016		Change %
NET REVENUES
North America	$	685.1	$	311.1	>100%
Europe	848.4		402.0		>100%
ALMEA	498.6		237.6		>100%
Total	$	2,032.1	$	950.7	>100%

North America

In the three months ended March 31, 2017 , net revenues in North America increased greater than 100%, or $374.0 , to $685.1 from $311.1 in the three months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Excluding the impact of the Acquisitions, net revenues in North America decreased 15% , or $47.7 , to $263.4 in the three months ended March 31, 2017 from $311.1 in the three months ended March 31, 2016 , primarily due to lower net revenues in the U.S. from Sally Hansen , Rimmel , and N.Y.C. New York Color in the Consumer Beauty division, partially reflecting negative market trends in the U.S., as well as, philosophy skin care products in the Luxury division and OPI in the Professional Beauty division. Excluding the impact of the Acquisitions and the negative foreign currency exchange translations impact of 1%, net revenues in North America decreased 14%.

Europe

In the three months ended March 31, 2017 , net revenues in Europe increased greater than 100%, or $446.4 , to $848.4 from $402.0 in the three months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Excluding the impact of the Acquisitions, net revenues in Europe decreased 8% , or $33.9 , to $368.1 in the three months ended March 31, 2017 from $402.0 in the three months ended March 31, 2016 , primarily due to lower net revenues from Astor in Germany and Eastern Europe, Rimmel in the U.K. and Playboy in Germany . Excluding the impact of the Acquisitions and the positive foreign currency exchange translations impact of 3%, net revenues in Europe decreased 11%.

ALMEA

In the three months ended March 31, 2017 , net revenues in ALMEA increased greater than 100%, or $261.0 , to $498.6 from $237.6 in the three months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Excluding the impact of the Acquisitions, net revenues in ALMEA increased 12% , or $28.3 , to $265.9 in the three months ended March 31, 2017 from $237.6 in the three months ended March 31, 2016 , primarily due to higher net revenues from the Hypermarcas Brands. Excluding the impact of the Acquisitions and the negative foreign currency exchange translations impact of 1%, net revenues in ALMEA increased 13%.

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COST OF SALES

In the three months ended March 31, 2017 , cost of sales increased greater than 100%, or $447.1 , to $816.1 from $369.0 in the three months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Cost of sales as a percentage of net revenues increased to 40.2% in the three months ended March 31, 2017 from 38.8% in the three months ended March 31, 2016 , resulting in a gross margin decline of approximately 140 basis points primarily due to the negative impact of the revaluation of acquired inventory from the acquisitions of the P&G Beauty Business, ghd and Younique. Excluding this impact on cost of sales, gross margin improved approximately 150 basis points primarily reflecting the acquisition the P&G Beauty Brands and Younique in fiscal 2017, which each have higher margin businesses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the three months ended March 31, 2017 , selling, general and administrative expenses increased greater than 100%, or $598.2 , to $1,092.4 from $494.2 in the three months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Selling, general and administrative expenses as a percentage of net revenues increased to 53.8% in the three months ended March 31, 2017 from 52.0% in the three months ended March 31, 2016 . Excluding the impact of the Acquisitions, business realignment costs, share-based compensation expense adjustment and costs related to acquisition activities, selling, general and administrative expenses increased by 12%, or $56.4, to $540.8 from $484.4 for the three months ended March 31, 2017 and increased as a percentage of net revenues to 60.3% from 51.0%, or approximately 930 basis points. This increase primarily reflects approximately 820 basis points related to higher administrative costs for additional employee hires and consulting expenses in connection with the integration of the P&G Beauty Business and approximately 80 basis points related to higher advertising and consumer promotion expense.

OPERATING (LOSS) INCOME

In the three months ended March 31, 2017 , operating income decreased by more than 100%, or $215.5 , to $(192.5) from $23.0 in the three months ended March 31, 2016 . Operating margin, or operating income as a percentage of net revenues, decreased to (9.5%) of net revenues in the three months ended March 31, 2017 as compared to 2.4% in the three months ended March 31, 2016 . This margin decline of approximately 1,190 basis points reflects approximately 700 basis points related to higher restructuring expenses, approximately 280 basis points related to higher amortization expense, approximately 140 basis points related to higher cost of sales and approximately 180 basis points related to an increase in selling, general and administrative expenses, partially offset by approximately 110 basis points related to lower acquisition-related costs as a percentage of net revenues.

Operating Income by Segment



	Three Months Ended March 31,
(in millions)	2017			2016			Change %
OPERATING (LOSS) INCOME
Luxury	$	60.9		$	29.7		>100%
Consumer Beauty	63.0			39.2			61	%
Professional Beauty	(18.2		)	12.8			<(100%)
Corporate	(298.2		)	(58.7		)	<(100%)
Total	(192.5		)	23.0			<(100%)

Luxury

In the three months ended March 31, 2017 , operating income for Luxury increased greater than 100%, or $31.2 , to $60.9 from $29.7 in the three months ended March 31, 2016 . Operating margin increased to 9.6% of net revenues in the three months ended March 31, 2017 as compared to 7.3% in the three months ended March 31, 2016 , reflecting lower advertising and consumer promotions expense as a percentage of net revenues, partially offset by higher amortization expense as a percentage of net revenues.

Consumer Beauty

In the three months ended March 31, 2017 , operating income for Consumer Beauty increased 61% , or $23.8 , to $63.0 from $39.2 in the three months ended March 31, 2016 . Operating margin decreased to 6.4% of net revenues in the three months ended March 31, 2017 as compared to 8.0% in the three months ended March 31, 2016 , primarily reflecting higher selling, general and administrative expenses as a percentage of net revenues.

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Professional Beauty

In the three months ended March 31, 2017 , operating (loss) income for Professional Beauty decreased greater than 100%, or $31.0 , to $(18.2) from $12.8 in the three months ended March 31, 2016 . Operating margin decreased to (4.5)% of net revenues in the three months ended March 31, 2017 as compared to 22.7% in the three months ended March 31, 2016 , primarily driven by higher amortization expense and higher selling, general and administrative expenses as a percentage of net revenues, partially offset by lower cost of goods sold as a percentage of net revenues.

Corporate

Corporate primarily includes corporate expenses not directly related to our operating activities. These items are included in Corporate since we consider them to be Corporate responsibilities, and these items are not used by our management to measure the underlying performance of the segments.

In the three months ended March 31, 2017 , operating loss for Corporate was $(298.2) compared to $(58.7) in the three months ended March 31, 2016 , as described under “Adjusted Operating Income” below.

Adjusted Operating Income

We believe that Adjusted Operating Income further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” Reconciliation of reported operating income to Adjusted Operating Income is presented below:



	Three Months Ended March 31,
(in millions)	2017			2016			Change %
Reported operating (loss) income	$	(192.5	)	$	23.0		<(100%)
% of Net revenues	(9.5		%)	2.4		%
Costs related to acquisition activities	122.3			42.4			>100%
Amortization Expense	102.6			20.9			>100%
Restructuring and other business realignment costs	175.9			15.3			>100%
Share-based compensation expense adjustment	—			1.0			(100	%)
Total adjustments to reported Operating income	400.8			79.6			>100%
Adjusted operating income	$	208.3		$	102.6		>100%
% of Net revenues	10.3		%	10.8		%

In the three months ended March 31, 2017 , adjusted operating income increased greater than 100%, or $105.7 , to $208.3 from $102.6 in the three months ended March 31, 2016 . Adjusted operating margin decreased to 10.3% of net revenues in the three months ended March 31, 2017 from 10.8% in the three months ended March 31, 2016 , primarily reflecting higher adjusted selling, general and administrative expenses as a percentage of net revenues of approximately 210 basis points partially offset by lower adjusted cost of sales as a percentage of net revenues of approximately 150 basis points.

Costs Related to Acquisition Activities

In the three months ended March 31, 2017 , we incurred $122.3 of costs related to acquisition activities. We recognized Acquisition-related costs of $57.7 , included in the Condensed Consolidated Statements of Operations. These costs primarily consist of legal and consulting fees in connection with the acquisition of the P&G Beauty Business. We also incurred $28.3, $22.2 and $12.7 in costs of sales primarily reflecting revaluation of acquired inventory in connection with the acquisition of ghd, Younique and the P&G Beauty Business in the Condensed Consolidated Statements of Operations.

In the three months ended March 31, 2016 , we incurred $42.4 of costs related to acquisition activities. We recognized acquisition-related costs of $37.0, in the Condensed Consolidated Statements of Operations. These costs can include finder’s fees, legal, accounting, valuation, and other professional or consulting fees, and other internal costs which can include compensation related expenses for dedicated internal resources. We also incurred $5.4 of costs primarily reflecting revaluation of acquired inventory in connection with the Brazil Acquisition, included in Cost of sales in the Condensed Consolidated Statements of Operations.

In all reported periods, all costs related to acquisition activities were reported in Corporate.

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Amortization Expense

In the three months ended March 31, 2017 , amortization expense increased to $102.6 from $20.9 in the three months ended March 31, 2016 primarily as a result of the Acquisitions. In the three months ended March 31, 2017 , amortization expense of $25.2 , $58.5 , and $18.9 was reported in the Luxury, Consumer Beauty and Professional Beauty segments, respectively.

Restructuring and Other Business Realignment Costs

In connection with the acquisition of the P&G Beauty Business, we anticipate that we will incur a total of approximately $1,200.0 of one-time operating expenses, including restructuring and related costs aimed at integrating and optimizing the combined organization (“Global Integration Activities”).

We are continuing to evaluate actions and associated costs, and plan to approve specific restructuring actions over a multi-year period. We expect that the Global Integration Activities will result in pre-tax restructuring and related costs of approximately $700.0 to $800.0 .

In the three months ended March 31, 2017 , we incurred restructuring and other business structure realignment costs of $175.9 , as follows:


•	We incurred restructuring costs of $155.8 primarily related to Global Integration Activities, included in the Condensed Consolidated Statements of Operations.


•	We incurred business structure realignment costs of $20.1 primarily related to our Global Integration Activities, Organizational Redesign and certain other programs. Of this amount, $12.0 is included in Selling, general and administrative expenses and $8.1 is included in Cost of sales.

In the three months ended March 31, 2016 , we incurred restructuring and other business structure realignment costs of $15.3, as follows:


•	We incurred restructuring costs of $6.6 primarily related to Organizational Redesign and Acquisition Integration Program costs, included in the Condensed Consolidated Statements of Operations.


•	We incurred business structure realignment costs of $8.7 primarily related to our Organizational Redesign and the 2013 Productivity Program, included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

In all reported periods, all restructuring and other business realignment costs were reported in Corporate.

In the period subsequent to March 31, 2017, on May 9, 2017, the Board approved plans to optimize the Company’s global supply chain capabilities as a part of the Global Integration Activities. The Company estimates these actions will result in total pre-tax restructuring and related costs of approximately $300.0 , to be incurred over the next two years.

Share-Based Compensation Adjustment

There was no share-based compensation expense adjustment included in the calculation of Adjusted Operating Income in the three months ended March 31, 2017 . Share-based compensation expense adjustment included in the calculation of Adjusted Operating Income was $1.0 in the three months ended March 31, 2016 .

Senior management evaluates operating performance of our segments based on the share-based expense, but excludes the share based compensation related the fiscal 2013 accounting modification from liability plan to equity plan accounting for share-based compensation that are not reflective of the ongoing and planned pattern of recognition for such expense. We follow the same treatment of the share-based compensation for the financial covenant compliance calculations under our debt agreements. See “Overview—Non-GAAP Financial Measures.” All other share-based compensation expense is reflected in the operating results of the segments. Share-based compensation adjustment is included in Corporate. See Note 4, “Segment Reporting” in the notes to our Condensed Consolidated Financial Statements.

INTEREST EXPENSE, NET

In the three months ended March 31, 2017 , Interest expense, net was $60.8 as compared with $25.1 in the three months ended March 31, 2016 . This increase is primarily due to higher average debt balances at increased interest rates. Additionally included in the prior period interest expense is a one-time foreign currency exchange gain of $11.1 related to our debt refinancing in fiscal 2016.

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INCOME TAXES

The effective income tax rate for the three months ended March 31, 2017 and 2016 was 36.9% and (133.3%) respectively. The effective tax rate for the three months ended March 31, 2017 includes an increase in the accrual for unrecognized tax benefits, the expiration of foreign statutes of limitation and audit settlements. The effective income tax rate for the three months ended March 31, 2016 includes the decrease in the accrual for unrecognized tax benefits and the expiration of foreign statutes of limitation.

The effective income tax rates vary from the U.S. federal statutory rate of 35% due to the effect of (i) jurisdictions with different statutory rates, (ii) adjustments to the Company’s unrealized tax benefits (“UTBs”) and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

Reconciliation of Reported (Loss) Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:



	Three Months Ended March 31, 2017								Three Months Ended March 31, 2016
(in millions)	(Loss) Income Before Income Taxes			(Benefit) Provision for Income Taxes			Effective Tax Rate		(Loss)Income Before Income Taxes			Provision for Income Taxes			Effective Tax Rate
Reported loss before income taxes	$	(252.8	)	$	(93.4	)	36.9	%	$	(8.7	)	$	11.6		(133.3	%)
Adjustments to reported Operating income ^{(a) (b)}	400.8			126.3					79.6			6.5
Adjustments to Interest expense ^{(b) (c)}	—			—					(4.6		)	(0.4		)
Other adjustments ^(b)(c)	—								6.2			0.5
Adjusted Income before income taxes	$	148.0		$	32.9		22.2	%	$	72.5		$	18.2		25.1	%


^(a)	See “Reconciliation of Reported Operating Income to Adjusted Operating Income under “Adjusted Operating Income”.

^(b)

The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability.


^(c)	See “Reconciliation of Reported Net (Loss) Income Attributable to Coty Inc. to Adjusted Net Income Attributable to Coty Inc.”.

The adjusted effective tax rate was 22.2% for the three months ended March 31, 2017 compared to 25.1% for the three months ended March 31, 2016 . The differences were primarily due to the expiration of foreign statutes of limitation.

NET (LOSS) INCOME ATTRIBUTABLE TO COTY INC.

Net (loss) attributable to Coty Inc. was $(164.2) in the three months ended March 31, 2017 as compared to (loss) of $(26.8) in the three months ended March 31, 2016 . This decrease primarily reflects lower operating income and higher interest expense in the three months ended March 31, 2017 , partially offset by a benefit from income taxes in the three months ended March 31, 2017 and losses related to hedges on the Brazil Acquisition in the three months ended March 31, 2016 .

Adjusted Net income attributable to Coty Inc. provides an enhanced understanding of our performance. See “Overview—Non-GAAP Financial Measures.”

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	Three Months Ended March 31,
(in millions)	2017			2016			Change %
Reported net loss attributable to Coty Inc.	$	(164.2	)	$	(26.8	)	<(100%)
% of Net revenues	(8.1		%)	(2.8		%)
Adjustments to reported Operating income ^(a)	400.8			79.6			>100%
Adjustments to Other expense ^(b)	—			6.2			(100	%)
Adjustments to Interest expense ^(c)	—			(4.6		)	100	%
Change in tax provision due to adjustments to reported Net income attributable to Coty Inc.	(126.3		)	(6.6		)	<(100%)
Adjusted net income attributable to Coty Inc.	$	110.3		$	47.8		>100%
% of Net revenues	5.4		%	5.0		%
Per Share Data
Adjusted weighted-average common shares
Basic	747.3			337.9
Diluted	751.5			346.0
Adjusted net income attributable to Coty Inc. per common share
Basic	$	0.15		$	0.14
Diluted	0.15			0.14


^(a)	See “Reconciliation of Reported operating income to Adjusted operating income.”


^(b)	In the three months ended March 31, 2016, we incurred losses of $5.4 on foreign currency contracts related to payments for the Brazil Acquisition and expenses of $0.8 related to the purchase of the remaining mandatorily redeemable financial interest in a subsidiary, included in Other (income) expense, net in the Condensed Consolidation Statements of Operations.


^(c)	In the three months ended March 31, 2016 primarily represents a net gain of $4.6 on the revaluation of intercompany loans used to facilitate payments for the Brazil Acquisition, included in Interest expense, net in the Condensed Consolidated Statements of Operations.

NINE MONTHS ENDED MARCH 31, 2017 AS COMPARED TO NINE MONTHS ENDED MARCH 31, 2016

NET REVENUES

In the nine months ended March 31, 2017 , net revenues increased 65% , or $2,135.5 , to $5,409.0 from $3,273.5 in the nine months ended March 31, 2016 . The acquisition of the P&G Beauty Business comprised 39% of total net revenues for the period and the Hypermarcas Brands, Younique and ghd combined comprised 6% of total net revenues for the period. The acquisition of the P&G Beauty Business was the primary driver of the significant increase in total net revenues in all of our segments and geographic regions. The increase in net revenues in the nine months ended March 31, 2017 reflects an increase in unit volume of 77%, partially offset by a negative price and mix impact of 9% and a negative foreign currency exchange translations impact of 3%. Excluding the impacts of the Acquisitions and foreign currency exchange translations, total net revenues in the nine months ended March 31, 2017 decreased 8%.

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Net Revenues by Segment



	Nine Months Ended March 31,
(in millions)	2017		2016		Change %
NET REVENUES
Luxury	$	1,918.6	$	1,433.4	34	%
Consumer Beauty	2,562.2		1,653.7		55	%
Professional Beauty	928.2		186.4		>100%
Total	$	5,409.0	$	3,273.5	65	%

Luxury

In the nine months ended March 31, 2017 , net revenues from the Luxury segment increased 34% , or $485.2 , to $1,918.6 from $1,433.4 in the nine months ended March 31, 2016 , primarily due to the impact of the Acquisitions. The acquisition of the P&G Beauty Business comprised 31% of the total net revenues for the segment. Hugo Boss and Gucci fragrances were the largest contributors to net revenues as a result of the acquisition of the P&G Beauty Business. Excluding the impact of the Acquisitions, net revenues from the Luxury segment decreased 7% , or $105.1 to $1,328.3 in the nine months ended March 31, 2017 , from $1,433.4 in the nine months ended March 31, 2016 , reflecting a decrease in unit volume of 3%, a negative price and mix impact of 3% and a negative foreign currency exchange translations impact of 1%. This decrease primarily reflects lower net revenues from Calvin Klein and Marc Jacobs fragrances, primarily driven by declines in net revenues from existing product lines and our strategic efforts to rationalize wholesale distribution by reducing the amount of product diversion to the value and mass channels. Partially offsetting the decline in net revenues was net revenues from the launch of Calvin Klein All during the three months ended March 31, 2017 . The negative price and mix impact primarily reflects a higher level of promotional and discounted pricing activities on lower-volume fragrance product lines and a lower volume of relative higher-priced Calvin Klein products.

Consumer Beauty

In the nine months ended March 31, 2017 , net revenues from the Consumer Beauty segment increased 55% , or $908.5 , to $2,562.2 from $1,653.7 in the nine months ended March 31, 2016 , primarily due to the impact of the Acquisitions. The acquisition of the P&G Beauty Business, the Hypermarcas Brands and Younique comprised 32% , 7% and 3% , respectively, of the total net revenues for the segment. CoverGirl and Max Factor cosmetics and the retail product line of Wella and Clairol hair products were the largest contributors to net revenues as a result of the acquisition of the P&G Beauty Business, although these and other brands were negatively impacted as we reorganized our business and by transitional factors, including significantly higher than expected trade inventory prior to the closing of the Transactions. Additionally, a reduction in shelf space and declines in certain of these brands negatively impacted our results. Excluding the impact of the Acquisitions, net revenues from the Consumer Beauty segment decreased 11% , or $183.5 , to $1,470.2 in the nine months ended March 31, 2017 from $1,653.7 in the nine months ended March 31, 2016 , reflecting a decrease in unit volume of 5%, a negative price and mix impact of 4% and a negative foreign currency exchange translations impact of 2%. This decrease primarily reflects lower net revenues from Rimmel and Sally Hansen , primarily as a result of a reduction in shipments to a key U.S. customer and adidas as a result of declines in existing products, partially offset by incremental net revenues from Hypermarcas Brands and growth from Bourjois as a result of continued expansion across Eastern Europe and Russia. Declines in Sally Hansen also reflect negative market trends in the U.S. The negative price and mix impact primarily reflects a higher volume of relative lower-priced products, such as the Hypermarcas brands.

Professional Beauty

In the nine months ended March 31, 2017 , net revenues from the Professional Beauty segment increased greater than 100%, or $741.8 , to $928.2 from $186.4 in the nine months ended March 31, 2016 , primarily due to the impact of the Acquisitions. The acquisition of the P&G Beauty Business and ghd comprised 73% and 10% , respectively, of the total net revenues for the segment. The professional product line of Wella hair products was the largest contributor to net revenues as a result of the acquisition of the P&G Beauty Business, reflecting the strong performance of the brand. Excluding the impact of the Acquisitions, net revenues from the Professional Beauty segment decreased 15% , or $27.7 , to $158.7 in the nine months ended March 31, 2017 from $186.4 in the nine months ended March 31, 2016 , reflecting a decrease in unit volume of 12%, a negative price and mix impact of 2% and a negative foreign currency exchange translations impact of 1%. Net revenues in the segment decreased as launch activity for OPI products in the nine months ended March 31, 2017 could not offset declines in net revenues from existing lacquer product lines. The negative price and mix impact on OPI primarily reflects unfavorable regional, channel and promotional mix, despite an increase in volume of gel and long wear product lines.

Net Revenues by Geographic Regions

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	Nine Months Ended March 31,
(in millions)	2017		2016		Change %
NET REVENUES
North America	$	1,727.4	$	1,072.8	61	%
Europe	2,429.4		1,494.8		63	%
ALMEA	1,252.2		705.9		77	%
Total	$	5,409.0	$	3,273.5	65	%

North America

In the nine months ended March 31, 2017 , net revenues in North America increased 61% , or $654.6 , to $1,727.4 from $1,072.8 in the nine months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Excluding the impact of the Acquisitions, net revenues in North America decreased 11% , or $113.0 , to $959.8 in the nine months ended March 31, 2017 from $1,072.8 in the nine months ended March 31, 2016 , primarily due to lower net revenues in the U.S. from Sally Hansen, N.Y.C. New York Color and Rimmel in our Consumer Beauty divisions, reflecting negative market trends in the U.S., as well as OPI in our Professional Beauty division. Excluding the impact of the Acquisitions and the negative foreign currency exchange translations impact of 1%, net revenues in North America decreased 10%.

Europe

In the nine months ended March 31, 2017 , net revenues in Europe increased 63% , or $934.6 , to $2,429.4 from $1,494.8 in the nine months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Excluding the impact of the Acquisitions, net revenues in Europe decreased 13% , or $197.0 , to $1,297.8 in the nine months ended March 31, 2017 from $1,494.8 in the nine months ended March 31, 2016 , primarily due to decreases from Rimmel , Marc Jacobs and Calvin Klein in the U.K., adidas in the U.K. and Germany and Playboy in Germany, partially offset by increases from Bourjois in Eastern Europe .

ALMEA

In the nine months ended March 31, 2017 , net revenues in ALMEA increased 77% , or $546.3 , to $1,252.2 from $705.9 in the nine months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Excluding the impact of the Acquisitions, net revenues in ALMEA decreased 1% , or $6.3 , to $699.6 in the nine months ended March 31, 2017 from $705.9 in the nine months ended March 31, 2016 , primarily due to declines in Calvin Klein in China and Marc Jacobs in our travel retail business in Latin America . Excluding the impact of the Acquisitions and the negative foreign currency exchange translations impact of 3%, net revenues in ALMEA increased 2%.

COST OF SALES

In the nine months ended March 31, 2017 , cost of sales increased 68% , or $872.8 , to $2,153.2 from $1,280.4 in the nine months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Cost of sales as a percentage of net revenues increased to 39.8% in the nine months ended March 31, 2017 from 39.1% in the nine months ended March 31, 2016 , resulting in a gross margin decline of approximately 70 basis points primarily due to the negative impact of the revaluation of acquired inventory from the acquisitions of the P&G Beauty Business, ghd and Younique. Excluding this impact on cost of sales, gross margin improved approximately 130 basis points primarily reflecting the acquisition of higher margin businesses in fiscal 2017 including the P&G Beauty Brands and Younique, partially offset by higher promotional and discounted pricing activity, reported in net revenues.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the nine months ended March 31, 2017 , selling, general and administrative expenses increased 83.5% %, or $1,247.6 , to $2,741.5 from $1,493.9 in the nine months ended March 31, 2016 , primarily due to the impact of the Acquisitions. Selling, general and administrative expenses as a percentage of net revenues increased to 50.7% in the nine months ended March 31, 2017 from 45.6% in the nine months ended March 31, 2016 . Excluding the impact of the Acquisitions, business realignment costs, share-based compensation expense adjustment and costs related to acquisition activities, selling, general and administrative expenses increased 5.6%, or $82.2, to $1,555.5 from $1,473.3 for the nine months ended March 31, 2017 and increased as a percentage of net revenues to 52.6% from 45.0%, or approximately 760 basis points. The increase primarily reflects approximately 580 basis points related to higher administrative costs for additional employee hires and consulting

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expenses in connection with the integration of the P&G Beauty Business, and approximately 220 basis points related to higher advertising and consumer promotion for increased spending in supporting Rimmel , Sally Hansen , Bourjois and the Hypermarcas Brands.

OPERATING (LOSS) INCOME

In the nine months ended March 31, 2017 , operating income decreased greater than 100%, or $415.9 to $(158.8) from $257.1 in the nine months ended March 31, 2016 . Operating margin, or operating income as a percentage of net revenues, decreased to (2.9)% in the nine months ended March 31, 2017 as compared to 7.9% in the nine months ended March 31, 2016 . This margin decline of approximately 1080 basis points reflects approximately 510 basis points related to higher selling, general and administrative expenses, approximately 220 basis points related to higher amortization expense, approximately 210 basis points related to higher acquisition-related costs, approximately 90 basis points related to higher restructuring expenses and approximately 70 basis points related to higher cost of sales, partially offset by approximately 20 basis points related to asset impairment charges in the nine months ended March 31, 2017 as a percentage of net revenues.

Operating Income by Segment



	Nine Months Ended March 31,
(in millions)	2017			2016			Change %
OPERATING INCOME (LOSS)
Luxury	$	203.6		$	206.1		(1	%)
Consumer Beauty	178.6			210.2			(15	%)
Professional Beauty	81.5			53.4			53	%
Corporate	(622.5		)	(212.6		)	<(100%)
Total	(158.8		)	257.1			<(100%)

Luxury

In the nine months ended March 31, 2017 , operating income for Luxury decreased 1% , or $2.5 , to $203.6 from $206.1 in the nine months ended March 31, 2016 . Operating margin decreased to 10.6% of net revenues in the nine months ended March 31, 2017 as compared to 14.4% in the nine months ended March 31, 2016 , reflecting higher selling, general and administrative expenses as a percentage of net revenues and amortization expense as a percentage of net revenues.

Consumer Beauty

In the nine months ended March 31, 2017 , operating income for Consumer Beauty decreased 15% , or $31.6 , to $178.6 from $210.2 in the nine months ended March 31, 2016 . Operating margin decreased to 7.0% of net revenues in the nine months ended March 31, 2017 as compared to 12.7% in the nine months ended March 31, 2016 , primarily driven by higher selling, general and administrative expenses as a percentage of net revenues and higher amortization expense as a percentage of net revenues, partially offset by lower cost of goods sold as a percentage of net revenues.

Professional Beauty

In the nine months ended March 31, 2017 , operating income for Professional Beauty increased 53%, or $28.1 , to $81.5 from $53.4 in the nine months ended March 31, 2016 . Operating margin decreased to 8.8% of net revenues in the nine months ended March 31, 2016 as compared to 28.6% in the three months ended March 31, 2016 , primarily driven by higher amortization expense as a percentage of net revenues and higher selling, general and administrative expenses as a percentage of net revenues, partially offset by lower cost of goods sold as a percentage of net revenues.

Corporate

In the nine months ended March 31, 2017 , operating loss for Corporate was $(622.5) compared to $(212.6) in the nine months ended March 31, 2016 , as described under “Adjusted Operating Income” below.

Adjusted Operating Income

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	Nine Months Ended March 31,
(in millions)	2017			2016			Change %
Reported Operating (loss) income	$	(158.8	)	$	257.1		<(100%)
% of Net revenues	(2.9		)%	7.9		%
Costs related to acquisition activities	395.7			107.3			>100%
Amortization Expense	219.0			59.0			>100%
Restructuring and other business realignment costs	210.9			98.5			>100%
Pension settlement charges	15.9			—			N/A
Asset impairment charges	—			5.5			(100	%)
Share-based compensation expense adjustment	—			1.3			(100	%)
Total adjustments to reported Operating income	841.5			271.6			>100%
Adjusted Operating income	$	682.7		$	528.7		29	%
% of Net revenues	12.6		%	16.2		%

Adjusted operating income in the nine months ended March 31, 2017 increased 29% , or $154.0 , to $682.7 from $528.7 in the nine months ended March 31, 2016 . Adjusted operating margin decreased to 12.6% of net revenues in the nine months ended March 31, 2017 as compared to 16.2% in the nine months ended March 31, 2016 , driven by approximately 490 basis points related to higher adjusted selling, general and administrative expenses partially offset by approximately 130 basis points related to lower adjusted cost of sales as a percentage of net revenues.

Costs Related to Acquisition Activities

In the nine months ended March 31, 2017 , we incurred $395.7 of costs related to acquisition activities. We recognized Acquisition-related costs of $275.1 , included in the Condensed Consolidated Statements of Operations. These costs primarily consist of legal and consulting fees in connection with the acquisition of the P&G Beauty Business. We also incurred $44.4, $22.2 and $48.8 in costs of sales primarily reflecting revaluation of acquired inventory in connection with the acquisition of ghd, Younique and the P&G Beauty Business, respectively in the Condensed Consolidated Statements of Operations.

In the nine months ended March 31, 2016 , we incurred $107.3 of costs related to acquisition activities. We recognized acquisition-related costs of $98.3 in the Condensed Consolidated Statements of Operations. These costs can include finder’s fees, legal, accounting, valuation, and other professional or consulting fees, and other internal costs which can include compensation related expenses for dedicated internal resources. We also incurred $9.0 of costs in connection with the Bourjois acquisition, included in cost of sales in the Condensed Consolidated Statements of Operations.

In all reported periods, all costs related to acquisition activities were reported in Corporate.

Amortization Expense

In the nine months ended March 31, 2017 , amortization expense increased to $219.0 from $59.0 in the nine months ended March 31, 2016 primarily as a result of the Acquisitions. In the nine months ended March 31, 2017 , amortization expense of $70.6 , $110.7 , and $37.6 was reported in the Luxury, Consumer Beauty and Professional Beauty segments, respectively.

Restructuring and Other Business Realignment Costs

In the nine months ended March 31, 2017 , we incurred restructuring and other business structure realignment costs of $210.9 , as follows:


•	We incurred restructuring costs of $179.0 primarily related to the Global Integration Activities, included in the Condensed Consolidated Statements of Operations.


•	We incurred business structure realignment costs of $31.9 primarily related to our Global Integration Activities, Organizational Redesign and certain other programs. Of this amount $20.4 is included in Selling, general and administrative expenses and $11.5 is included in Cost of sales.

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In the nine months ended March 31, 2016 , we incurred restructuring and other business structure realignment costs of $98.5, as follows:


•	We incurred Restructuring costs of $79.3 primarily related to Organizational Redesign, included in the Condensed Consolidated Statements of Operations, which primarily relate to the Acquisition Integration Program and Organizational Redesign.


•	We incurred business structure realignment costs of $19.2 primarily related to our Organizational Redesign and the 2013 Productivity Program, included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

In all reported periods, all restructuring and other business realignment costs were reported in Corporate.

Pension Settlement Charges

In the nine months ended March 31, 2017 , we incurred charges of $15.9 in connection with the settlement of obligations related to the U.S. Del Laboratories, Inc. pension plan. The settlement of the plan was effectuated through lump sum payments to eligible participants during the three months ended September 30, 2016, in addition to, the purchase of annuity contracts from a third-party insurance provider, effectively transferring the U.S. Del Laboratories, Inc. pension plan obligation to the insurance provider, during the nine months ended March 31, 2017. The settlement charge of $15.9, for the nine months ended March 31, 2017, is as a result of accelerating the recognition of losses previously deferred in other comprehensive income (loss).

Pension settlement charges were reported in Corporate.

Asset Impairment Charges

In the nine months ended March 31, 2017 , there were no asset impairment charges reported in the Condensed Consolidated Statements of Operations.

In the nine months ended March 31, 2016 , asset impairment charges of $5.5 were reported in the Condensed Consolidated Statements of Operations. The impairment represents the write-off of long-lived assets in Southeast Asia consisting of customer relationships reported in Corporate.

Share-Based Compensation Adjustment

There was no share-based compensation expense adjustment included in the calculation of Adjusted Operating Income in the nine months ended March 31, 2017 . Share-based compensation expense adjustment included in the calculation of Adjusted Operating Income was $1.3 in the nine months ended March 31, 2016 .

Senior management evaluates operating performance of our segments based on the share-based expense, but excludes the share based compensation related the fiscal 2013 accounting modification from liability plan to equity plan accounting for share-based compensation that are not reflective of the ongoing and planned pattern of recognition for such expense. See “Overview—Non-GAAP Financial Measures.” All other share-based compensation expense is reflected in the operating results of the segments. Share-based compensation adjustment is included in Corporate. See Note 4, “Segment Reporting” in our notes to the Condensed Consolidated Financial Statements.

INTEREST EXPENSE, NET

In the nine months ended March 31, 2017 , interest expense, net was $159.1 as compared with $55.7 in the nine months ended March 31, 2016 . This increase is primarily due to higher average debt balances at increased interest rates. Additionally included in the prior period interest expense is a one-time foreign currency exchange gain of $11.1 related to our debt refinancing in fiscal 2016.

LOSS ON EARLY EXTINGUISHMENT OF DEBT

In the nine months ended March 31, 2017 , there were no losses related to the early extinguishment of debt.

In the nine months ended March 31, 2016 , we incurred $3.1 in losses on the early extinguishment of debt in connection with the refinancing of our the prior credit facilities.

OTHER EXPENSE (INCOME), NET

We incurred $0.2 of expense and $30.4 of expense in the nine months ended March 31, 2017 and 2016 , respectively. The other expense primarily reflects $29.6 of losses related to hedges in connection with the Brazil Acquisition.

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INCOME TAXES

The effective income tax rate for the nine months ended March 31, 2017 and 2016 was 69.3% and (25.3)% , respectively. The effective tax rate for the nine months ended March 31, 2017 includes the release of a valuation allowance in the US as a result of the P&G Beauty Business acquisition of $111.2. The negative effective income tax rate for nine months ended March 31, 2016 was primarily the result of the net impact of the settlements with the IRS as described below.

During the first quarter of year 2016, we reached final settlement with the IRS in connection with the 2004-2012 examination periods. The settlement primarily relates to the acquisition of the Calvin Klein fragrance business. In connection with the settlement, we recognized a tax benefit of approximately $193.9 of which $164.2 was mainly due to the recognition of additional deferred tax assets related to the basis of the Calvin Klein trademark, and approximately $29.7 resulted from the reduction of gross unrecognized tax benefits. Of the $193.9 tax benefit, $113.0 was offset by a valuation allowance due to on-going operating losses in the U.S.

The effective rates vary from the U.S. federal statutory rate of 35% due to the effect of (i) jurisdictions with different statutory rates, (ii) adjustments to our unrecognized tax benefits and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

Reconciliation of Reported (Loss) Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:



	Nine Months Ended March 31, 2017								Nine Months Ended March 31, 2016
(in millions)	(Loss)Income Before Income Taxes			(Benefit) Provision for Income Taxes			Effective Tax Rate		Income Before Income Taxes			(Benefit) Provision for Income Taxes			Effective Tax Rate
Reported (Loss) income before income taxes	$	(318.1	)	$	(220.6	)	69.3	%	$	167.9		$	(42.5	)	(25.3	%)
Adjustments to reported Operating income ^(a)(b)	841.5			313.0					271.6			37.6
Adjustments to Interest expense ^(b)(c)	1.4			0.6					(13.1		)	(1.8		)
Other adjustments ^(b)(c)	—			—					33.5			4.6
Adjusted Income before income taxes	$	524.8		$	93.0		17.7	%	$	459.9		$	(2.1	)	(0.5	%)


^(a)	See “Reconciliation of Reported Operating Income to Adjusted Operating Income”.

^(b)


^(c)	See “Reconciliation of Reported Net (Loss) Income Attributable to Coty Inc. to Adjusted Net Income Attributable to Coty Inc.”.

The adjusted effective tax rate was 17.7% compared to (0.5)% in the prior-year period. The differences were primarily due to the release of a valuation allowance in the US as a result of the P&G Beauty Business acquisition.

NET (LOSS) INCOME ATTRIBUTABLE TO COTY INC.

In the nine months ended March 31, 2017 , net income attributable to Coty Inc. decreased $305.3 , to $(117.4) , from $187.9 in the nine months ended March 31, 2016 . This decrease primarily reflects lower operating income and higher interest expense in the nine months ended March 31, 2017 , partially offset by a higher tax benefit in the nine months ended March 31, 2017 than in the nine months ended March 31, 2016 and losses related to hedges on the Brazil Acquisition in the nine months ended March 31, 2016 .

We believe that Adjusted Net Income Attributable to Coty Inc. provides an enhanced understanding of our performance. See “Overview—Non-GAAP Financial Measures.”

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	Nine Months Ended March 31,
(in millions)	2017			2016			Change %
Reported net (loss) income attributable to Coty Inc.	$	(117.4	)	$	187.9		<(100%)
% of Net revenues	(2.2		%)	5.7		%
Adjustments to reported Operating income ^(a)	841.5			271.6			>100%
Adjustments to Other expense ^(b)	—			30.4			(100	%)
Loss on early extinguishment of debt ^(c)	—			3.1			(100	%)
Adjustments to Interest expense ^(d)	1.4			(13.1		)	(100	%)
Change in tax provision due to adjustments to reported Net income attributable to Coty Inc.	(313.6		)	(40.4		)	<(100%)
Adjusted net income attributable to Coty Inc.	$	411.9		$	439.5		(6	%)
% of Net revenues	7.6		%	13.4		%
Per Share Data
Adjusted weighted-average common shares
Basic	607.9			347.8
Diluted	613.4			356.9
Adjusted net income attributable to Coty Inc. per common share
Basic	$	0.68		$	1.26
Diluted	0.67			1.23


^(a)	See “Reconciliation of Operating Income to Adjusted Operating Income” in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


^(b)	In the nine months ended March 31, 2016, we incurred losses of $29.6 on foreign currency contracts related to payments for the Brazil Acquisition and expenses of $0.8 related to the purchase of the remaining mandatorily redeemable financial interest in a subsidiary, included in Other expense (income), net in the Condensed Consolidated Statements of Operations.


^(c)	In the nine months ended March 31, 2016 , the amount represents the write-off of deferred financing costs in connection with the refinancing of the prior Coty Inc. credit facilities, included in Loss on early extinguishment of debt in the Condensed Consolidated Statements of Operations.

^(d)

The amount in the nine months ended March 31, 2017 represents a net loss of $1.4 incurred in connection with the Brazil Acquisition and subsequent intercompany loans, included in Interest expense, net in the Condensed Consolidated Statements of Operations. The amount in the nine months ended March 31, 2016 primarily represents one-time gains of $11.1 on short-term forward contracts to exchange Euros for U.S. Dollars related to the Euro-denominated portion of the Term Loan B Facility and a net losses of $2.0 on the revaluation of intercompany loans including the impact of derivative contracts used to hedge intercompany loans to facilitate payments in connection with the Brazil Acquisition, included in Interest expense, net in the Condensed Consolidated Statements of Operations.

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our primary sources of funds include cash generated from operations, borrowings from issuance of debt and committed and uncommitted lines of credit provided by banks and lenders in the U.S. and abroad. As of March 31, 2017 , we had cash and cash equivalents of $767.0 compared with $372.4 at June 30, 2016 .

Our cash flows are subject to seasonal variation throughout the year, including demands on cash made during our first fiscal quarter in anticipation of higher global sales during the second quarter and strong cash generation in the second fiscal quarter as a result of increased demand by retailers associated with the holiday season. Our principal uses of cash are to fund planned operating expenditures, capital expenditures, interest payments, acquisitions, dividends, share repurchases and any principal payments on debt. The working capital movements are based on the sourcing of materials related to the production of products within each of our segments.

As a result of the cash on hand, our ability to generate cash from operations and through access to our revolving credit facility and other lending sources, we believe we have sufficient liquidity to meet our ongoing needs on both a near term and long-term basis.

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Debt

The balances consisted of the following as of March 31, 2017 and June 30, 2016 , respectively:



	March 31, 2017			June 30, 2016
Short-term debt	$	3.4		$	19.8
Galleria Credit Agreement
Galleria Revolving Credit Facility due September 2021	—			—
Galleria Term Loan A Facility due September 2021	944.3			—
Galleria Term Loan B Facility due September 2023	1,000.0			—
Coty Credit Agreement
Coty Revolving Credit Facility due October 2020	825.0			670.0
Coty Term Loan A Facility due October 2020	1,806.3			1,883.6
Coty Term Loan A Facility due October 2021	962.8			—
Coty Term Loan B Facility due October 2022	1,641.6			1,596.0
Other long-term debt and capital lease obligations	1.4			0.7
Total debt	7,184.8			4,170.1
Less: Short-term debt and current portion of long-term debt	(193.0		)	(161.8		)
Total Long-term debt	6,991.8			4,008.3
Less: Unamortized debt issuance costs ^(a)(b)	(71.7		)	(64.6		)
Less: Discount on Long-term debt	(10.8		)	(7.3		)
Total Long-term debt, net	$	6,909.3		$	3,936.4

Coty Credit Agreement

On October 27, 2015, we entered into a Credit Agreement (the “Coty Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. The Coty Credit Agreement provides for senior secured credit facilities comprised of (i) a revolving credit facility in an aggregate principal amount up to $1,500.0 (the “Coty Revolving Credit Facility”) which includes up to $80.0 in swingline loans available for short term borrowings, (ii) a $1,750.0 term loan A facility (“Coty Term Loan A Facility”) and (iii) a term loan B facility comprising of a $500.0 tranche and a € 665.0 million tranche (“Coty Term Loan B Facility”). The Coty Term Loan B Facility was issued at a 0.50% discount.

On April 8, 2016, we entered into an Incremental Assumption Agreement and Amendment No. 1 (the “Incremental Credit Agreement”) to the Coty Credit Agreement. The Incremental Credit Agreement provides for an additional € 140.0 million in commitments under the Coty Term Loan A Facility and an additional € 325.0 million in commitments under the Coty Term Loan B Facility of the Coty Credit Agreement (the “Incremental Term Loans”). The terms of the € 140.0 million and € 325.0 million portions of the Incremental Term Loans are substantially the same as the respective existing Coty Term Loan A Facility and Euro denominated portion of the Coty Term Loan B Facility.

On October 28, 2016, we entered into an Incremental Assumption Agreement and Refinancing Amendment (the “Incremental and Refinancing Agreement”), which amended the Coty Credit Agreement. The Incremental and Refinancing Agreement provides for: (i) an additional Coty Term Loan A Facility in aggregate principal amount of $975.0 in commitments (the “Incremental Term A Facility”), (ii) an additional Coty Term Loan B Facility in aggregate principal amount of $100.0 in commitments (the “Incremental Term B Facility”) and (iii) a refinancing of the previously existing USD and Euro denominated Coty Term Loan B Facility loans (the “Refinancing Facilities”) under the Coty Credit Agreement.

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alternate base rate (“ABR”) equal to the highest of (1) JPMorgan Chase Bank N.A.’s prime rate, (2) the federal funds rate plus 0.50% and (3) one-month LIBOR plus 1.0% , in each case plus an applicable margin of 1.50% and (ii) the LIBOR floor with respect to the LIBOR loans under the Incremental Term B Facility and the Refinancing Facilities is 0.00% .

We recognized $12.4 of deferred debt issuance costs in connection with the Incremental and Refinancing Agreement.

Galleria Credit Agreement

On October 1, 2016, at the closing of the Transactions, we assumed the debt facilities available under the Galleria Credit Agreement (the “Galleria Credit Agreement”) which was initially entered into by Galleria on January 26, 2016. The Galleria Credit Agreement provides for the senior secured credit facilities comprised of (i) a $2,000.0 five year term loan A facility (“Galleria Term Loan A Facility”), (ii) a $1,000.0 seven year term loan B facility (“Galleria Term Loan B Facility”) and (iii) a $1,500.0 five year revolving credit facility (“Galleria Revolving Facility”). The Galleria Term Loan B Facility was issued at a 0.50% discount. In connection with the closing of the Transactions, we assumed $1,941.8 of aggregate debt outstanding consisting of $944.3 Galleria Term Loan A Facility, $995.0 Galleria Term Loan B Facility, net of a discount and $0.0 outstanding under the Galleria Revolving Facility, as well as $2.5 in assumed fees payable. At the closing of the Transactions, the remaining unused loan commitments for the Galleria Term Loan A Facility expired.

We recognized $12.4 of deferred debt issuance costs in connection with the Galleria Credit Agreement.

Interest Terms:

The Galleria Credit Agreement facilities will bear interest at rates equal to, at our option, either:


•	the LIBOR of the applicable qualified currency plus the applicable margin; or


•	ABR plus the applicable margin.



Pricing Tier	Total Net Leverage Ratio:	LIBOR plus:	Alternative Base Rate Margin:
1.0	Greater than or equal to 5.00:1	2.000%	1.000%
2.0	Less than 5.00:1 but greater than or equal to 4.00:1	1.750%	0.750%
3.0	Less than 4.00:1 but greater than or equal to 2.75:1	1.500%	0.500%
4.0	Less than 2.75:1 but greater than or equal to 2.00:1	1.250%	0.250%
5.0	Less than 2.00:1 but greater than or equal to 1.50:1	1.125%	0.125%
6.0	Less than 1.50:1	1.000%	—%

Scheduled Amortization

Beginning in the second quarter of fiscal 2018 and ending at maturity, we will make quarterly repayments of 1.25% and 0.25% of the initial aggregate Galleria Term Loan A Facility and Galleria Term Loan B Facility, respectively. The remaining balance of the initial aggregate Galleria Term Loan A Facility and Galleria Term Loan B Facility amount will be payable on the maturity date for each facility, respectively.

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Debt Maturities Schedule

Our aggregate maturities of long-term debt, including current portion of long-term debt and excluding capital lease obligations as of March 31, 2017, are presented below:



Fiscal Year Ending June 30
2017, remaining	$	40.0
2018	203.2
2019	217.5
2020	217.5
2021	2,445.2
Thereafter	4,056.6
Total	$	7,180.0

Debt Covenants

We are required to comply with certain affirmative and negative covenants contained within the Coty Credit Agreement and the Galleria Credit Agreement (collectively the “Agreements”). The Agreements include a financial covenant that requires us to maintain a total net leverage ratio (as defined therein), equal to or less than 5.25 to 1.00 for each fiscal quarter through June 30, 2017 subject to certain agreed step-downs thereafter. In the four fiscal quarters following the closing of any material acquisition (as defined in the Agreements respectively), including the fiscal quarter in which such material acquisition occurs, the maximum total net leverage ratio shall be the lesser of (i) 5.95 to 1.00 and (ii) 1.00 higher than the otherwise applicable maximum total net leverage ratio for such quarter (as described in the prior sentence). Immediately after any such four fiscal quarter period, there shall be at least two consecutive fiscal quarters during which our total net leverage ratio is no greater than the maximum total net leverage ratio that would otherwise have been required in the absence of such material acquisition, regardless of whether any additional material acquisitions are consummated during such period. As of March 31, 2017 , we were in compliance with all covenants within the Agreements.

Business Combinations

P&G Beauty Business Acquisition

On October 1, 2016, pursuant to the Transaction Agreement, we completed the Transactions and acquired the P&G Beauty Business in order to further strengthen our position in the global beauty industry. The purchase price was $11,570.4 and consisted of $9,628.6 of total equity consideration and $1,941.8 of assumed debt.

We issued 409.7 million shares of common stock to the former holders of Galleria common stock, together with cash in lieu of fractional shares. Immediately after consummation of the Merger, approximately 54% of the fully-diluted shares of our common stock was held by pre-Merger holders of Galleria common stock, and approximately 46% of the fully-diluted shares of our common stock was held by pre-Merger holders of our common stock. Coty Inc. is considered to be the acquiring company for accounting purposes.

Acquisition of ghd

On November 21, 2016, we completed the acquisition of 100% of the equity interest of Lion/Gloria Topco Limited which held the assets of ghd (“ghd”) which stands for “Good Hair Day”, a premium brand in high-end hair styling appliances, pursuant to the sale and purchase agreement. The ghd acquisition is expected to further strengthen our professional hair category and is included in the Professional Beauty segment’s results after the acquisition date. The total cash consideration paid net of acquired cash and cash equivalents was £430.2 million , the equivalent of $531.5 , at the time of closing, which was funded through cash on hand and available debt.

Acquisition of Younique

On February 1, 2017, we completed its acquisition of 60% of the membership interest in Foundation, LLC (“Foundation”) which held the net assets of Younique, LLC, a Utah limited liability company (“Younique”), for cash consideration of $600.0 , net of acquired cash and debt assumed. The existing Younique membership holders contributed their 100% membership interest in Younique to Foundation in exchange for a 40% membership interest in Foundation and $600.0 of cash consideration. The purchase consideration is subject to normal working capital adjustments. Younique is expected to strengthen the Consumer Beauty division’s color cosmetics and skin and body care product offerings. The acquisition was funded with a combination of cash on hand and borrowings under available debt facilities. We account for the noncontrolling interest portion of the acquisition as a redeemable noncontrolling interest. Refer to Note 21 — Noncontrolling Interests and Redeemable Noncontrolling Interests for information regarding valuation method and significant assumptions used to calculate the fair value.

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Cash Flows



	Nine Months Ended March 31,
	2017			2016
Condensed Consolidated Statements of Cash Flows Data: (in millions)
Net cash provided by operating activities	$	706.7		$	445.3
Net cash used in investing activities	(1,056.1		)	(1,042.0		)
Net cash provided by financing activities	781.1			621.7

Net cash provided by operating activities

Net cash provided by operating activities was $706.7 and $445.3 for the nine months ended March 31, 2017 and 2016 , respectively. The increase in cash flows of $261.4 was primarily due to an increase of $485.9 resulting from the change in operating assets and liabilities due to the P&G Beauty Business acquisition and an increase in $83.4 in adjustments to reconcile net income to operating cash flow, offset by a decrease of $307.9 in Net income.

Net cash used in investing activities

Net cash used in investing activities was $1,056.1 and $1,042.0 for the nine months ended March 31, 2017 and 2016 , respectively. The increase in cash outflows of $14.1 is primarily driven by higher cash payments for capital projects of $208.9, partially offset by a decrease of $154.7 for net payments made related to business combinations.

Net cash provided by financing activities

Net cash provided by financing activities was $781.1 and $621.7 for the nine months ended March 31, 2017 and 2016 , respectively. The increase in cash inflows of $159.4 was primarily driven by a decrease of $691.6 in payments for Class A Common Stock compared to the prior year, partially offset by an increase of $310.6 in net repayments of the revolving loan and term loan facilities and an increase of $190.2 in cash dividends paid.

Dividends

On August 1, 2016, we declared an annual cash dividend of $0.275 per share, or $93.4 on our Common Stock, RSUs and phantom units. Of the $93.4 , $92.4 was paid on August 19, 2016 to holders of record of Common Stock on August 11, 2016. The remaining $1.0 is payable upon settlement of the RSUs and phantom units outstanding as of August 11, 2016.

On December 9, 2016, we declared a quarterly cash dividend of $0.125 per share, or $94.0 on our Common Stock, RSUs and phantom units. Of the $94.0, $93.4 was paid on December 28, 2016 to holders of record of Common Stock on December 19, 2016. The remaining $0.6 is payable upon settlement of the RSUs and phantom units outstanding as of December 19, 2016.

On February 9, 2017, we declared a quarterly cash dividend of $0.125 per share, or $94.0 on its Common Stock, RSUs and phantom units. Of the $94.0, $93.4 was paid on March 10, 2017 to holders of record of Common Stock on February 28, 2017. The remaining $0.6 is payable upon settlement of the RSUs and phantom units outstanding as of February 28, 2017.

On May 10, 2017, we announced a quarterly cash dividend of $0.125 per share on our Common Stock, restricted stock units (the “RSUs”) and phantom units. The dividend will be paid on June 13, 2017 to holders of record of Common Stock on May 31, 2017.

As may be declared by the Board of Directors, we anticipate issuing future dividends on a quarterly basis effective as of our second quarter ended December 31, 2016.

Share Repurchase

On February 3, 2016, the Board authorized us to repurchase up to $500.0 of its Class A Common Stock (the “Incremental Repurchase Program”). Subject to certain restrictions on repurchases of shares through September 30, 2018 imposed by the tax matters agreement, dated October 1, 2016, between us and P&G entered into in connection with the P&G Beauty Business acquisition, repurchases may be made from time to time at our discretion, based on ongoing assessments of the capital needs of the business, the market price of its Class A Common Stock, and general market conditions. For the three and nine months ended March 31, 2017 , we have repurchased nil and 1.4 million shares, respectively, of its Class A Common Stock. The shares were purchased in multiple transactions at prices ranging from $25.35 to $27.40 . The aggregate fair value of shares repurchased during the nine months ended March 31, 2017 was $36.3 , and was recorded as an increase to Treasury stock in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests. As of March 31, 2017 , we have $396.8 remaining under the Incremental Repurchase Program.

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Employee Benefit Plans

During the three months ended September 30, 2016, we made lump sum payments to certain U.S. Del Laboratories, Inc. pension plan participants totaling $13.5 to partially settle the plan’s obligation to these participants. Payments were made from the plan’s assets. During the three months ended December 31, 2016, we transferred the remainder of our obligation to a third-party insurance provider by purchasing annuity contracts. The settlement was facilitated by a cash contribution of $8.8 followed by liquidation of the plan’s assets totaling $47.0 at the settlement date. As a result of these actions the termination of the plan was completed as of December 31, 2016.

Commitments and Contingencies

Noncontrolling Interests

We have the right to purchase the noncontrolling interests in certain subsidiaries from the noncontrolling interest holders at certain points in time.

In December 2014, we gave notice of intent to exercise our right to purchase the noncontrolling interest for 14% of a certain Singapore subsidiary from the noncontrolling interest holder at an estimated purchase price of approximately $10.7 for this 14%. In addition, on September 29, 2015, we gave notice of intent to exercise its option to terminate the Shareholders’ Agreement with the noncontrolling interest holder and to purchase the remaining 35% of the noncontrolling interest holder’s interest in the Singapore subsidiary. The noncontrolling interest holder indicated the desire to continue its participation and to retain an equity investment in the joint venture. The noncontrolling interest holder and we are exploring alternative options of restructuring the joint venture.

Redeemable Noncontrolling Interests

On February 1, 2017, we completed our acquisition of 60% of the membership interest in Foundation which held the net assets of Younique, for cash consideration of $600.0 , net of acquired cash and debt assumed. The existing Younique membership holders contributed their 100% membership interest in Younique to Foundation in exchange for a 40% membership interest in Foundation and $600.0 of cash consideration. We account for the noncontrolling interest portion of the Foundation as RNCI due to the noncontrolling interest holder’s ability to put their shares to us in certain circumstances. We recognized $410.9 and $433.6 as the redeemable noncontrolling interest balances as of February 1, 2017 (acquisition date) and March 31, 2017 respectively.

We have the right to purchase the RNCI in Foundation from the RNCI holders (each such right, a “Foundation Call right”) upon the occurrence of certain events that are not in our control. In addition to the Foundation Call right features, the noncontrolling interest holders of Foundation have the right to sell the noncontrolling interests to us or upon the occurrence of certain events (each such right, a “Foundation Put right”).

The amount at which the Foundation Put right and Foundation Call right can be exercised is based on a fair value at the exercise date, multiplied by the noncontrolling interest holder’s percentage interest in Foundation. In certain circumstances the Foundation Put right or the Foundation Call right may be exercised at a discount or a premium. Currently we view the possibility of these circumstances occurring as remote. The noncontrolling interests are redeemable outside of our control and are recorded in the Condensed Consolidated Balance Sheets at the estimated fair value. We adjust Foundation’s RNCI to the fair values at the end of each reporting period with changes recognized as adjustments to APIC.

We use both an income approach and a market approach to estimate the fair value of the Foundation RNCI. The income approach is used to determine the fair value of the Foundation RNCI using a discounted cash flow method, projecting future cash flows of the business, as well as a terminal value, and discounting such cash flows at a rate of return that reflects the relative risk of the cash flows. For the market approach we use a selected multiple based on comparable companies multiplied by the forecasted cash flows. The key estimates and factors used in this approach include, but are not limited to, revenue growth rates and profit margins based on our internal forecasts and the entity specific weighted-average cost of capital used to discount future cash flows.

On February 12, 2016, we gave notice of intent to exercise our option to purchase as of June 30, 2016 the noncontrolling interest in a certain Hong Kong subsidiary at the purchase price of $9.8 for the remaining 45% interest. The transaction was effective as of June 30, 2016 and the payment was completed during the three months ended December 31, 2016.

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Off-Balance Sheet Arrangements

We had undrawn letters of credit of $5.5 and $4.6 as of March 31, 2017 and June 30, 2016, respectively. We consider these letters of credit to be immaterial to the business.

Contractual Obligations

Our principal contractual obligations and commitments as of March 31, 2017 are presented below:



(in millions)	Total		Payments Due in Fiscal					Thereafter
(in millions)	Total		2017, remaining	2018	2019	2020	2021	Thereafter
Long-term debt obligations	$	7,180.0	40.0	203.2	217.5	217.5	2,445.2	$	4,056.6
Interest on long-term debt obligations ^(a)	1,332.7		45.2	198.2	215.8	232.7	265.5	375.3
Operating lease obligations	818.2		32.6	124.0	110.4	94.4	81.6	375.2
License agreements: ^(b)
Royalty payments	723.3		12.4	93.6	99.4	81.4	57.5	379.0
Advertising and promotional spend obligations	120.7		6.6	27.6	29.5	31.0	13.0	13.0
Other contractual obligations ^(c)	280.0		28.1	108.2	51.1	38.7	30.5	23.4
Other long-term obligations:
Pension obligations (mandated) ^(d)	18.5		1.4	4.6	4.4	4.1	4.0	—
Total	$	10,473.4	166.3	759.4	728.1	699.8	2,897.3	$	5,222.5

^(a) Interest costs on our variable rate debt after consideration of our interest rate swap arrangements are determined based on an interest rate forecast using the forward interest rate curve and assumptions of the amount of debt outstanding. A 25 basis-point increase in our variable interest rate debt would have increased our interest costs by $102.9 over the term of our long-term debt.

^(b) Obligations under license agreements relate to royalty payments and required advertising and promotional spending levels for our products bearing the licensed trademark. Royalty payments are typically made based on contractually defined net sales. However, certain licenses require minimum guaranteed royalty payments regardless of sales levels. Minimum guaranteed royalty payments and required minimums for advertising and promotional spending have been included in the table above. Actual royalty payments and advertising and promotional spending are expected to be higher. Furthermore, early termination of any of these license agreements could result in potential cash outflows that have not been reflected above.

^(c) Other contractual obligations primarily represent advertising/marketing, manufacturing, logistics and capital improvements commitments. Additionally, we have included the mandatorily redeemable financial instruments arising out of our joint ventures. We also maintain several distribution agreements for which early termination could result in potential future cash outflows that have not been reflected above.

^(d) Represents future contributions to our pension plans mandated by local regulations or statutes.

The table excludes $506.4 of RNCI which is reflected in Redeemable noncontrolling interests in the Consolidated Balance Sheet as of March 31, 2017 related to our 33% RNCI in the United Arab Emirates subsidiary and our 40% interest in Foundation. Given the provisions of the associated Put and Call rights, both RNCI are redeemable outside of our control and are recorded in temporary equity.

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Critical Accounting Policies

We believe that the critical accounting policies listed below involve our more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on our Condensed Consolidated Financial Statements:


•	Revenue Recognition


•	Goodwill, Other Intangible Assets and Long-Lived Assets


•	Business Combinations


•	Inventory


•	Pension and Other Post-Employment Benefit Costs


•	Share-Based Compensation


•	Income Taxes


•	Redeemable noncontrolling interests

Due to the change in our operating segments and reporting units, we performed an impairment analysis as of October 1, 2016 and determined that no adjustments to carrying values were required either pre or post the change of our operating segments and reporting units. The fair values of our new reporting units exceeded their respective carrying values at October 1, 2016 by a range of 8.1% to 82.3%. The P&G Beauty Business acquisition impact is significant to the new reporting units as recently acquired assets represent 59.6%, 78.7% and 67.8% of total Luxury, Consumer Beauty and Professional Beauty reporting units’ carrying values, respectively as on the date of the test their carrying values approximate their fair values. Accordingly, the newly acquired assets have no cushion and therefore lower the overall cushion for the new reporting units.

As of March 31, 2017 , there have been no other material changes to the items disclosed as critical accounting policies and estimates in “Management Discussion and Analysis of Financial Condition and Results of Operations” in Part II—Item 7 of our Fiscal 2016 Form 10-K.

Forward Looking Statements

Certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, our future operations and financial performance, expected growth (including revenue declines and trends), our ability to support our planned business operations on a near- and long-term basis, mergers and acquisitions, future dividend payments, divestitures, path to recovery, synergies or growth from acquisitions, future dividend payments, the success of the integration of the P&G Beauty Business and our outlook for fiscal 2017 and all other future reporting periods. These forward-looking statements are generally identified by words or phrases, such as “anticipate”, “are going to”, “estimate”, “plan”, “project”, “expect”, “believe”, “intend”, “foresee”, “forecast”, “will”, “may”, “should”, “outlook”, “continue”, “target”, “aim”, “potential” and similar words or phrases. These statements are based on certain assumptions and estimates that we consider reasonable and are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual events or results to differ materially from such statements, including:


•	our ability to achieve our global business strategy, compete effectively in the beauty industry and achieve the benefits contemplated by our recent strategic transactions within the expected time frame, including our joint ventures and recent acquisitions;


•	use of estimates and assumptions in preparing our financial statements, including with regard to revenue recognition, stock compensation expense, purchase price allocations, the market value of inventory and the fair value of acquired assets and liabilities associated with acquisitions;


•	managerial, integration, operational, regulatory, legal and financial risks, including management of cash flows, and expenses associated with our strategic transactions and internal reorganizations;


•	the integration of the P&G Beauty Business with our business, operations, systems, financial data and culture (including the recent exit and anticipated future exits of the Transition Services Agreement) and the ability to realize synergies and other potential benefits within the time frames currently contemplated;


•	changes in law, regulations and policies that affect our business or products;


•	our and our brand partners' and licensors' ability to obtain, maintain and protect the intellectual property rights, including trademarks, brand names and other intellectual property used in their respective businesses, products and software, and their abilities to protect their respective reputations and defend claims by third parties for infringement of intellectual property rights;


•	our ability to implement (and the cost of) the Global Integration Activities, Acquisition Integration Program, the Organizational Redesign restructuring program and the Post-Merger Reorganization as planned and the success of the programs or any anticipated programs in delivering anticipated improvements and efficiencies;


•	our ability to successfully execute our announced intent to divest and/or discontinue non-core brands and to rationalize wholesale distribution by reducing the amount of product diversion to the value and mass channels;

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•	our ability to anticipate, gauge and respond to market trends and consumer preferences, which may change rapidly, and the market acceptance of new products, including any relaunched or rebranded products;


•	risks related to our international operations and joint ventures, including reputational, compliance, regulatory, economic and foreign political risks;


•	our dependence on certain licenses, entities performing outsourced functions and third-party suppliers, including third party software providers;


•	administrative, development and other difficulties in meeting the expected timing of market expansions, product launches and marketing efforts;


•	global political and/or economic uncertainties or disruptions, including the impact of Brexit and the new U.S. administration;


•	the number, type, outcomes (by judgment or settlement) and costs of legal, tax, regulatory or administrative proceedings, and/or litigation;


•	our ability to manage seasonal variability;


•	increased competition, consolidation among retailers, shifts in consumers’ preferred distribution channels and other changes in the retail, e-commerce and wholesale environment in which we do business and sell our products;


•	disruptions in operations, including due to disruptions or consolidation in supply chain, manufacturing rights or information systems, labor disputes and natural disasters;


•	restrictions imposed on us through our license agreements and credit facilities and changes in the manner in which we finance our debt and future capital needs, including potential acquisitions;

•

increasing dependency on information technology and our ability to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, costs and timing of implementation and effectiveness of any upgrades to their respective information technology systems and our failure to comply with any privacy or data security laws or to protect against theft of customer, employee and corporate sensitive information;


•	our ability to attract and retain key personnel;


•	the distribution and sale by third parties of counterfeit and/or gray market versions of our products; and


•	other factors described elsewhere in this document and from time to time in documents that we file with the SEC.

More information about potential risks and uncertainties that could affect our business and financial results is included under the heading “Risk Factors” and “—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and other periodic reports we have filed and may file with the SEC from time to time.

All forward-looking statements made in this document are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this document, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.

Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.

Industry, Ranking and Market Data

Unless otherwise indicated, information contained in this Quarterly Report on Form 10-Q concerning our industry and the market in which we operate, including our general expectations about our industry, market position, market opportunity and market size, is based on data from various sources including internal data and estimates as well as third-party sources widely available to the public such as independent industry publications (including Euromonitor International Ltd), government publications, reports by market research firms or other published independent sources and on our assumptions based on that data and other similar sources. We did not fund and are not otherwise affiliated with the third-party sources that we cite. Industry publications and other published sources generally state that the information contained therein has been obtained from third-party sources believed to be reliable. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and management’s understanding of industry conditions, and such information has not been verified by any independent sources. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the market, industry and other information included in this Quarterly Report on Form 10-Q to be the most recently available and to be generally reliable, such information is inherently imprecise and we have not independently verified any third-party information or verified that more recent information is not available.

Our fiscal year ends on June 30. Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2017” refer to the fiscal year ending June 30, 2017. Any reference to a year not preceded by “fiscal” refers to a calendar year.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our Fiscal 2016 Form 10-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer (the “CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2017 . As permitted by SEC guidance for newly acquired businesses, this evaluation did not include an assessment of those disclosure controls and procedures that are subsumed by, and did not include an assessment of internal control over financial reporting as it relates to, the P&G Beauty Business, ghd, and Younique which were acquired on October 1, 2016, November 21, 2016 and February 1, 2017, respectively. Based on the evaluation of our disclosure controls and procedures as of March 31, 2017 , our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

Except as described below, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) of the Exchange Act during the second fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We completed the acquisitions of the P&G Beauty Business, ghd, and Younique on October 1, 2016, November 21, 2016 and February 1, 2017, respectively. Collectively, the P&G Beauty Business, ghd and Younique accounted for 48% of our total assets as of March 31, 2017 and 42% of our total net sales for the nine months ended March 31, 2017 . As part of our ongoing integration of the P&G Beauty Business, ghd and Younique we are continuing to incorporate our controls and procedures into these subsidiaries and to augment our company-wide controls to reflect the risks inherent in these acquisitions. As permitted by the SEC guidance for newly acquired businesses, our report on our internal control over financial reporting in the Annual Report on Form 10-K for the year ending June 30, 2017 will include a scope exception that excludes the acquired P&G Beauty Business, ghd and Younique subsidiaries in order for management to have sufficient time to evaluate and implement our internal control structure over the operations of these subsidiaries.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving our objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings .

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We are involved, from time to time, in litigation, other regulatory actions and other legal proceedings incidental to our business, including consumer class action, personal injury, intellectual property and advertising claims litigation, among others. While we cannot predict any final outcomes relating thereto, management believes that the outcome of current litigation, regulatory actions and legal proceedings will not have a material effect upon our business, results of operations, financial condition or cash flows. However, management’s assessment of our current litigation, regulatory actions and other legal proceedings, especially those related to the P&G Beauty Business, is ongoing, and could change in light of the discovery of facts with respect to litigation, regulatory actions or other proceedings pending against us not presently known to us or determinations by judges, arbitrators, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation, regulatory actions and legal proceedings. As the outcomes of such proceedings are unpredictable, we can give no assurance that the results of any such proceedings will not materially affect our reputation, business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors .

We have disclosed information about the risk factors that could adversely affect our business in Part II, Item 1A under the heading “Risk Factors” of our 10-Q for the quarterly period ended December 31, 2016. There have been no material changes to these risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The table below provides information with respect to purchases of shares of our Class A Common Stock in the open market by JAB that settled during the fiscal quarter ended March 31, 2017.



Period	Total Number of Shares Purchased	Average Price Paid per Share ^(a)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs ^(a)
January 1, 2017 - January 31, 2017	—	—	—	—
February 1, 2017 - February 28, 2017	4,090,000	$18.59	—	—
March 1, 2017 - March 31, 2017	—	—	—	—
Total	4,090,000	$18.59	—	—

(a) Includes fees and commissions.

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Item 6. Exhibits, Financial Statement Schedules.

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q:



Exhibit No.		Description
2.1		Contribution Agreement, dated as of January 10, 2017, by and among Coty Inc., Coty US Holdings Inc., Foundation, LLC, Younique, LLC, UEV Holdings, LLC, Aspen Cove Holdings, Inc., each of the other unit holders of Younique, LLC, and Derek Maxfield (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 1, 2017).
10.1		Coty Inc. Long-Term Incentive Plan, as amended and restated effective as of February 1, 2017.
10.2		Amended and Restated Coty Inc. Equity and Long-Term Incentive Plan, as amended and restated on February 1, 2017.
10.3		Amended and Restated Annual Performance Plan, as of February 1, 2017.
10.4		Nonqualified Stock Option Award Terms and Conditions under Coty Inc. Long-Term Incentive Plan, as amended February 1, 2017 and April 8, 2013 and effective as of February 1, 2017.
10.5		Amended Form of Elite Subscription and Stock Option Agreement.
10.6		Subscription Agreement, dated as of February 16, 2017, between Coty Inc. and Sébastien Froidefond.
10.7		Side Letter, dated as of March 31, 2017, between Coty Services UK Limited and Sébastien Froidefond.
10.8		Subscription Agreement, dated as of March 27, 2017, between Coty Inc. and Lambertus J.H. Becht.
21.1		List of significant subsidiaries.
31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(a).
31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(a).
32.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350.
32.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350.
101.INS	*	XBRL Instance Document.
101.SCH	*	XBRL Taxonomy Extension Schema Document.
101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	*	XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document.

* Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	COTY INC.

Date: May 10, 2017	By:	/s/Camillo Pane
		Name: Camillo Pane
		Title: Chief Executive Officer
		(Principal Executive Officer)

		/s/Patrice de Talhouët
		Name: Patrice de Talhouët
		Title: Chief Financial Officer
		(Principal Financial Officer)

Exhibit 10.1

COTY INC.

LONG-TERM INCENTIVE PLAN

(as amended and restated effective as of February 1, 2017)

SECTION 1

PURPOSE AND DURATION

1.1

Purpose. The purpose of this Coty Inc. Long-Term Incentive Plan is to promote the interests of Coty Inc. and its shareholders by (i) attracting and retaining exceptional executive personnel and other key employees of the Company and its Affiliates; (ii) motivating such employees by means of performance‑related incentives to achieve long‑range performance goals; and (iii) enabling such employees to participate in the long‑term growth and financial success of the Company.


1.2	Effective Date and Term of the Plan .


(a)	The original effective date of the Plan was December 10, 1996. The effective date of this amended and restated plan document is the Effective Date.

(b)

The Plan will terminate upon the earlier of (i) the date on which all Shares available for issuance under the Plan have been issued pursuant to the exercise of Stock Options or the Award of Shares under the Plan, or (ii) the date specified by action of the Board. Upon such Plan termination, all Awards outstanding under the Plan will continue to have full force and effect in accordance with the terms of the Terms and Conditions evidencing each Award.

SECTION 2

DEFINITIONS

Whenever used in the Plan, the following terms have the meanings set forth below:


2.1	“Affiliate” means any entity (i) that, directly or indirectly, is controlled by the Company, or in which the Company has a significant equity interest, and (ii) as to which the Company is an “eligible issuer of service recipient stock” within the meaning of Treas. Reg. 1.409A-1(b)(5)(iii)(E), in any such case as determined by the Committee.


2.2	“Applicable Fraction” means a fraction, the numerator of which is the number of days elapsed from the Grant Date of an Award to the date of the Participant’s termination of Service and the denominator of which is the number of days between the Grant Date and the date the Award was scheduled to become exercisable or otherwise vest.


2.3	“Award” means a grant under the Plan to a Participant of a Stock Option, Restricted Stock Award, or Other Stock-Based Award.


2.4	“Board” means the Board of Directors of the Company.


2.5	“Business Day” means any day other than a Saturday, Sunday, or legal holiday, or a day on which the national securities exchange that constitutes the principal market for the Shares is closed.

2.6

“Cause” has the meaning set forth in any employment, severance or other agreement between the Company or an Affiliate and the Participant. If there is no employment, severance or other agreement between the Company or an Affiliate and the Participant, or if such agreement does not define “Cause,” then “Cause” shall mean the occurrence of any of the following, as determined by the Committee in its sole discretion:

(a)

a Participant’s willful and continued failure substantially to perform his or her duties (other than as a result of total or partial incapacity due to physical or mental illness or as a result of termination by such Participant for Good Reason), which failure continues for more than 30 days after receipt by the Participant of written notice setting forth the facts and circumstances identified by the Company as constituting adequate grounds for termination under this clause (a);


(b)	any willful act or omission by a Participant constituting dishonesty, fraud or other malfeasance, and any act or omission by a Participant constituting immoral conduct, which in any such case is injurious to the financial condition or business reputation of the Company or any of its Affiliates;


(c)	a Participant’s indictment for a felony under the laws of the United States or any state thereof or any other jurisdiction in which the Company conducts business; or


(d)	a Participant’s breach of any nonsolicitation, noncompetition, confidentiality, or other restrictive covenant by which he or she is bound.

For purposes of this definition, no act or failure to act shall be deemed “willful” unless effected by a Participant not in good faith and without a reasonable belief that such action or failure to act was in or not opposed to the Company’s best interests.


2.7	“Change in Control” means the occurrence of any of the following:

(a)

Any Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), that is not the Majority Shareholder is or becomes the "beneficial owner" (as defined below), directly or indirectly, of securities representing either (i) more than 50% of the combined voting power of the Company’s then outstanding securities, or (ii) 20% or more of the combined voting power of the Company's then outstanding securities at a time when the Majority Shareholder holds less than 30% of such combined voting power. For purposes of this clause (a), “beneficial owner” has the meaning given that term in Rule 13d‑3 under the Exchange Act, except that a Person shall be deemed to be the "beneficial owner" of all shares that any such Person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants, options or otherwise, without regard to the 60-day period referred to in such Rule;

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(b)

Individuals who constitute the Board on the Restatement Effective Date (the “ Incumbent Board ”) cease for any reason to constitute at least a majority thereof, provided, that any Person becoming a director subsequent to such date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least three-quarters of the directors then comprising the Incumbent Board shall be, for purposes of this clause (b), considered as though such Person were a member of the Incumbent Board; and provided , further , that this clause (b) shall not apply as long as the Majority Shareholder is the beneficial owner of a majority of the voting power of the Company’s outstanding securities;


(c)	The Majority Shareholder enters into any joint venture, joint operating arrangement, partnership, standstill agreement or other arrangement similar to any of the foregoing with any other Person or group, pursuant to which such Person or group assumes significant operational or managerial control of the Company; or

(d)

The shareholders of the Company approve a plan or agreement providing (i) for a merger or consolidation of the Company other than with a wholly owned subsidiary and other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (ii) for a sale, exchange or other disposition of all or substantially all of the business or assets of the Company. If any of the events enumerated in this clause (d) occurs, the Board shall determine the effective date of the Change in Control resulting therefrom for purposes of this Plan.


2.8	“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

2.9

“Committee” means the Remuneration and Nomination Committee of the Board or any successor committee with responsibility for compensation, or any subcommittee, as long as the number of Committee members and their qualifications shall at all times be sufficient to meet the independence requirements of the New York Stock Exchange, Inc. or any other applicable exchange on which the Company’s common equity is at the time listed and, as applicable, the requirements for “outside directors” under Section 162(m) and the regulations thereunder, as in effect from time to time.


2.10	“Company” means Coty Inc., a Delaware corporation, and any successor thereto as provided in Section 14.1.

2.11

“Designated Beneficiary” means the Person or Persons the Participant designates from time to time on a signed form prescribed by the Committee, properly filed with the Committee during the Participant’s lifetime, as the beneficiary of any amounts or benefits the Participant owns or is to receive under the Plan, in accordance with Section 10.1. A properly filed beneficiary designation will revoke all prior designations by the same Participant. If no such form has been

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filed with the Committee, the Designated Beneficiary shall be the beneficiary named by the Participant in the Company’s qualified 401(k) savings plan or, if none, the Beneficiary’s estate.

2.12

“Disability” means either (i) disability as defined for purposes of the Company’s disability benefit plan, or (ii) a Participant’s inability, as a result of physical or mental incapacity, to perform the duties of his or her position(s) for a period of six consecutive months or for an aggregate of six months in any consecutive 12-month period. Any question as to the existence of the Disability of a Participant as to which the Participant and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Participant and the Company. If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Plan. Following a Change in Control, the Company shall pay all expenses incurred in the determination of whether a Participant is disabled.


2.13	“Effective Date” means February 2, 2017.


2.14	“Employee” means an employee of the Company or an Affiliate (that is not a Joint Venture).


2.15	“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.


2.16	“Executive Officer” means any Company employee who is an “executive officer” as defined in Rule 3b-7 promulgated under the Exchange Act.


2.17	“ Exercise Date ” shall mean any Business Day.


2.18	“Exercise Price” means the price at which a Participant may purchase a Share pursuant to a Stock Option.

2.19

“Fair Market Value” as it relates to a Share means, unless otherwise determined by the Committee, the most recent closing price of a Share on the principal national securities exchange on which the Shares are then listed, or if there were no sales on such date, on the next preceding day on which there were sales, or if such Shares are not listed on a national securities exchange, the last reported bid price in the over-the-counter market.


2.20	“Good Reason” shall have the meaning set forth in any employment, severance or other agreement between the Company or an Affiliate and the Participant. If there is no employment, severance or other agreement between the Company or an Affiliate and the Participant, or if such agreement does not define “Good Reason,” then “Good Reason” shall mean the occurrence of any of the following:


(a)	Before a Change in Control:


(i)	A Participant’s removal from, or the Company’s failure to reelect or reappoint the Participant to, his or her positions at the Company (other than as a result of a

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promotion). For purposes of this clause (i), a mere change of title shall not constitute removal from, or non-reelection to, such position, provided that a Participant’s new title is substantially equivalent to the Participant’s title as of the Grant Date and his or her position is otherwise not adversely affected; or


(ii)	The relocation of a Participant’s principal workplace without his or her consent to a location more than 25 miles distant from its current location.


(b)	Following a Change in Control:


(i)	Any of the events described in clause (a) above,


(ii)	A material diminution in a Participant’s title, position, duties or responsibilities, or the assignment to a Participant of duties that are inconsistent, in a material respect, with the scope of duties and responsibilities associated with his or her position as of the Grant Date,


(iii)	The failure of the Company to continue a Participant’s participation in the Company’s Annual Performance Plan and in this Plan on a basis that is commensurate with his or her position, or


2.21	“Grant Date” means the date on which an Award is granted.


2.22	“ Joint Venture ” has the meaning given that term in Section 6.9.


2.23	“Majority Shareholder” means (i) the Company’s majority shareholder as of June 12, 2013 or (ii) a Benckiser Permitted Holder as defined in the Company’s Certificate of Incorporation effective as of the Effective Date or any other similarly situated Person as determined by the Committee.


2.24	“Other Stock-Based Awards” has the meaning given that term in Section 8.


2.25	“Owned Shares” means Shares that a Participant has acquired through the exercise of a Stock Option, the vesting of Restricted Stock or a distribution of Shares in connection with an Other Stock-Based Award.


2.26	“Participant” means an Employee selected by the Committee to receive an Award under the Plan pursuant to Section 5.2, or who has an outstanding Award granted under the Plan.


2.27	“Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization and any other entity, whether foreign or domestic, including any governmental entity or any department, agency or political subdivision thereof.


2.28	“Plan” means this Coty Inc. Long-Term Incentive Plan, as amended from time to time.

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2.29	“Restricted Stock” means a contingent grant of Shares awarded to a Participant pursuant to Section 7.


2.30	“Restriction Period” means the period during which the transfer of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance objectives, or the occurrence of other events as the Committee determines, in its sole discretion) and, except as provided in the Terms and Conditions, the Restricted Stock is not vested.


2.31	“Retirement” means a termination of Service (other than a termination of Service for Cause):


(a)	after attaining age 60, but only if the Company or the employing Affiliate consents to the treatment of such termination as a “Retirement” for purposes of this Plan; or


(b)	qualifying as a retirement at normal retirement age under the laws and/or arrangements applicable to the Participant, as reasonably determined by the Committee.


2.32	“Section 409A” means Section 409A of the Code and the applicable regulations and other legal authority promulgated thereunder.

2.33

“Service” means the provision of services in the capacity of an Employee or a Director of the Company or an Affiliate. A transfer of Service from the Company to an Affiliate or from an Affiliate to the Company or another Affiliate shall not constitute a termination of Service under the Plan or any Terms and Conditions. All determinations regarding Service, including whether any leave of absence is a termination of Service, shall be made by the Committee in its sole discretion. For purposes of this paragraph, a “Continuing Director” shall mean any individual who, upon his or her termination of employment with the Company or an Affiliate, continues to serve as a member of the Board or the board of directors of an Affiliate. The Service of a Continuing Director shall terminate when he or she ceases to serve as a member of the Board or on the board of directors of an Affiliate.


2.34	“Share” means a share of the Class A Common Stock, par value $.01 per share, of the Company, or such other securities of the Company as may be designated by the Committee from time to time.


2.35	“Stock Option” means a nonqualified stock option, as described in Section 6, that is not intended to meet the requirements of Code Section 422.


2.36	“Stock Option Spread” means the amount by which the Fair Market Value, as of the Exercise Date, of the Shares as to which a Stock Option is exercised exceeds the aggregate Exercise Price with respect to such Shares.

2.37

“Successor” means the Participant’s spouse, the Participant’s lineal descendants and/or any trust the beneficiaries of which consist only of the Participant, the Participant’s spouse and/or the Participant’s lineal descendants, or to a corporation in which the Participant, the Participant’s spouse and/or the Participant’s lineal descendants own 100% of the economic interest and has the unfettered right to prevent further transfer or disposition of the Restricted Stock, Stock Option

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or Owned Shares, as applicable. The Committee may, in its discretion, deem other parties to qualify as a Successor for purposes of this Plan.


2.38	“Terms and Conditions” means any electronic or written agreement or other instrument or document evidencing an Award.


2.39	“Withholding Tax” means the aggregate federal, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising under the Plan.

SECTION 3

Administration


3.1	Plan Administration. The Plan shall be administered by the Committee.

3.2

Authority of the Committee. Except as limited by law or the by-laws of the Company, and subject to the provisions of the Plan, the Committee shall have full power and discretion to: (a) select eligible Employees to participate in the Plan; (b) determine the size and type of Awards; (c) determine the terms and conditions of Awards in a manner consistent with the Plan; (d) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in Shares, or other property, and the method or methods by which Awards may be settled or exercised; (e) determine the Fair Market Value of a Share; (f) construe and interpret the Plan and any agreement or instrument entered into under the Plan; (g) establish, amend or waive rules and regulations for the Plan’s administration; (h) specify the Exercise Price; and (i) subject to the provisions of Section 13.1, amend the terms and conditions of any outstanding Award to the extent the amended terms are within the Committee’s authority under the Plan. Further, the Committee shall make all other determinations that may be necessary or advisable to administer the Plan. The Committee may delegate some or all of its authority under the Plan to officers or employees of the Company or other Persons, except with respect to Awards to Executive Officers.


3.3	Decisions Binding. All determinations and decisions made by the Committee or by a Person or Persons delegated authority by the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding on all Persons, including, without limitation, the Company, its shareholders, all Affiliates, Employees, Participants and their estates and beneficiaries.

SECTION 4

Shares Subject to the Plan


4.1	Number of Shares Available for Grants. Subject to adjustment as provided in Section 4.3 the number of Shares with respect to which Awards (including for this purpose awards granted under the Plan prior to the Restatement Effective Date) may be granted under the Plan shall be as set forth in a resolution adopted by the Board and as authorized by the Company’s shareholders.


4.2	Lapsed Awards. If any Award granted under the Plan is canceled, terminates, expires, lapses or is forfeited for any reason, any Shares subject to the Award shall again be available for the grant of an Award under the Plan.

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4.3

Adjustments in Authorized Shares. If the Shares, as currently constituted, are changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether because of a merger, consolidation, recapitalization, reclassification, split, reverse split, combination of shares, or otherwise, but not including an IPO or other capital infusion from any source) or if the number of Shares is increased through the payment of a stock dividend, then the Committee shall substitute for or add to each Share that may become subject to an Award the number and kind of shares of stock or other securities into which each outstanding Share was changed, for which each such Share was exchanged, or to which each such Share is entitled, as the case may be.


4.4	Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.


4.5	Plan Frozen. As of November 8, 2012, no Awards may be granted under the Plan.

SECTION 5

Eligibility and Participation


5.1	Eligibility. Any Employee, including any officer or employee‑director of the Company or an Affiliate, who is not a member of the Committee shall be eligible to be designated a Participant. To be eligible, a Participant shall have signed and delivered to the Company the Confidentiality and Non-Competition Agreement delivered by the Company to the Participant.


5.2	Actual Participation. The Committee shall determine the eligible Employees to whom it will grant Awards.

SECTION 6

Stock Options


6.1	Grant of Stock Options.


(a)	Subject to the terms and provisions of the Plan, the Committee may grant Stock Options to any Employee in the number, and upon the terms, and at such time or times, as the Committee determines and sets forth in Terms and Conditions.

(b)

Each Stock Option grant shall be evidenced by Terms and Conditions that specify the duration of the Stock Option, the number of Shares to which the Stock Option pertains, the manner, time, and rate of exercise and vesting of the Stock Option, and such other provisions as the Committee determines. Vesting conditions may include, but not be limited to, the achievement of specific performance objectives (Company-wide, business unit, and/or individual) or continued Service.

(c)

The Company’s Chief Executive Officer, as long as he or she is a member of the Board, may grant, upon the recommendation of the Company’s Vice President, Corporate Human Resources, Stock Options covering up to a total of 2,000,000 Shares to Employees for retention, recognition or other appropriate purposes, provided that a report of any such grant shall be provided to the Committee at its next meeting following the grant.

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6.2	Exercise Price. The Terms and Conditions shall specify the Stock Option’s Exercise Price, which shall be not less than the Fair Market Value of a Share on the Grant Date.


6.3	Duration of Stock Options. Each Stock Option will expire at the time determined by the Committee at the time of grant and set forth in the Terms and Conditions.


6.4	Exercise of Stock Options.


(a)	Stock Options shall become exercisable at such times and be subject to such vesting and other restrictions and conditions as the Committee in each instance approves and sets forth in the Terms and Conditions. Restrictions and conditions on the exercise of a Stock Option need not be the same for each Award or for each Participant.

(b)

The holder of a Stock Option may exercise the Stock Option only by delivering a written notice of exercise to the Company setting forth the number of Shares as to which the Stock Option is to be exercised. Upon the Exercise Date, the holder shall pay or provide for the Exercise Price and applicable Withholding Tax in full, pursuant to such exercise procedures established by the Committee from time to time after giving consideration to applicable tax, securities and accounting rules.


(c)	Any exercisable Stock Option that has not been exercised by its holder shall be automatically exercised in accordance with subsection (a) hereof on the Exercise Date immediately prior to its expiration if, on such Exercise Date, there is a Stock Option Spread with respect to such Stock Option.


6.5	Termination of Service. Except as otherwise provided in the Terms and Conditions:


(a)	In the event a Participant’s Service terminates by reason of death, Disability, or Retirement:


(i)	The Applicable Fraction of the portion of any Stock Option held by such Participant which has not theretofore become exercisable shall immediately become vested and exercisable.


(ii)	All Stock Options held by the Participant, to the extent exercisable (including by application of clause (i) above) as of the Participant’s termination of Service shall remain exercisable through the second anniversary of the date of termination of Service.


(iii)	Any unvested portion of the Participant’s Stock Options as of the date of termination (other than any portion thereof that becomes vested pursuant to clause (i) above) shall be forfeited and canceled, without consideration, on the date of termination.


(b)	Except as provided in Section 6.8, in the event a Participant’s Service terminates other than by reason of death, Disability, or Retirement:

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(i)	Any unvested portion of the Participant’s Stock Options as of the date of termination shall be forfeited and canceled on the date of termination, and

(ii)

The vested portion, if any, of the Participant’s Stock Options shall remain exercisable through (A) the date that is six months after the Participant’s termination of Service, if the six month period commences in an open trading window, or (B) if the six month period commences in a closed trading window, the date that is six months from the first day of the next open trading window. Any vested Stock Option remaining outstanding after such date shall thereafter expire.


(c)	Notwithstanding the foregoing, the Committee may, in its sole discretion, accelerate the vesting and exercisability, and/or extend the period of exercisability, of all or a portion of a Stock Option at any time.


(d)	In no event shall a Stock Option be exercisable following its expiration date.


6.6	Nontransferability of Stock Options.

(a)

Except as otherwise provided in Section 6.6(b), a Participant’s Terms and Conditions, or the Plan, during the Restriction Period, (i) no Stock Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and (ii) all Stock Options shall be exercisable during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. The Committee may, in its sole discretion, require a Participant’s guardian or legal representative to supply it with the evidence the Committee deems necessary to establish the authority of the guardian or legal representative to act on behalf of the Participant.

(b)

Subject to applicable law, vested Stock Options may be transferred to a Successor. Such transferred Stock Options may only be further sold, transferred, pledged, assigned or otherwise alienated by the Successor in accordance with this Section 6.6, and shall be subject in all respects to the terms of the Terms and Conditions and the Plan. For a transfer to be effective, the Successor shall promptly furnish the Company with written notice thereof and a copy of such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance of the Successor of the terms and conditions of the Plan.

6.7

Dividend Equivalents and Other Distributions. The Committee may, in its sole discretion, provide under an agreement for payments in connection with Stock Options that are equivalent to dividends or other distributions declared and paid on the Shares underlying the Stock Options prior to the date of exercise. Such dividend equivalent agreement, if any, shall be separate and apart from the Terms and Conditions and shall be designed to comply separately with Section 409A.

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6.8

Change in Control. If, within twelve months following a Change in Control, (i) a Participant is terminated by the Company or an employing Affiliate (that is not a Joint Venture) without Cause or (ii) such Participant resigns from the Company or an employing Affiliate (that is not a Joint Venture) for Good Reason, the unvested portion of any then outstanding Stock Option shall vest and become exercisable.

6.9

Employment in a Joint Venture. If a Participant becomes an employee of certain joint ventures of the Company, as determined by the Board from time to time (a “ Joint Venture ”), during the Restriction Period, vesting of the Participant’s Stock Options shall be tolled beginning on the date such Participant becomes an employee of the Joint Venture until the date such Participant again becomes an Employee. Accordingly, the Restriction Period for such Participant’s Stock Options shall be extended by the number of days the Participant was an employee of the Joint Venture.

SECTION 7

Restricted Stock


7.1	Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee may, at any time and from time to time, grant Restricted Stock to any Employee in such amounts as it determines and sets forth in Terms and Conditions.


7.2	Terms and Conditions. Each grant of Restricted Stock shall be evidenced by Terms and Conditions that specify the Restriction Period, the number of Shares granted, the purchase price, if any, and such other provisions as the Committee determines.


7.3	Nontransferability.

(a)

Except as provided in Section 7.3(b), during the Restricted Period, (i) no Restricted Stock granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution and (ii) all rights with respect to Restricted Stock shall be available during the Participant’s lifetime only to the Participant or the Participant’s guardian or legal representative. The Committee may, in its sole discretion, require a Participant’s guardian or legal representative to supply it with evidence the Committee deems necessary to establish the authority of the guardian or legal representative to act on behalf of the Participant.

(b)

Subject to applicable law, Restricted Stock may be transferred to a Successor. Such transferred Restricted Stock may only be further sold, transferred, pledged, assigned or otherwise alienated by the Successor in accordance with this Section 7.3, and shall be subject in all respects to the terms of the Terms and Conditions and the Plan. For a transfer to be effective, the Successor shall promptly furnish the Company with written notice thereof and a copy of such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance of the Successor of the terms and conditions of the Plan.


7.4	Termination of Service. Except as provided in Section 7.5, if a Participant’s Service terminates, then except as otherwise provided in the Terms and Conditions all unvested Restricted Stock

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held by such Participant will be forfeited and any vested Restricted Stock shall continue to be subject to the terms of the Plan and any applicable Award.


7.5	Change in Control. If, within twelve months following a Change in Control, (i) a Participant is terminated by the Company or an employing Affiliate (that is not a Joint Venture) without Cause or (ii) such Participant resigns from the Company or an employing Affiliate (that is not a Joint Venture) for Good Reason, all then outstanding Restricted Stock shall vest and become nonforfeitable.


7.6	Other Conditions.

(a)

The Committee may impose such other conditions and restrictions on any Restricted Stock as it deems advisable and sets forth in the Terms and Conditions, including, without limitation, vesting restrictions based upon the achievement of specific performance objectives (Company-wide, business unit, and/or individual) or continued Service, and/or restrictions under applicable federal or state securities laws. The Committee may provide that restrictions established under this Section 7.6(a) as to any given Award will lapse all at once or in installments.


(b)	The Company may retain the certificates representing Shares of Restricted Stock in its possession until all conditions and/or restrictions applicable to the Shares have been satisfied.


7.7	Voting Rights. Except as otherwise provided in the Terms and Conditions, a Participant holding Shares of Restricted Stock may exercise any voting rights that apply to those Shares during the Restriction Period.


7.8	Dividends and Other Distributions. During the Restriction Period, a Participant holding Shares of Restricted Stock shall be credited with regular dividends and other distributions paid on those Shares. Such dividends and other distributions shall be subject to the same vesting conditions as the underlying Shares, and shall be paid within 30 days following the end of the Restriction Period.


7.9	Section 83(b) Elections on Restricted Stock. The Participant, if subject to taxation in the United States with respect to any compensation derived under the Plan, shall indicate to the Company whether the Participant intends to make an election under Code Section 83(b) with respect to the Restricted Stock.

7.10

Employment in a Joint Venture. If a Participant becomes an employee of a Joint Venture during the Restriction Period, vesting of the Participant’s Restricted Stock shall be tolled beginning on the date such Participant becomes an employee of the Joint Venture and shall recommence on the date such Participant again becomes an Employee. Accordingly, the Restriction Period for such Participant’s Restricted Stock shall be extended by the number of days the Participant was an employee of the Joint Venture.

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SECTION 8

Other Stock-Based Awards

8.1

The Committee shall have authority to grant to eligible Employees an “ Other Stock‑Based Award ,” which shall consist of any right which (i) is not a Stock Option or Restricted Stock, and (ii) is an Award of Shares or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as deemed by the Committee to be consistent with the purposes of the Plan. Subject to the terms of the Plan and any applicable Terms and Conditions, the Committee shall determine the terms and conditions of any such Other Stock‑Based Award.

SECTION 9

Share Restrictions and Purchase and Sale Rights


9.1	Restrictions. The Committee may impose such restrictions on any Shares as it deems necessary or advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which the Shares are then listed and/or traded, and under any blue sky or state securities laws.


9.2	Additional Conditions of Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or transferred, or (ii) to treat as owner of such Shares, to accord the right to vote as such owner, or to pay dividends to any transferee to whom such Shares have been transferred in violation of the Plan or any Terms and Conditions.

SECTION 10

Beneficiary Designation

10.1

Each Participant may, from time to time, name any Designated Beneficiary (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case the Participant should die before receiving any or all of his or her benefits under the Plan. Each beneficiary designation shall revoke all prior designations by the same Participant, must be in a form prescribed by the Committee and must be made during the Participant’s lifetime. If a Designated Beneficiary predeceases the Participant or no beneficiary has been designated, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

SECTION 11

Breach of Restrictive Covenants


11.1	The Terms and Conditions may provide that if the Participant breaches, whether during or after termination of Service, a nonsolicitation, noncompetition, confidentiality, or other restrictive covenant by which he or she is bound, then in addition to any other penalties or restrictions that may apply under any such agreement, state law, or otherwise, the Participant shall forfeit:


(a)	Any Awards granted to him or her under the Plan, including Awards that have become exercisable;


(b)	The profit the Participant realized from the exercise of any Stock Options that the Participant exercised after terminating Service and within the six-month period

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immediately preceding the Participant’s termination of Service, which is the Stock Option Spread associated with any Shares acquired by the Participant upon his or her exercise of such Stock Options; and


(c)	The Fair Market Value, as determined on the vesting date, of any Restricted Stock that vested within the six-month period immediately preceding the Participant’s termination of Service.

SECTION 12
Rights of Participants

12.1

Service. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Affiliate to terminate any Participant’s Service at any time, or confer upon any Participant any right to continue in the Service of the Company or any Affiliate. The grant of any Award under the Plan shall not in any way affect the right or power of the Company to make adjustments, reclassifications or changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.


12.2	Participation. No Employee shall have the right to receive an Award under the Plan, or, having received any Award, to receive a future Award.

SECTION 13
Amendment, Modification, Termination and Change in Control

13.1

Amendment, Modification and Termination. The Board may at any time and from time to time alter, amend, modify or terminate the Plan in whole or in part, without the approval of the Company’s shareholders, except to the extent such approval is required by law. Subject to the terms and conditions of the Plan, the Committee may modify, extend or renew outstanding Awards under the Plan, or accept the surrender of outstanding Awards (to the extent not already exercised) and grant new Awards in substitution of them (to the extent not already exercised), in order to comply with the requirements of applicable law or otherwise. Notwithstanding the foregoing, no modification of an Award shall, without the prior written consent of the Participant, materially alter or impair any rights or obligations under any Award already granted under the Plan, except such an amendment made to comply with the requirements of applicable law.


13.2	Adjustment of Awards Upon the Occurrence of Certain Events .

(a)

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shall be subject to the same terms and conditions as the underlying Award. Any such adjustment in an outstanding Stock Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of such Stock Option but with a corresponding adjustment in the Exercise Price for each Share or other unit of any security covered by such Stock Option.


(b)	Reciprocal Transactions . The Committee may, but shall not be obligated to, make an appropriate and proportionate adjustment to an Award or to the Exercise Price of any outstanding Award, and/or grant an additional Award to the holder of any outstanding Award, to compensate for the diminution in the intrinsic value of the Shares resulting from any reciprocal transaction.

(c)

Certain Unusual or Nonrecurring Events . In recognition of unusual or nonrecurring events affecting the Company or its financial statements, or in recognition of changes in applicable laws, regulations, or accounting principles, and, whenever the Committee determines that adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, the Committee may, using reasonable care, make adjustments in the terms and conditions of, and the criteria included in, Awards. In no event will the Committee, unless otherwise approved by shareholders, be permitted (i) to reduce the Exercise Price of any outstanding Stock Option, (ii) cancel a Stock Option in exchange for cash or other Awards (except as provided in Section 13.4), (iii) exchange or replace an outstanding Stock Option with a new Stock Option with a lower Exercise Price, or (iv) take any other action that would be a "repricing" of Stock Options.


(d)	Notice . The Committee shall give notice of any adjustment to each Participant who holds an Award that has been adjusted and the adjustment (whether or not such notice is given) shall be effective and binding for all Plan purposes.


(e)	Section 409A . Notwithstanding any provision herein to the contrary, no adjustment shall be made under this Section 13.2 to the extent it would give rise to adverse tax consequences under Section 409A.


13.3	Fractional Shares. Fractional Shares, whether resulting from any adjustment in Awards pursuant to Section 13.2 or otherwise, may be settled in cash or otherwise as the Committee determines.


13.4	Change in Control .


(a)	If, within twelve months following a Change in Control, (i) a Participant is terminated by the Company or an employing Affiliate (that is not a Joint Venture) without Cause or (ii) such Participant resigns from the Company or an employing Affiliate (that is not a Joint Venture) for Good Reason, all then outstanding Awards shall become fully vested.


(b)	Any Award that has not been fully exercised before the date of a Change in Control may be settled or otherwise terminated on such date in the discretion of the Committee, unless a provision has been made in writing in connection with such transaction for the

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assumption of all Awards theretofore granted, or the substitution for such Awards of awards to acquire the stock of the surviving, resulting or acquiring corporation, with any adjustments as the Committee determines appropriate, in which event the Awards theretofore granted shall continue in the manner and under the terms so provided. Notwithstanding anything in the Plan to the contrary, any underwater Award that has not been fully exercised, and any Award that the Committee determines cannot become vested, before the date of consummation of the Change in Control may be canceled without consideration in the discretion of the Committee.


13.5	Tax Withholding. The Company shall have the right to deduct or withhold, or require a Participant to remit to the Company, an amount (either in cash or Shares) sufficient to satisfy any Withholding Tax.

SECTION 14
Miscellaneous Provisions


14.1	Successors. All obligations of the Company under the Plan or the Terms and Conditions shall be binding on any successor to the Company, whether the existence of the successor results from a direct or indirect purchase of all or substantially all of the Company’s stock, or a merger or consolidation, or otherwise.


14.2	Legal Construction.


(a)	Number . Except where otherwise indicated by the context, any plural term used in the Plan includes the singular and any singular term includes the plural.


(b)	Severability . If any provision of the Plan is held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.


14.3	Business Day. In the event the day prescribed for the performance of any act under the Plan, or deadline by which such act must be performed, shall fall on a day other than a Business Day, such day or deadline shall be extended until the close of business on the next succeeding Business Day.


14.4	Requirements of Law. The granting of Awards, the issuance of Shares and the payment of cash under the Plan shall be subject to all applicable laws, rules and regulations, and to any approvals by governmental agencies or national securities exchanges as may be required.


14.5	Rights of a Shareholder. A Participant shall not be, nor shall a Participant have any of the rights and privileges of, a shareholder until certificates for the underlying Shares of Restricted Stock have been issued.


14.6	Securities Law Compliance.


(a)	As to any individual who is, on the relevant date, an officer, director or greater than 10% percent beneficial owner of any class of the Company’s equity securities that is registered

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pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 under the Exchange Act, or any successor rule. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

(b)

To the extent the Committee deems it necessary, appropriate or desirable to comply with state securities laws or practice and to further the purposes of the Plan, the Committee may, without amending the Plan, (i) establish rules applicable to Awards granted to Participants, including rules that differ from those set forth in the Plan, and (ii) grant Awards to such Participants in accordance with those rules that would require the application of the securities laws of any state.

14.7

Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments or deliveries of Shares not yet made to a Participant by the Company, the Participant’s rights are no greater than those of a general creditor of the Company. The Committee may authorize the establishment of trusts or other arrangements to meet the obligations created under the Plan, so long as the arrangement does not cause the Plan to lose its legal status as an unfunded plan.

14.8

Non-U.S. Based Employee. Notwithstanding any other provision of the Plan to the contrary, the Committee may make Awards to Employees who are not citizens or residents of the United States, or to Employees outside the United States, on terms and conditions that are different from those specified in the Plan as may, in the Committee’s judgment, be necessary or desirable to foster and promote achievement of the Plan’s purposes. In furtherance of such purposes, the Committee may, without amending the Plan, establish or modify rules, procedures and subplans as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company operates or has employees.


14.9	Governing Law. To the extent not preempted by Federal law, the Plan and all agreements hereunder shall be construed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to its conflicts of law principles that would require the application of the law of any other jurisdiction.

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Exhibit 10.2

AMENDED AND RESTATED

COTY INC.

EQUITY AND LONG-TERM INCENTIVE PLAN

(As amended and restated on February 1, 2017)

SECTION 1

PURPOSE AND DURATION

1.1

Purpose . The purpose of this Coty Inc. Equity and Long-Term Incentive Plan is to promote the interests of Coty Inc. and its shareholders by (i) attracting and retaining exceptional executive personnel and other key employees of the Company and its Affiliates; (ii) motivating such employees by means of performance-related incentives to achieve long-range performance goals; and (iii) enabling such employees to participate in the long-term growth and financial success of the Company.

1.2 Effective Date and Term of the Plan.


(a)	The original effective date of the Plan is November 8, 2012. This Plan was first amended and restated on April 8, 2013, amended and restated again on October 28, 2015, again on November 3, 2016 and again on February 1, 2017. The effective date of this third amended and restated plan document is the Fourth Restatement Effective Date.

(b)

SECTION 2

DEFINITIONS

Whenever used in the Plan, the following terms have the meanings set forth below:


2.1	“Affiliate” means any entity (i) that, directly or indirectly, is controlled by the Company, or in which the Company has a significant equity interest, and (ii) as to which the Company is an “eligible issuer of service recipient stock” within the meaning of Treas. Reg. 1.409A-1(b)(5)(iii)(E), in any such case as determined by the Committee.


2.2	“Applicable Fraction” means a fraction, the numerator of which is the number of days elapsed from the Grant Date of an Award to the date of the Participant’s termination of Service and the denominator of which is the number of days between the Grant Date and the date the Award was scheduled to become exercisable or otherwise vest.


2.3	“Award” means a grant under the Plan to a Participant of a Stock Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit, Performance Award, or Other Stock-Based Award.


2.4	“Board” means the Board of Directors of the Company.


2.5	“Business Day” means any day other than a Saturday, Sunday, or legal holiday, or a day on which the national securities exchange that constitutes the principal market for the Shares is closed.

2.6

(a)


(b)	any willful act or omission by a Participant constituting dishonesty, fraud or other malfeasance, and any act or omission by a Participant constituting immoral conduct, which in any such case is injurious to the financial condition or business reputation of the Company or any of its Affiliates;


(c)	a Participant’s indictment for a felony under the laws of the United States or any state thereof or any other jurisdiction in which the Company conducts business; or


(d)	a Participant’s breach of any nonsolicitation, noncompetition, confidentiality, or other restrictive covenant by which he or she is bound.

2.7 “Change in Control” means the occurrence of any of the following:

(a)

Any Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) that is not the Majority Shareholder is or becomes the “beneficial owner” (as defined below), directly or indirectly, of securities representing either (i) more than 50% of the combined voting power of the Company’s then outstanding securities, or (ii) 20% or more of the combined voting power of the Company’s then outstanding securities at a time when the Majority Shareholder hold less than 30% of such combined voting power. For purposes of this clause (a), “beneficial owner” has the meaning given that term in Rule 13d-3 under the Exchange Act, except that a Person shall be deemed to be the “beneficial owner” of all shares that any such Person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants, options or otherwise, without regard to the 60-day period referred to in such Rule;


(b)	Individuals who constitute the Board on the First Restatement Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided, that any Person

becoming a director subsequent to such date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least three-quarters of the directors then comprising the Incumbent Board shall be, for purposes of this clause (b), considered as though such Person were a member of the Incumbent Board; and provided, further, that this clause (b) shall not apply as long as the Majority Shareholder is the beneficial owner of a majority of voting power of the Company’s outstanding securities;


(c)	The Majority Shareholder enters into any joint venture, joint operating arrangement, partnership, standstill agreement or other arrangement similar to any of the foregoing with any other Person or group, pursuant to which such Person or group assumes significant operational or managerial control of the Company; or

(d)


2.8	“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

2.9

“Committee” means the Remuneration and Nominating Committee of the Board or any successor committee with responsibility for compensation, or any subcommittee, as long as the number of Committee members and their qualifications shall at all times be sufficient to meet the independence requirements of the New York Stock Exchange, Inc. or any other applicable exchange on which the Company’s common equity is at the time listed and, as applicable, the requirements for “outside directors” under Section 162(m) and the regulations thereunder, as in effect from time to time.


2.10	“Company” means Coty Inc., a Delaware corporation, and any successor thereto as provided in Section 16.1.

2.11

“Designated Beneficiary” means the Person or Persons the Participant designates from time to time on a signed form prescribed by the Committee, properly filed with the Committee during the Participant’s lifetime, as the beneficiary of any amounts or benefits the Participant owns or is to receive under the Plan, in accordance with Section 12.1. A properly filed beneficiary designation will revoke all prior designations by the same Participant. If no such form has been filed with the Committee, the Designated Beneficiary shall be the beneficiary named by the Participant in the Company’s qualified 401(k) savings plan or, if none, the Beneficiary’s estate.


2.12	“Director” means a member of the board of directors of the Company or an Affiliate.

2.13


2.14	“Employee” means an employee of the Company or an Affiliate (that is not a Joint Venture).


2.15	“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.


2.16	“Executive Officer” means any Company employee who is an “executive officer” as defined in Rule 3b-7 promulgated under the Exchange Act.


2.17	“Exercise Date” shall mean any Business Day.


2.18	“Exercise Price” means the price at which a Participant may purchase a Share pursuant to a Stock Option or Stock Appreciation Right.

2.19


2.20	“First Restatement Effective Date” means the date on which the Amended and Restated Certificate of Incorporation of the Company that was adopted by the Company in connection with the first underwritten public offering of the Company’s common stock was filed with the Secretary of State of the State of Delaware.


2.21	“Fourth Restatement Effective Date” means February 1, 2017.


2.22	“Good Reason” shall have the meaning set forth in any employment, severance or other agreement between the Company or an Affiliate and the Participant. If there is no employment, severance or other agreement between the Company or an Affiliate and the Participant, or if such agreement does not define “Good Reason,” then “Good Reason” shall mean the occurrence of any of the following:


(a)	Before a Change in Control:


(i)	A Participant’s removal from, or the Company’s failure to reelect or reappoint the Participant to, his or her positions at the Company (other than as a result of a promotion). For purposes of this clause (i), a mere change of title shall not constitute removal from, or non-reelection

to, such position, provided that a Participant’s new title is substantially equivalent to the Participant’s title as of the Grant Date and his or her position is otherwise not adversely affected; or


(ii)	The relocation of a Participant’s principal workplace without his or her consent to a location more than 25 miles distant from its current location.


(b)	Following a Change in Control:


(i)	Any of the events described in clause (a) above;


(ii)	A material diminution in a Participant’s title, position, duties or responsibilities, or the assignment to a Participant of duties that are inconsistent, in a material respect, with the scope of duties and responsibilities associated with his or her position as of the Grant Date; or


(iii)	The failure of the Company to continue a Participant’s participation in the Company’s Annual Performance Plan and in this Plan or any successor plans thereto on a basis that is commensurate with his or her position.


2.23	“Grant Date” means the date on which an Award is granted.


2.24	“Joint Venture” has the meaning given that term in Section 6.9.


2.25	“Majority Shareholder” means (i) the Company’s majority shareholder as of the First Restatement Effective Date or (ii) a Benckiser Permitted Holder as defined in the Company’s Certificate of Incorporation effective on the First Restatement Effective Date or any other similarly situated Person as determined by the Committee.


2.26	“Original Effective Date” means November 8, 2012.


2.27	“Other Stock-Based Awards” has the meaning given that term in Section 10.


2.28	“Owned Shares” means Shares that a Participant has acquired through the exercise of a Stock Option or a Stock Appreciation Right, the vesting of Restricted Stock, the settlement of a Restricted Stock Unit or a distribution of Shares in connection with an Other Stock-Based Award.


2.29	“Participant” means an Employee selected by the Committee to receive an Award under the Plan pursuant to Section 5.2, or who has an outstanding Award granted under the Plan.


2.30	“Performance Award” means a right to receive cash or Shares (as determined by the Committee) upon the achievement, in whole or in part, of the applicable Performance Criteria pursuant to Section 9. A grant of Restricted Stock, Restricted Stock Units, or Other Stock Awards may be designed to qualify as Performance Awards.


2.31	“Performance-Based Exception” means the performance-based exception from the tax deductibility limitations of Code Section 162(m) and any regulations promulgated thereunder.


2.32	“Performance Criteria” means the objectives established by the Committee for a Performance Period for the purpose of determining the extent to which an Award of Performance Awards has been earned.

“Performance Criteria” may be based on the relative or comparative attainment of one or more of the following criteria during a Performance Period, whether in absolute terms or relative to the performance of one or more similarly situated companies or a published index covering the performance of a number of companies: total stockholder return (inclusive or exclusive of dividends paid); stock price; gross, operating or net earnings or margins; approved rate increases; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization (“EBITDA”); EBITDA excluding traditional working media; earnings per share; economic value added; ratio of operating earnings to capital spending; net sales; sales growth; return on assets, capital or equity; income; market share; level of expenses; revenue; revenue growth; cash flow; increases in customer base; capital expenditures; cost reductions and expense control objectives; compliance with environmental or regulatory goals or requirements; conservation; budget objectives; working capital; mergers, acquisitions and divestitures; attainment of objectives measured in terms of quality or safety; customer complaints or customer satisfaction; and improvements in financial controls; and, in the case of persons who are not Executive Officers, such other criteria as may be determined by the Committee. Performance Criteria may be established on a Company-wide basis or with respect to one or more business units, divisions, subsidiaries, or geographic locations, or on an individual basis.

At the time the Committee establishes Performance Criteria for a Performance Period, the Committee may exclude any or all items determined to be unusual in nature and/or infrequent in occurrence as determined under U.S. generally accepted accounting principles including, without limitation, the charges or costs associated with restructurings of the Company or any subsidiary, discontinued operations, other unusual or infrequently occurring items, the cumulative effects of accounting changes or such other objective factors as the Committee deems appropriate. Unless otherwise explicitly stated by the Committee at the time Performance Criteria are established, each applicable performance goal shall be appropriately adjusted for one or more of the following items: (i) amortization, asset impairments or write downs; (ii) litigation judgments or claim settlements; (iii) the effect of changes in tax law, accounting principles or such laws or provisions affecting reported results; (iv) accruals for reorganization and restructuring programs; (v) any items determined to be unusual in nature and/or infrequent in occurrence as described in Accounting Standards Codification (ASC) 225-20, as amended, and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year; (vi) the operations of any business acquired by the Company or any affiliate or of any joint venture in which the Company or affiliate participates; (vii) the divestiture of one or more business operations or the assets thereof; or (viii) the costs incurred in connection with such acquisitions or divestitures; and (ix) charges for stock based compensation.

Except in the case of Awards to Executive Officers intended to qualify for the Performance-Based Exception, the Committee may at any time adjust the Performance Criteria for any Performance Period as it deems equitable. The Committee shall have no obligation to treat Participants uniformly.


2.33	“Performance Period” means the 12-month time period during which Performance Criteria must be met in order for a Participant to earn Performance Awards granted under Section 9 or any other

period established by the Committee during which Performance Criteria must be met in order for a Participant to earn Performance Awards granted under Section 9.


2.34	“Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization and any other entity, whether foreign or domestic, including any governmental entity or any department, agency or political subdivision thereof.


2.35	“Plan” means this Coty Inc. Equity and Long-Term Incentive Plan, as amended from time to time.


2.36	“Prior Plans” means the Coty Inc. Long-Term Incentive Plan and the Coty Inc. Executive Ownership Plan, each as in effect immediately prior to the Original Effective Date and as may be amended from time to time.


2.37	“Restricted Stock” means a contingent grant of Shares awarded to a Participant pursuant to Section 8.


2.38	“Restricted Stock Unit” means a Restricted Stock Unit granted to a Participant, as described in Section 8.

2.39

“Restriction Period” means the period during which the transfer of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance objectives, or the occurrence of other events as the Committee determines, in its sole discretion) and, except as provided in the Terms and Conditions, during which the Restricted Stock and any Restricted Stock Unit is not vested.


2.40	“Retirement” means a termination of Service (other than a termination of Service for Cause):


(a)	after attaining age 60, but only if the Company or the employing Affiliate consents to the treatment of such termination as a “Retirement” for purposes of this Plan; or


(b)	qualifying as a retirement at normal retirement age under the laws and/or arrangements applicable to the Participant, as reasonably determined by the Committee.


2.41	“Section 162(m)” means Section 162(m) of the Code and the applicable regulations and other legal authority promulgated thereunder.


2.42	“Section 409A” means Section 409A of the Code and the applicable regulations and other legal authority promulgated thereunder.

2.43

“Service” means the provision of services in the capacity of an Employee or Continuing Director of the Company or an Affiliate. A transfer of Service from the Company to an Affiliate or from an Affiliate to the Company or another Affiliate shall not constitute a termination of Service under the Plan or any Terms and Conditions. All determinations regarding Service, including whether any leave of absence is a termination of Service, shall be made by the Committee in its sole discretion. For purposes of this paragraph, a “Continuing Director” shall mean any individual who, upon his or her termination of employment with the Company or an Affiliate, continues to serve as a member of the Board or the board of directors of an Affiliate. The Service of a Continuing Director shall

terminate when he or she ceases to serve as a member of the Board or on the board of directors of an Affiliate.


2.44	“Share” means a share of the Class A Common Stock, par value $.01 per share, of the Company, or such other securities of the Company as may be designated by the Committee from time to time.


2.45	“Stock Appreciation Right” or “SAR” means an Award consisting of a right to receive any excess in value of shares of common stock over the exercise price and designated as an SAR pursuant to the terms of Section 7.


2.46	“Stock Appreciation Right Spread” means the amount by which the Fair Market Value, as of the Exercise Date, of the Shares as to which a Stock Appreciation Right is exercised exceeds the aggregate Exercise Price with respect to such Stock Appreciation Right.


2.47	“Stock Option” means a nonqualified stock option, as described in Section 6, that is not intended to meet the requirements of Code Section 422.


2.48	“Stock Option Spread” means the amount by which the Fair Market Value, as of the Exercise Date, of the Shares as to which a Stock Option is exercised exceeds the aggregate Exercise Price with respect to such Shares.

2.49

“Successor” means the Participant’s spouse, the Participant’s lineal descendants, any trust the beneficiaries of which consist only of the Participant, the Participant’s spouse and/or the Participant’s lineal descendants, or to a corporation in which the Participant, the Participant’s spouse and/or the Participant’s lineal descendants own 100% of the economic interest and has the unfettered right to prevent further transfer or disposition of the Restricted Stock, Stock Option, Stock Appreciation Right, Restricted Stock Unit or Owned Shares, applicable. The Committee may, in its discretion, deem other parties to qualify as a Successor for purposes of this Plan.


2.50	“Terms and Conditions” means any electronic or written agreement or other instrument or document evidencing an Award.


2.51	“Third Restatement Effective Date” means November 3, 2016.


2.52	“Valuation Date” means any Business Day. A Valuation Date shall also occur upon the consummation of a transaction constituting a Change in Control.


2.53	“Withholding Tax” means the aggregate federal, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising under the Plan.

SECTION 3

Administration


3.1	Plan Administration. The Plan shall be administered by the Committee.


3.2	Authority of the Committee. Except as limited by law or the by-laws of the Company, and subject to the provisions of the Plan, the Committee shall have full power and discretion to: (a) select eligible Employees to participate in the Plan; (b) determine the size and type of Awards; (c) determine the

terms and conditions of Awards in a manner consistent with the Plan; (d) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in Shares, and the method or methods by which Awards may be settled or exercised; (e) determine the Fair Market Value of a Share; (f) construe and interpret the Plan and any agreement or instrument entered into under the Plan; (g) establish, amend or waive rules and regulations for the Plan’s administration; (h) specify the Exercise Price; and (i) subject to the provisions of Section 15.1, amend the terms and conditions of any outstanding Award to the extent the amended terms are within the Committee’s authority under the Plan. Further, the Committee shall make all other determinations that may be necessary or advisable to administer the Plan. The Committee may delegate some or all of its authority under the Plan to officers or employees of the Company or other Persons, except with respect to Awards to Executive Officers or to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16 of the Exchange Act or cause an Award intended to qualify for treatment as performance-based compensation under Section 162(m) to not so qualify.


3.3	Decisions Binding. All determinations and decisions made by the Committee or by a Person or Persons delegated authority by the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding on all Persons, including, without limitation, the Company, its shareholders, all Affiliates, Employees, Participants and their estates and beneficiaries.

SECTION 4

Shares Subject to the Plan

4.1

Number of Shares Available for Grants. Subject to adjustment as provided in Sections 4.2 and 4.3, the number of Shares that may be issued or transferred to Participants under the Plan is 68,000. No additional awards shall be made under the Prior Plans on or after the Original Effective Date. Subject to adjustment as provided in Section 4.3, to the extent necessary to comply with Section 162(m), the maximum number of Shares or Share equivalent units that may be granted during any fiscal year to any one Participant under Options, SARs, Restricted Stock, Restricted Stock Units, Performance Awards or other Stock-Based Awards is $25,000,000, which limit will (i) be calculated based on the Fair Market Value of the number of Shares subject to the applicable Award as of the applicable Grant Date and (ii) apply regardless of whether the compensation is paid in Shares or in cash. To the extent necessary to comply with Code Section 162(m) the maximum aggregate dollar amount that may be paid to any one Participant during any fiscal year under Performance Awards or any cash-based Award under Section 9 is $25,000,000.

4.2

Lapsed Awards. If any Award granted under this Plan or a Prior Plan is canceled, terminates, expires or lapses for any reason, any Shares subject to such award will again be available for the grant of an Award under the Plan. Common Stock issued through the assumption or substitution of outstanding grants from an acquired company shall not reduce the shares available for Awards under the Plan. In addition, if a Share subject to an Award is not delivered because the Award is settled in cash, then that Share will thereafter be deemed to be available for grant. If a Share subject to an Award is not

delivered because it is used to satisfy a tax withholding obligation or used to pay the Exercise Price of an Option, then that Share will not thereafter be deemed to be available for grant.

4.3

Adjustments in Authorized Shares. If the Shares, as currently constituted, are changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether because of a merger, consolidation, recapitalization, reclassification, split, reverse split, combination of shares, or otherwise, but not including a capital infusion from any source) or if the number of Shares is increased through the payment of a stock dividend, then the Committee shall substitute for or add to each Share that may become subject to an Award the number and kind of shares of stock or other securities into which each outstanding Share was changed, for which each such Share was exchanged, or to which each such Share is entitled, as the case may be.


4.4	Sources of Shares Deliverable under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

SECTION 5

Eligibility and Participation


5.1	Eligibility. Any Employee, including any officer or employee-director of the Company or an Affiliate, shall be eligible to be designated a Participant. To be eligible, a Participant shall have signed and delivered to the Company the Confidentiality and Non-Competition Agreement delivered by the Company to the Participant.


5.2	Actual Participation. The Committee shall determine the eligible Employees to whom it will grant Awards.

SECTION 6

Stock Options


6.1	Grant of Stock Options.


(a)	Subject to the terms and provisions of the Plan, the Committee may grant Stock Options to any Participant in the number, and upon the terms, and at such time or times, as the Committee determines and sets forth in the Terms and Conditions.

(b)

Each Stock Option grant shall be evidenced by the Terms and Conditions that specifies the duration of the Stock Option, the number of Shares to which the Stock Option pertains, the manner, time, and rate of exercise and vesting of the Stock Option, and such other provisions as the Committee determines. Vesting conditions may include, but not be limited to, the achievement of specific performance objectives (Company-wide, business unit, and/or individual) or continued Service.


6.2	Exercise Price. The Terms and Conditions shall specify the Stock Option’s Exercise Price, which shall be not less than the Fair Market Value of a Share on the Grant Date.


6.3	Duration of Stock Options. Each Stock Option will expire at the time determined by the Committee at the time of grant and set forth in the Terms and Conditions.


6.4	Exercise of Stock Options.


(a)	Stock Options shall become exercisable at such times and be subject to such vesting and other restrictions and conditions as the Committee in each instance approves and sets forth in each Terms and Conditions. Restrictions and conditions on the exercise of a Stock Option need not be the same for each Award or for each Participant.

(b)

The holder of a Stock Option may exercise the Stock Option only by delivering a written notice of exercise to the Company setting forth the number of Shares as to which the Stock Option is to be exercised. Upon the Exercise Date, the holder shall pay or provide for the Exercise Price and applicable Withholding Tax in full, pursuant to such procedures established by the Committee from time to time after giving consideration to applicable tax, securities and accounting rules.


(c)	Any exercisable Stock Option that has not been exercised by its holder shall be automatically exercised in accordance with subsection (b) hereof on the Exercise Date immediately prior to its expiration if, on such Exercise Date, there is a Stock Option Spread with respect to such Stock Option.


6.5	Termination of Service. Except as otherwise provided in the Terms and Conditions:


(a)	In the event a Participant’s Service terminates by reason of death, Disability, or Retirement:


(i)	The Applicable Fraction of the portion of any Stock Option held by such Participant which has not theretofore become exercisable shall immediately become vested and exercisable.


(ii)	All Stock Options held by the Participant, to the extent exercisable (including by application of clause (i) above) as of the Participant’s termination of Service shall remain exercisable through the second anniversary of the date of termination of Service and shall thereafter expire.


(iii)	Any unvested portion of the Participant’s Stock Options as of the date of termination (other than any portion thereof that becomes vested pursuant to clause (i) above) shall be forfeited and canceled, without consideration, on the date of termination.


(b)	Except as provided in Section 6.8, in the event a Participant’s Service terminates other than by reason of death, Disability, or Retirement:


(i)	Any unvested portion of the Participant’s Stock Options as of the date of termination shall be forfeited and canceled on the date of termination, and


(ii)	The vested portion, if any, of the Participant’s Stock Options shall remain exercisable through (A) the date that is six months after the Participant’s termination of Service, if the six month period commences in an open trading window, or (B) if the six month period commences in a closed trading window, the date that is six months from the first day of the next open

trading window. Any vested Stock Option remaining outstanding after such date shall thereafter expire.


(c)	Notwithstanding the foregoing, the Committee may, in its sole discretion, accelerate the vesting and exercisability, and/or extend the period of exercisability, of all or a portion of a Stock Option at any time as permitted by Section 409A.


(d)	In no event shall a Stock Option be exercisable following its expiration date.


6.6	Nontransferability of Stock Options.

(a)

(b)

6.7

6.8

6.9

Employment in a Joint Venture. If a Participant becomes an employee of certain joint ventures of the Company, as determined by the Board from time to time (a “Joint Venture”), during the Restriction Period, vesting of the Participant’s Stock Options shall be tolled beginning on the date such Participant becomes an employee of the Joint Venture until the date such Participant again becomes an Employee. Accordingly, the Restriction Period for such Participant’s Stock Options shall be extended by the number of days the Participant was an employee of the Joint Venture.

SECTION 7

Stock Appreciation Rights


7.1	Grant of Stock Appreciation Rights.


(a)	Subject to the terms and provisions of the Plan, the Committee may grant Stock Appreciation Rights to any Participant in the number, and upon the terms, and at such time or times, as the Committee determines and sets forth in the Terms and Conditions.

(b)

Each Stock Appreciation Right grant shall be evidenced by the Terms and Conditions that specifies the duration of the Stock Appreciation Right, the number of Shares to which the Stock Appreciation Right pertains, the manner, time, and rate of exercise and vesting of the Stock Appreciation Right, and such other provisions as the Committee determines. Vesting conditions may include, but not be limited to, the achievement of specific performance objectives (Company-wide, business unit, and/or individual) or continued Service.


7.2	Exercise Price. The Terms and Conditions shall specify the Stock Appreciation Right’s Exercise Price, which shall be not less than the Fair Market Value of a Share on the Grant Date.


7.3	Duration of Stock Appreciation Rights. Each Stock Appreciation Right will expire at the time determined by the Committee at the time of grant and set forth in the Terms and Conditions.


7.4	Exercise of Stock Appreciation Rights.


(a)	Stock Appreciation Rights shall become exercisable at such times and be subject to such vesting and other restrictions and conditions as the Committee in each instance approves and sets forth in each Terms and Conditions. Restrictions and conditions on the exercise of a Stock Appreciation Right need not be the same for each Award or for each Participant.

(b)

The holder of a Stock Appreciation Right may exercise the Stock Appreciation Right only by delivering a written notice of exercise to the Company setting forth the number of Stock Appreciation Rights to be exercised. The Stock Appreciation Right Spread may be settled, as set forth in the Terms and Conditions, by delivery by the Company of the number of Shares equal to the Stock Appreciation Right Spread, in which case the Participant shall on or before the Exercise Date pay or provide for the applicable Withholding Tax in full, pursuant to such exercise procedures established by the Committee from time to time after giving consideration to applicable tax, securities and accounting rules. Any exercisable Stock Appreciation Right that has not been exercised by its holder shall be automatically exercised in accordance with subsection (b) hereof on the Exercise Date immediately prior to its expiration if, on such Exercise Date, there is a Stock Appreciation Right Spread with respect to such Stock Appreciation Right.


7.5	Termination of Service. Except as otherwise provided in the Terms and Conditions:


(a)	In the event a Participant’s Service terminates by reason of death, Disability, or Retirement:


(i)	The Applicable Fraction of the portion of any Stock Appreciation Right held by such Participant which has not theretofore become exercisable shall immediately become vested and exercisable.


(ii)	All Stock Appreciation Rights held by the Participant, to the extent exercisable (including by application of clause (i) above) as of the Participant’s termination of Service shall remain exercisable through the second anniversary of the date of termination of Service and shall thereafter expire.


(iii)	Any unvested portion of the Participant’s Stock Appreciation Rights as of the date of termination (other than any portion thereof that becomes vested pursuant to clause (i) above) shall be forfeited and canceled, without consideration, on the date of termination.


(b)	Except as provided in Section 7.8, in the event a Participant’s Service terminates other than by reason of death, Disability, or Retirement:


(i)	Any unvested portion of the Participant’s Stock Appreciation Rights as of the date of termination shall be forfeited and canceled on the date of termination, and


(ii)	The vested portion, if any, of the Participant’s Stock Appreciation Rights shall remain exercisable through the ninetieth (90th) day after the Participant’s termination of Service. Any vested Stock Appreciation Right remaining outstanding after such date shall thereafter expire.


(c)	Notwithstanding the foregoing, the Committee may, in its sole discretion, accelerate the vesting and exercisability, and/or extend the period of exercisability, of all or a portion of a Stock Appreciation Right at any time as permitted by Section 409A.


(d)	In no event shall a Stock Appreciation Right be exercisable following its expiration date.


7.6	Nontransferability of Stock Appreciation Rights.

(a)

Except as otherwise provided in Section 7.6(b), a Participant’s Terms and Conditions, or the Plan, during the Restriction Period, (i) no Stock Appreciation Right granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and (ii) all Stock Appreciation Rights shall be exercisable during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. The Committee may, in its sole discretion, require a Participant’s guardian or legal representative to supply it with the evidence the Committee deems necessary to establish the authority of the guardian or legal representative to act on behalf of the Participant.

(b)

Subject to applicable law, vested Stock Appreciation Rights may be transferred to a Successor. Such transferred Stock Appreciation Rights may only be further sold, transferred, pledged, assigned or otherwise alienated by the Successor in accordance with this Section 7.6, and shall be subject in all respects to the terms of the Terms and Conditions and the Plan. For a transfer to be effective, the Successor shall promptly furnish the Company with written notice thereof

and a copy of such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance of the Successor of the terms and conditions of the Plan.

7.7

Dividend Equivalents and Other Distributions. The Committee may, in its sole discretion, provide under an agreement for payments in connection with Stock Appreciation Rights that are equivalent to dividends and other distributions declared and paid on the Shares underlying the Stock Appreciation Rights prior to the date of exercise. Such dividend equivalent agreement, if any, shall be separate and apart from the Terms and Conditions and shall be designed to comply separately with Section 409A.

7.8

7.9

Employment in a Joint Venture. If a Participant becomes an employee of certain joint ventures of the Company, as determined by the Board from time to time (a “Joint Venture”), during the Restriction Period, vesting of the Participant’s Stock Appreciation Rights shall be tolled beginning on the date such Participant becomes an employee of the Joint Venture until the date such Participant again becomes an Employee. Accordingly, the Restriction Period for such Participant’s Stock Appreciation Rights shall be extended by the number of days the Participant was an employee of the Joint Venture.

SECTION 8

Restricted Stock and Restricted Stock Units


8.1	Grant of Restricted Stock and Restricted Stock Units. Subject to the terms and provisions of the Plan, the Committee may, at any time and from time to time, grant Restricted Stock or Restricted Stock Units to any Participant in such amounts as it determines and sets forth in the Terms and Conditions.


8.2	Terms and Conditions. Each grant of Restricted Stock or Restricted Stock Units shall be evidenced by the Terms and Conditions that specifies the Restriction Period, the number of Shares or Restricted Stock Units granted, the purchase price, if any, and such other provisions as the Committee determines.


8.3	Nontransferability.

(a)

Except as provided in Section 8.3(b), during the Restricted Period, (i) no Restricted Stock or Restricted Stock Unit granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution and (ii) all rights with respect to Restricted Stock or Restricted Stock Units shall be available during the Participant’s lifetime only to the Participant or the Participant’s guardian or legal representative. The Committee may, in its sole discretion, require a Participant’s guardian or

legal representative to supply it with evidence the Committee deems necessary to establish the authority of the guardian or legal representative to act on behalf of the Participant.

(b)

Subject to applicable law, Restricted Stock may be transferred to a Successor. Such transferred Restricted Stock may only be further sold, transferred, pledged, assigned or otherwise alienated by the Successor in accordance with this Section 8.3, and shall be subject in all respects to the terms of the Terms and Conditions and the Plan. For a transfer to be effective, the Successor shall promptly furnish the Company with written notice thereof and a copy of such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance of the Successor of the terms and conditions of the Plan.

8.4

Termination of Service. Except as provided in Section 8.5, if a Participant’s Service terminates, then except as otherwise provided in the Terms and Conditions all unvested Restricted Stock and Restricted Stock Units held by such Participant will be forfeited and any vested Restricted Stock and Restricted Stock Units shall continue to be subject to the terms of the Plan and any applicable Award.

8.5

Change in Control. If, within twelve months following a Change in Control, (i) a Participant is terminated by the Company or an employing Affiliate (that is not a Joint Venture) without Cause or (ii) such Participant resigns from the Company or an employing Affiliate (that is not a Joint Venture) for Good Reason, all then outstanding Restricted Stock and Restricted Stock Units shall vest and become nonforfeitable.

8.6

Other Conditions. The Committee may impose such other conditions and restrictions on any Restricted Stock and Restricted Stock Units as it deems advisable and sets forth in the Terms and Conditions, including, without limitation, vesting restrictions based upon the achievement of specific performance objectives (Company-wide, business unit, and/or individual) or continued Service, and/or restrictions under applicable federal or state securities laws. The Committee may provide that restrictions established under this Section 8.6 as to any given Award will lapse all at once or in installments.


8.7	Voting Rights. Except as otherwise provided in the Terms and Conditions, and subject to Section 13.1(c), a Participant holding Shares of Restricted Stock may exercise any voting rights that apply to those Shares during the Restriction Period.

8.8

Dividends and Other Distributions. During the Restriction Period, a Participant holding Shares of Restricted Stock or Restricted Stock Units shall be credited with regular dividends or dividend equivalents and other distributions paid on those Shares. Such dividends or dividend equivalents and other distributions shall be subject to the same vesting conditions as the underlying Shares or Restricted Stock Units, and shall be paid within 30 days following the end of the Restriction Period.


8.9	Section 83(b) Elections on Restricted Stock. The Participant, if subject to taxation in the United States with respect to any compensation derived under the Plan, shall indicate to the Company whether the Participant intends to make an election under Code Section 83(b) with respect to the Restricted Stock.

8.10

Employment in a Joint Venture. If a Participant becomes an employee of a Joint Venture during the Restriction Period, vesting of the Participant’s Restricted Stock and Restricted Stock Units shall be tolled beginning on the date such Participant becomes an employee of the Joint Venture and shall recommence on the date such Participant again becomes an Employee. Accordingly, the Restriction Period for such Participant’s Restricted Stock and Restricted Stock Units shall be extended by the number of days the Participant was an employee of the Joint Venture.


8.11	Payment of Restricted Stock Units. Each Restricted Stock Unit shall be payable to the Participant in such form provided in the Terms and Conditions following the last day of the Restriction Period, or on such later date provided in the Terms and Conditions or pursuant to a deferral agreement between the Participant and the Company.

SECTION 9

Performance Awards

9.1

Grant of Performance Awards. The Committee shall have the authority to determine (i) the Participants who shall receive Performance Awards, (ii) the size, number, amount or value, as applicable, of Performance Awards, and (iii) the Performance Criteria applicable in respect of such Performance Awards for each Performance Period. The Committee shall determine the duration of each Performance Period (which may differ from each other), and there may be more than one Performance Period in existence at any one time as to any Participant or all or any class of Participants. Each grant of Performance Awards shall be evidenced by the Terms and Conditions that shall specify the Performance Criteria applicable thereto and such other terms and conditions not inconsistent with the Plan as the Committee shall determine.

9.2

Earning of Performance Awards. The grant and/or vesting of Performance Awards shall be contingent, in whole or in part, upon the attainment of specified Performance Criteria or the occurrence of any event or events involving a Change in Control, death or Disability, as the Committee shall determine. In addition to the achievement of the specified Performance Criteria, the Committee may, at the grant date, condition earning of Performance Awards on the Participant completing a minimum period of service following the Grant Date or on such other conditions as the Committee shall specify.


9.3	Performance Awards and Code Section 162(m). The provisions of this Section 9.3 shall apply with respect to any Performance Award that is intended to meet the Performance-Based Exception.

(a)

Establishment of Performance Criteria. The Committee shall establish the Performance Criteria for the applicable Performance Period no later than the 90th day after the Performance Period begins (or by such other date as may be required under Section 162(m)) but in any event at a time when achievement of the Performance Criteria is substantially uncertain. The Committee may not in any event increase the amount of compensation payable to an Executive Officer upon attainment of the Performance Criteria above the maximum amount approved by the Committee at the time the Performance Criteria is established.


(b)	Certification of Attainment of Performance Criteria. As soon as practicable after the end of a Performance Period and prior to any payment in respect of such Performance Period, the

Committee shall certify in writing the amount, number or value, as applicable, of the Performance Awards that have been earned on the basis of performance in relation to the established Performance Criteria.

(c)

Payment of Awards. Earned Performance Awards shall be distributed to the Participant or, if the Participant has died, to the Participant’s Designated Beneficiary as soon as practicable after the expiration of the Performance Period and the Committee’s certification under Section 9.3(b) above, provided that, unless the payment of a Performance Award has been deferred in accordance with Section 409A of the Code, distributions of a Performance Award shall be made no later than March 15 of the year following the year in which the amount is earned.

SECTION 10

Other Stock-Based Awards

10.1

The Committee shall have authority to grant to eligible Participants an “Other Stock-Based Award,” which shall consist of any right which (i) is not a Stock Option, Stock Appreciation Right, Restricted Stock Unit or Restricted Stock and (ii) is an Award of Shares or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as deemed by the Committee to be consistent with the purposes of the Plan. Subject to the terms of the Plan and any applicable Terms and Conditions, the Committee shall determine the terms and conditions of any such Other Stock-Based Award.

SECTION 11

Share Restrictions and Purchase and Sale Rights


11.1	Restrictions. The Committee may impose such restrictions on any Shares as it deems necessary or advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which the Shares are then listed and/or traded, and under any blue sky or state securities laws.


11.2	Additional Conditions of Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or transferred, or (ii) to treat as owner of such Shares, to accord the right to vote as such owner, or to pay dividends to any transferee to whom such Shares have been transferred in violation of the Plan or any Terms and Conditions.

SECTION 12

Beneficiary Designation

12.1

SECTION 13

Breach of Restrictive Covenants


13.1	The Terms and Conditions may provide that if the Participant breaches, whether during or after termination of Service, a nonsolicitation, noncompetition, confidentiality, or other restrictive covenant by which he or she is bound, then in addition to any other penalties or restrictions that may apply under any such agreement, state law, or otherwise, the Participant shall forfeit:


(a)	Any Awards granted to him or her under the Plan, including Awards that have become exercisable;

(b)

The profit the Participant realized from the exercise of any Stock Options or Stock Appreciation Rights that the Participant exercised after terminating Service and within the six-month period immediately preceding the Participant’s termination of Service, which is the Stock Option Spread or Stock Appreciation Right Spread associated with any Shares acquired by the Participant upon his or her exercise of such Stock Options or such Stock Appreciation Rights; and


(c)	The Fair Market Value, as determined on the vesting date, of any Restricted Stock that vested or Restricted Stock Unit that was settled within the six-month period immediately preceding the Participant’s termination of Service.

SECTION 14

Rights of Participants

14.1


14.2	Participation. No Employee shall have the right to receive an Award under the Plan, or, having received any Award, to receive a future Award.

SECTION 15

Amendment, Modification, Termination and Change in Control

15.1

or obligations under any Award already granted under the Plan, except such an amendment made to comply with the requirements of applicable law.


15.2	Adjustment of Awards upon the Occurrence of Certain Events.

(a)

In General. If the Shares, as currently constituted, are changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether because of a merger, consolidation, recapitalization, reclassification, split, reverse split, combination of shares, or otherwise, but not including a capital infusion from any source) or if the number of Shares is increased through the payment of a stock dividend, then the Committee shall substitute for or add to each Share underlying an Award the number and kind of shares of stock or other securities into which each outstanding Share was changed, for which each such Share was exchanged, or to which each such Share is entitled, as the case may be, which shares or other securities shall be subject to the same terms and conditions as the underlying Award. Any such adjustment in an outstanding Stock Option or Stock Appreciation Right shall be made with a corresponding adjustment in the Exercise Price for each Share or other unit of any security covered by such Stock Option or Stock Appreciation Right but without change in the aggregate purchase price applicable to the unexercised portion of such Stock Option.


(b)	Reciprocal Transactions. The Committee may, but shall not be obligated to, make an appropriate and proportionate adjustment to an Award or to the Exercise Price of any outstanding Award, and/or grant an additional Award to the holder of any outstanding Award, to compensate for the diminution in the intrinsic value of the Shares resulting from any reciprocal transaction.

(c)

Certain Unusual or Nonrecurring Events. In recognition of unusual or nonrecurring events affecting the Company or its financial statements, or in recognition of changes in applicable laws, regulations, or accounting principles, and, whenever the Committee determines that adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, the Committee may, using reasonable care, make adjustments in the terms and conditions of, and the criteria included in, Awards. In no event will the Committee, unless otherwise approved by shareholders, be permitted (i) to reduce the Exercise Price of any outstanding Stock Option or Stock Appreciation Right, (ii) cancel a Stock Option or Stock Appreciation Right in exchange for cash or other Awards (except as provided in Section 15.4), (iii) exchange or replace an outstanding Stock Option or Stock Appreciation Right with a new Stock Option or Stock Appreciation Right with a lower Exercise Price, or (iv) take any other action that would be a “repricing” of Stock Options or Stock Appreciation Rights.


(d)	Notice. The Committee shall give notice of any adjustment to each Participant who holds an Award that has been adjusted and the adjustment (whether or not such notice is given) shall be effective and binding for all Plan purposes.


(e)	Section 409A. Notwithstanding any provision herein to the contrary, no adjustment shall be made under this Section 15.2 to the extent it would give rise to adverse tax consequences under Section 409A.


15.3	Fractional Shares. Fractional Shares, whether resulting from any adjustment in Awards pursuant to Section 15.2 or otherwise, may be settled in cash or otherwise as the Committee determines.


15.4	Change in Control.


(a)	If, within twelve months following a Change in Control, (i) a Participant is terminated by the Company or an employing Affiliate (that is not a Joint Venture) without Cause or (ii) such Participant resigns from the Company or an employing Affiliate (that is not a Joint Venture) for Good Reason, all then outstanding Awards shall become fully vested.

(b)

Any Award that has not been fully exercised before the date of a Change in Control may be settled or otherwise terminated on such date in the discretion of the Committee, unless a provision has been made in writing in connection with such transaction for the assumption of all Awards theretofore granted, or the substitution for such Awards of awards to acquire the stock of the surviving, resulting or acquiring corporation, with any adjustments as the Committee determines appropriate, in which event the Awards theretofore granted shall continue in the manner and under the terms so provided. Notwithstanding anything in the Plan to the contrary, any underwater Award that has not been fully exercised, and any Award that the Committee determines cannot become vested, before the date of consummation of the Change in Control may be canceled without consideration in the discretion of the Committee.


15.5	Tax Withholding. The Company shall have the right to deduct or withhold, or require a Participant to remit to the Company, an amount (either in cash or Shares) sufficient to satisfy any Withholding Tax.

SECTION 16

Miscellaneous Provisions


16.1	Successors. All obligations of the Company under the Plan or any Terms and Conditions shall be binding on any successor to the Company, whether the existence of the successor results from a direct or indirect purchase of all or substantially all of the Company’s stock, or a merger or consolidation, or otherwise.


16.2	Legal Construction.


(a)	Number. Except where otherwise indicated by the context, any plural term used in the Plan includes the singular and any singular term includes the plural.


(b)	Severability. If any provision of the Plan is held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.


16.3	Business Day. In the event the day prescribed for the performance of any act under the Plan, or deadline by which such act must be performed, shall fall on a day other than a Business Day, such day or deadline shall be extended until the close of business on the next succeeding Business Day.


16.4	Requirements of Law. The granting of Awards, the issuance of Shares and the payment of cash under the Plan shall be subject to all applicable laws, rules and regulations, and to any approvals by governmental agencies or national securities exchanges as may be required.


16.5	Rights of a Shareholder. A Participant shall not be, nor shall a Participant have any of the rights and privileges of, a shareholder until certificates for the underlying Shares have been issued or the underlying Shares have been registered as a book-entry in the name of the Participant.


16.6	Securities Law Compliance.

(a)

As to any individual who is, on the relevant date, an officer, director or greater than 10% percent beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 under the Exchange Act, or any successor rule. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

(b)

16.7

16.8

Non-U.S. Based Participant. Notwithstanding any other provision of the Plan to the contrary, the Committee may make Awards to Participants who are not citizens or residents of the United States, or to Participants outside the United States, on terms and conditions that are different from those specified in the Plan as may, in the Committee’s judgment, be necessary or desirable to foster and promote achievement of the Plan’s purposes. In furtherance of such purposes, the Committee may, without amending the Plan, establish or modify rules, procedures and subplans as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company operates or has employees.


16.9	Governing Law. To the extent not preempted by Federal law, the Plan and all agreements hereunder shall be construed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to its conflicts of law principles that would require the application of the law of any other jurisdiction.


16.10	Section 162(m). The Plan is intended to be administered, interpreted and construed so that Performance Awards may qualify for the Performance-Based Exception.


16.11	Recoupment. Notwithstanding any provision in the Plan to the contrary, Awards granted or paid under the Plan will be subject to recoupment by the Company pursuant to any “clawback” or similar compensation recoupment policy that may be established by the Company.

Exhibit 10.3

AMENDED AND RESTATED
COTY INC.
ANNUAL PERFORMANCE PLAN
(as of February 1, 2017)

SECTION 1. Purpose . The purpose of the Coty Inc. Annual Performance Plan, as Amended and Restated on February 1, 2017 (the “Plan”) is to promote the profitability of Coty Inc., its subsidiaries and affiliates (the “Company”) by providing senior executives and top line managers with incentive awards based on the achievement of objectively determinable goals that are aimed at increasing shareholder value. The effective date of this Plan is the Restatement Effective Date.

SECTION 2. Definitions . For the purposes of the Plan, the following terms shall have the meanings indicated:

“Affiliate” shall mean (i) any entity that, directly or indirectly, controls or is controlled by the Company and (ii) any entity in which the Company has a significant equity or other ownership interest, in either case as determined by the Committee.

“Award” shall mean the grant of an award by the Committee to a Participant. An Award shall represent the opportunity to qualify for an Incentive Award in accordance with the terms of the Plan.

“Base Salary” shall mean a Participant’s annual gross salary rate in effect on the day on which the Committee determines the Performance Criteria and relevant levels of achievement that will be used to calculate an Incentive Award for a given Performance Period.

“Board” shall mean the Board of Directors of the Company.

“Cause” shall have the meaning set forth in any employment, severance or other agreement between the Company or an Affiliate and the Participant. If there is no employment, severance or other agreement between the Company or an Affiliate and the Participant, or if such agreement does not define “Cause,” then “Cause” shall mean the occurrence of any of the following, as determined by the Committee in its sole discretion:

(A) a Participant’s willful and continued failure substantially to perform his duties (other than as a result of total or partial incapacity due to physical or mental illness or as a result of voluntary termination of employment by such Participant) which failure continues for more than 30 days after receipt by the Participant of written notice setting forth the facts and circumstances identified by the Company as constituting adequate grounds for termination under this clause (A),

(B) any willful act or omission by a Participant constituting dishonesty, fraud or other malfeasance, and any act or omission by a Participant constituting immoral conduct, which in any such case is injurious to the financial condition or business reputation of the Company or any of its Affiliates,

(C) a Participant’s indictment for a felony under the laws of the United States or any state thereof or a similar event in any other jurisdiction in which the Company or its Affiliates conduct business, or

(D) a Participant’s breach of any restrictive covenants by which he or she is bound.

“Change in Control” shall be deemed to have occurred if:

(A) Any Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) that is not the Majority Shareholder is or becomes the “beneficial owner” (as defined below), directly or indirectly, of securities representing either (i) more than 50% of the combined voting power of the Company’s then outstanding securities, or (ii) 20% or more of the combined voting power of the Company’s then outstanding securities at a time when the Majority Shareholder holds less than 30% of such combined voting power. For purposes of this clause (A), “beneficial owner” has the meaning given that term in Rule 13d 3 under the Exchange Act, except that a Person shall be deemed to be the “beneficial owner” of all shares that any such Person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants, options or otherwise, without regard to the 60-day period referred to in such Rule;

(B) Individuals who constitute the Board on the Original Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided, that any Person becoming a director subsequent to such date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least three-quarters of the directors then comprising the Incumbent Board shall be, for purposes of this clause (B), considered as though such Person were a member of the Incumbent Board; and provided, further, that this clause (B) shall not apply as long as the Majority Shareholder is the beneficial owner of a majority of the Company’s common stock;

(C) The Majority Shareholder enters into any joint venture, joint operating arrangement, partnership, standstill agreement or other arrangement similar to any of the foregoing with any other Person or group, pursuant to which such Person or group assumes significant operational or managerial control of the Company; or

(D) The shareholders of the Company approve a plan or agreement providing (i) for a merger or consolidation of the Company other than with a wholly owned subsidiary and other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (ii) for a sale, exchange or other disposition of all or substantially all of the business or assets of the Company. If any of the events enumerated in this clause (D) occurs, the Board shall determine the effective date of the Change in Control resulting therefrom for purposes of this Plan.

“Committee” shall mean the Remuneration and Nominating Committee of the Board or any successor committee with responsibility for compensation, or any subcommittee, as long as the number of Committee members and their qualifications shall at all times be sufficient to meet the independence requirements of the New York Stock Exchange, Inc. or any other applicable exchange on which the Company’s common equity is at the time listed. The Committee shall consist solely of two or more members of the Board who are not employees of the Company and who otherwise qualify as “outside directors” under Section 162(m).

“Determination Date” shall mean the date that is 90 days after the beginning of a Performance Period or, if earlier, the date on which no more than 25% of the Performance Period has elapsed.

“Disability” shall mean either (i) disability as defined for purposes of the Company’s disability benefit plan, or (ii) a Participant’s inability, as a result of physical or mental incapacity, to perform the duties of his or her position(s) for a period of six consecutive months or for an aggregate of six months in any consecutive 12-month period.

“Employment Agreement” shall mean, with respect to a Participant, any employment agreement by and between the Company and such Participant as in effect from time to time.

“Executive Officer” means any Company employee who is an “executive officer” as defined in Rule 3b-7 promulgated under the Securities Exchange Act of 1934, as amended.

“Incentive Award” shall mean the incentive compensation payable to a Participant, as determined by the Committee pursuant to the terms of the Plan.

“Majority Shareholder” means (i) the Company’s majority shareholder as of the Original Effective Date or (ii) a Benckiser Permitted Holder as defined in the Company’s Certificate of Incorporation effective on the Original Effective Date or any other similarly situated Person as determined by the Committee.

“Maximum Award” means, with respect to any Participant for any fiscal year of the Company in which one or more Performance Periods ends, $8,000,000.

“Original Effective Date” means June 12, 2013.

“Participant” shall mean an Executive Officer or other key employee of the Company selected by the Committee in accordance with Section 4 who receives an Award.

“Performance Criteria” shall mean objective criteria selected by the Committee (in its sole and absolute discretion consistent with the terms of the Plan), which may be based on the relative or comparative attainment of one or more of the following criteria during a Performance Period, whether in absolute terms or relative to the performance of one or more similarly situated companies or a published index covering the performance of a number of companies: total stockholder return (inclusive or exclusive of dividends paid); stock price; gross, operating or net earnings or margins; approved rate increases; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization (“EBITDA”); EBITDA excluding traditional working media; earnings per share; economic value added; ratio of operating earnings to capital spending; net sales; sales growth; return on assets, capital or equity; income; market share; level of expenses; revenue; revenue growth; cash flow; increases in customer base; capital expenditures; cost reductions and expense control objectives; compliance with environmental or regulatory goals or requirements; conservation; budget objectives; working capital; mergers, acquisitions and divestitures; attainment of objectives measured in terms of quality or safety; talent management; customer complaints or customer satisfaction; and improvements in financial controls; and, in the case of persons who are not Executive Officers, such other criteria as may be determined by the Committee. Performance Criteria may be established on a Company-wide basis or with respect to one or more business units, divisions, subsidiaries, or geographic locations, or on an individual basis.

of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year; (vi) the operations of any business acquired by the Company or any affiliate or of any joint venture in which the Company or affiliate participates; (vii) the divestiture of one or more business operations or the assets thereof; or (viii) the costs incurred in connection with such acquisitions or divestitures; and (ix) charges for stock based compensation.

Except in the case of Awards to Executive Officers intended to be ‘performance-based compensation’ under Section 162(m), the Committee may at any time adjust the Performance Criteria for any Performance Period as it deems equitable. The Committee shall have no obligation to treat Participants uniformly.

“Performance Period” means the period selected by the Committee, which shall generally coincide with the Company’s fiscal year. The Committee shall not be required to establish the same Performance Period for all Participants.

“Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or any other entity, whether foreign or domestic, including any governmental entity or any department, agency or political subdivision thereof.

“Restatement Effective Date” means February 1, 2017.

“Retirement” shall mean a termination of employment (other than a termination of employment for Cause):

(A) after attaining age 60, but only if the Company or the employing Affiliate consents to the treatment of such termination as a “Retirement” for purposes of this Plan; or

(B) qualifying as a retirement at normal retirement age under the laws and/or arrangements applicable to the Participant, as reasonably determined by the Committee.

“Section 162(m)” means Section 162(m) of the Internal Revenue Code of 1986, as amended, and any regulations or governing authority promulgated thereunder, as in effect from time to time.

SECTION 3. Administration .

(a) The Plan shall be administered by the Committee, which shall have full authority to interpret the Plan and from time to time to adopt such rules and regulations for carrying out the Plan as it may deem best.

(b) All determinations by the Committee shall be made by the affirmative vote of a majority of its members, but any determination reduced to writing and signed by a majority of the

members shall be fully as effective as if it had been made at a meeting duly called and held. All decisions by the Committee (or if applicable, the Board) pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Participants, the Company and shareholders. The Committee may delegate to the Company’s Executive Committee its authority under the Plan with respect to Participants who are not Executive Officers; provided that all such Awards and payments in the aggregate do not exceed the total Awards and payments approved by the Committee for such Participants for the Performance Period.

SECTION 4. Eligibility . Subject to the provisions of the Plan, the Committee, in its sole and absolute discretion, may select at the outset of each Performance Period those Executive Officers, officers or employees (including those who are also directors) of the Company who will be granted Awards under the Plan with respect to such Performance Period. No member of the Committee shall be eligible to receive an Award under the Plan.

SECTION 5. Amount and Payment of Incentive Award .

(a) No later than the Determination Date, the Committee shall establish the applicable Performance Criteria and relevant levels of achievement that will be used to calculate an Incentive Award, if any, based on a percentage of the Participant’s Base Salary or such other basis as determined by the Committee. Such performance levels may be expressed as a target level, minimum level, maximum level, or such other levels as determined by the Board and communicated in writing to the Participant. For avoidance of doubt, electronic transmission shall be considered in writing for all purposes under the Plan.

(b) Within a reasonable time after the close of a Performance Period, the Committee (or solely with respect to Participants who are not Executive Officers, the Committee’s delegate, if any) shall determine whether the objective Performance Criteria and applicable levels of achievement established for that Performance Period have been met by the respective Participants. If the objective Performance Criteria and any other material terms established by the Committee have been met by a Participant, the Committee shall so certify in writing with respect to such Participant the actual level of achievement of the Performance Criteria applicable to such Participant for the Performance Period.

(c) If the Committee has made the written certification under Section 5(b) for a Performance Period, each Participant to whom the certification applies shall be eligible for an Incentive Award for the Performance Period. The Incentive Award for each such Participant shall not exceed the Maximum Award. For any Performance Period, however, the Committee shall have sole and absolute discretion to adjust the amount of, or eliminate entirely, the Incentive Award to one or more of the Participants based upon the Committee’s review of the objective performance goals for each Participant; provided, however, that for any Incentive Award that is intended to qualify

as “performance-based compensation” under Section 162(m), the Committee shall have discretion to reduce the amount of such Incentive Award or eliminate the Incentive Award entirely, but not to increase the amount of any Award.

(d) Any amounts a Participant has qualified to receive in respect of an Award as determined by the Committee (or, as applicable, its delegate) shall be paid to Participants no later than two and one-half months after the later of the end of the calendar year or the end of the Company’s tax year, in each case in which the applicable Performance Period ends (except to the extent the Participant has made a timely election to defer the payment of all or any portion of such Incentive Award under a Company-approved deferred compensation plan or arrangement). Payment shall be in cash or in shares of Company or Affiliate stock pursuant to a long term incentive compensation plan that has been approved by shareholders. Each Award shall be paid solely from the general assets of the Company and nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right to payment of an Award other than as an unsecured general creditor with respect to any payment to which he or she may be entitled. The Company has no obligation to fund, segregate or otherwise set aside amounts to be used to make payments under this Plan.

(e) Participation in the program ends when a Participant’s employment ends. Except as otherwise provided in Section 5(f) or in an Employment Agreement or as determined by the Committee, the Participant must be actively employed by the Company on the payment date in order to qualify for payment with respect to an Award.

(f) Except as otherwise provided in an Employment Agreement or as determined by the Committee, if a Participant’s employment terminates during a Performance Period by reason of Retirement, Disability or death, the Participant shall be entitled to payment, at the same time as payment to other Award holders is made, of a prorated Award reflecting the portion of the Performance Period during which he or she was employed, based on actual results achieved for such Performance Period. For avoidance of doubt, if a Participant’s employment terminates after the end of a Performance Period by reason of Retirement, Disability or death, the Participant shall be entitled to payment, at the same time as payment to other Award holders is made, of the full Award based on actual results achieved for such Performance Period.

(g) With respect to any Award or portion of an Award that is not to an Executive Officer or not intended to qualify as “performance-based compensation” under Section 162(m), the Committee may grant an Award on terms and conditions as determined by the Committee in its sole discretion, including an Incentive Award based on factors other than Performance Criteria.

SECTION 6. General Provisions .

(a) No portion of any Award under the Plan may be assigned or transferred prior to the payment thereof.

(b) All payments made pursuant to the Plan shall be subject to withholding in respect of income and other taxes required by law to be withheld or to withholding and offset by the Company in respect of any other amounts due and owing the Company by a Participant, in accordance with procedures to be established by the Committee.

(c) The selection of an individual for participation in the Plan shall not give such Participant any right to be retained in the employ of the Company, and the right of the Company to dismiss or discharge any such Participant, or to terminate any arrangement pursuant to which any such Participant provides services to the Company, is specifically reserved. The benefits provided for Participants under the Plan shall be in addition to, and shall in no way preclude, the payment of other forms of compensation to or in respect of such Participants.

(d) The Board and the Committee shall be entitled to rely on the advice of counsel and other experts, including the independent public accountants for the Company. No member of the Board or of the Committee or any officers of the Company shall be liable for any act or failure to act under the Plan.

(e) Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which arrangements may be either generally applicable or applicable only in specific cases.

(f) No member of the Committee or the Board shall participate in any action of the Committee or the Board involving that member.

(g) The Committee may cancel, withhold, defer or reduce the amount to be paid under any Award, and no Participant shall have any contractual right under the Plan to the Award of any amount hereunder, if the Committee determines to do so, in its absolute discretion, for any reason, including but not limited to a breach by a Participant of any agreement with or obligation to the Company.

(h) Notwithstanding any provision in the Plan to the contrary, Awards granted or paid under the Plan will be subject to recoupment by the Company pursuant to any “clawback” or similar compensation recoupment policy that may be established by the Company.

SECTION 7. Change in Control . Upon a Change in Control of the Company, the Board may, in its discretion, deem Performance Criteria to have been achieved at such level of performance as

designated by the Committee with respect to any applicable Performance Criteria under any outstanding Award relating to the Performance Period in which the Change in Control occurs. Any such Award shall be paid within five business days following such Change in Control; provided, however, that any such Award shall be reduced by the amount of any comparable benefit to which the Participant would be entitled under applicable law upon termination of employment.

SECTION 8. Amendment and Termination of the Plan . The Board or the Committee may, at any time or from time to time, terminate, in whole or in part, or amend the Plan. In the event of such termination, in whole or in part, of the Plan, the Board or the Committee may in its sole discretion direct the payment to Participants of any Awards not theretofore paid out prior to the respective dates upon which payments would otherwise be made hereunder to such Participants, in a lump sum or installments as the Board shall prescribe with respect to each such Participant, as permitted under Section 409A of the Code. To the extent required by applicable law, including Section 162(m), Plan amendments shall be subject to shareholder approval.

SECTION 9. Governing Law . The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award shall be determined in accordance with the laws of the State of New York, without regard to its conflicts of laws principles.

SECTION 10. Application of Section 162(m) . Except as set forth in Section 5(g) of the Plan, the Plan is intended to be administered, interpreted and construed so that Incentive Award payments may qualify as “performance-based compensation” under Section 162(m).

SECTION 11. Duration of the Plan . The Plan shall remain in effect until terminated by the Board or the Committee.

SECTION 12. Application of Section 409A . Incentive Awards payable under the Plan are intended to qualify for exemption from or, in the alternative, comply with, Section 409A. The Plan shall be construed and interpreted in accordance with such intent. If any provision of the Plan needs to be revised to satisfy the requirements of Section 409A, then such provision shall be modified or restricted to the extent and in the manner necessary to be in compliance with such requirements of Section 409A and any such modification shall attempt to maintain the same economic results as were intended under the Plan. The Company makes no guarantee that payments under the Plan will satisfy all applicable requirements for exemption from Section 409A. Payments made to a participant under the Plan in error shall be returned to the Company and do not create a legally binding right to such payments.

SECTION 13. Successors . All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business or assets of the Company.

Exhibit 10.4

NONQUALIFIED STOCK OPTION AWARD

TERMS AND CONDITIONS

UNDER
COTY INC. LONG-TERM INCENTIVE PLAN

(as amended February 1, 2017 and April 8, 2013 and effective as of February 1, 2017)

This instrument (the “ Terms and Conditions ”) evidences the grant effective on the date set forth in your total compensation letter (the “ Grant Date ”) of a nonqualified stock option award to you (the “ Participant ”) by Coty Inc., a Delaware corporation (the “ Company ”). Any term capitalized but not defined in these Terms and Conditions will have the meaning set forth in the Coty Inc. Long-Term Incentive Plan, as amended and restated effective February 1, 2017 (the “ Plan ”).

Option Grant. In accordance with the terms of the Plan and subject to these Terms and Conditions, the Company hereby grants to the Participant as of the Grant Date an option (the “ Option ”) to purchase all or any part of an aggregate of the number of shares of the Company’s Shares set forth in your total compensation letter (the “ Option Shares ”). This award is subject to cancellation unless the Participant executes and returns to the Company the Coty Inc. Confidentiality and Non-Competition Agreement by December 31 of the calendar year in which the Option was granted. This Option is a nonqualified stock option and is not intended to be an incentive stock option within the meaning of Code Section 422.


2.	Exercise Price. The Exercise Price of the Option will be the price per Share set forth in your total compensation letter.


3.	Vesting and Exercisability of Option. The Participant may exercise this Option only after it has become vested and exercisable in accordance with the following:


(a)	In General . The Option shall vest and become exercisable on the fifth anniversary of the Grant Date.


(b)	Change in Control . If, within twelve months following a Change in Control, (i) the Participant is terminated by the Company or an employing Affiliate (that is not a Joint Venture) without Cause or (ii) the Participant resigns from the Company or an employing Affiliate (that is not a Joint Venture) for Good Reason, the Option shall vest and become exercisable.

(c)

Joint Venture . If the Participant becomes an employee of a Joint Venture during the Restriction Period, vesting of the Option shall be tolled beginning on the date the Participant becomes an employee of the Joint Venture and shall recommence on the date the Participant again becomes an Employee Accordingly, the Restriction Period shall be extended by the number of days the Participant was an employee of the Joint Venture.


(d)	Retirement, Death, or Disability . The Option shall vest and become exercisable to the extent provided in paragraph 7 in the event of the Participant’s termination of Service by reason of Retirement, death, or Disability.


4.	Expiration. Subject to paragraph 7, the Option will expire on the tenth anniversary of the Grant Date (the “ Expiration Date ”).


5.	Transferability of Option .


(a)	Except as provided in Section 5(b), (i) the Participant may not sell, transfer, pledge, assign or otherwise alienate or hypothecate the Option, other than by will or the laws of descent and distribution and (ii) the Option shall be exercisable during the Participant’s lifetime only by the Participant or his or her guardian or legal representative.

(b)

Subject to applicable law, vested Stock Options may be transferred to a Successor. Such transferred Stock Options may only be further sold, transferred, pledged, assigned or otherwise alienated by the Successor in accordance with this Section 5(b), and shall be subject in all respects to the terms of these Terms and Conditions and the Plan. For a transfer to be effective, the Successor shall promptly furnish the Company with written notice thereof and a copy of such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance of the Successor of the terms and conditions of the Plan.


6.	Exercise of Option.

(a)

Notice of Exercise . After the Option has become exercisable pursuant to paragraph 3, and while it remains exercisable in accordance with paragraph 7, the Participant may exercise the Option in whole or in part on any Exercise Date by delivering a signed, written exercise notice to the Company. The notice shall indicate the number of Shares being purchased. Upon the Exercise Date, the holder shall pay or provide for the Exercise Price and applicable Withholding Tax in full, pursuant to such procedures established by the Committee from time to time after giving consideration to applicable tax, securities and accounting rules. The Option must be exercised as to a whole number of Shares.

(b)

Withholding Obligation . The withholding obligation upon the Participant’s exercise of the Option must be satisfied by paying the amount of required withholding to the Company. If the Participant does not pay the amount of required withholding to the Company, the Company will withhold from the Shares delivered to the Participant the minimum amount of funds required to cover any Withholding Tax required to be withheld by the Company by reason of such exercise of the Option.


(c)	Use of Shares . Shares used to satisfy the Exercise Price and/or any required withholding tax (including Shares underlying surrendered Options) will be valued at their Fair Market Value, determined in accordance with the Plan.


(d)	Condition of Transfer . The Company will issue no Shares pursuant to the Option before the Participant has paid the Exercise Price and any withholding obligation in full.


(e)	Automatic Exercise . Any exercisable Option that has not been exercised by its holder shall be automatically exercised in accordance with Section 6(a) on the Exercise Date immediately prior to its expiration if, on such Exercise Date, there is a Option Spread with respect to such Option.


7.	Termination of Service. Upon termination of Service with the Company or an Affiliate, the Participant’s right to exercise the Option will be subject to the following rules:


(a)	Retirement, Disability or Death .

(i)

If the Participant’s Service terminates due to Retirement, Disability or death before the Option has otherwise become vested, then the Option shall immediately become vested and exercisable with respect to the Applicable Fraction of the Option Shares, and shall be immediately forfeited and canceled with respect to the remaining Option Shares. The “ Applicable Fraction ” means a fraction, the numerator of which is the number of days elapsed from the Grant Date of an Award to the date of the Participant’s termination of Service and the denominator of which is the number of days between the Grant Date and the date the Award was scheduled to become exercisable or otherwise vest.


(ii)	The portion of an Option that is vested (whether by application of paragraph 7(a)(i) above or otherwise) on the date the Participant terminates Service due to Retirement, Disability or death may be exercised on an Exercise Date occurring on or before the second anniversary of the date of the Participant’s termination.

(b)

Other Termination of Service . Except as provided in paragraph 3(b), if the Participant’s Service terminates for any reason other than Retirement, Disability or death, the Participant may exercise the Option to the extent that it was exercisable on the date of such termination on any Exercise Date through (A) the date that is six months after the Participant’s termination of Service, if the six month period commences in an open trading window, or (B) if the six month period commences in a closed trading window, the date that is six months from the first day of the next open trading window. Any Option that is not vested on the date the Participant’s Service shall thereafter expire.


(c)	Option Expiration . In no event may the Option be exercised after the Expiration Date.


8.	Plan and Terms and Conditions Not a Contract of Employment or Service. Neither the Plan nor these Terms and Conditions are a contract of employment or Service, and no terms

of the Participant’s employment or Service will be affected in any way by the Plan, these Terms and Conditions or related instruments, except to the extent specifically expressed therein. Neither the Plan nor these Terms and Conditions will be construed as conferring any legal rights on the Participant to continue to be employed or remain in Service with the Company, nor will it interfere with any Company Party’s right to discharge the Participant or to deal with him or her regardless of the existence of the Plan, these Terms and Conditions or the Option.


9.	Participant to Have No Rights as a Shareholder. Before the date as of which the Participant is recorded on the books of the Company as the holder of any Shares underlying the Option, the Participant will have no rights as a shareholder with respect to those Shares.

10.

Notice. Any notice or other communication required or permitted under these Terms and Conditions must be in writing and must be delivered personally, sent by certified, registered or express mail, or sent by overnight courier, at the sender’s expense. Notice will be deemed given when delivered personally or, if mailed, three (3) days after the date of deposit in the United States mail or, if sent by overnight courier, on the regular business day following the date sent. Notice to the Company should be sent to:

Coty Inc.

Two Park Avenue

17 ^th Floor

New York, New York 10016

Attention: General Counsel

Notice to the Participant should be sent to the address on file with the Company. Either party may change the Person and/or address to which the other party must give notice under this paragraph 10 by giving such other party written notice of such change, in accordance with the procedures described above.


11.	Governing Law. To the extent not preempted by federal law, these Terms and Conditions will be construed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to its conflicts of law principles that would require the application of the law of any other jurisdiction.


12.	Plan Document Controls. The rights granted under these Terms and Conditions are in all respects subject to the provisions set forth in the Plan to the same extent and with the same effect as if set forth fully in these Terms and Conditions. If the terms of these Terms and Conditions conflict with the terms of the Plan document, the Plan document will control.


13.	Amendment of these Terms and Conditions. These Terms and Conditions may be amended unilaterally by the Committee to the extent provided under the Plan, or by a written instrument signed by both parties.


14.	Entire Agreement. These Terms and Conditions, together with the Plan, constitutes the entire obligation of the parties with respect to the subject matter of these Terms and

Conditions and supersedes any prior written or oral expressions of intent or understanding with respect to such subject matter.


15.	Administration. The Committee administers the Plan and these Terms and Conditions. The Participant’s rights under these Terms and Conditions are expressly subject to the terms and conditions of the Plan, including any guidelines the Committee adopts from time to time. The Participant hereby acknowledges receipt of a copy of the Plan.

COTY INC.

_____________________________

Camillo Pane

Chief Executive Officer

Exhibit 10.5

FORM OF

ELITE

SUBSCRIPTION AND STOCK OPTION

AGREEMENT

This Subscription and Stock Option Agreement (this “ Agreement ”), dated [DATE], (the “ Agreement Date ”) is by and between, Coty Inc., a Delaware corporation (the “ Company ”) and [NAME] (the “ Participant ”) and collectively as “Parties.”

RECITALS

WHEREAS, the Company and the Participant desire to enter into this Agreement for the Participant to have acquired a number of shares of Class A Common Stock of the Company, par value $0.01 per share, no later than a certain date, as set forth below and, to the extent required under the Company’s Insider Trading Policy, subject to approval by the Company’s Chief Legal Officer.

WHEREAS, in connection with the Participant’s acquisition of Class A Common Stock and not in duplication of any other matching grant related to such shares, the Company shall grant to the Participant on [DATE] (the “ Grant Date ”) an option to purchase an additional number of shares of Class A Common Stock pursuant to the terms set forth below and the Coty Inc. Equity and Long-Term Incentive Plan, as amended and restated as of April 8, 2013, as amended effective February 2, 2017, and as may be amended further from time to time (the “ Plan ”) and subject to approval, as necessary, by the Company’s Remuneration and Nomination Committee or its designee.

WHEREAS, this Agreement shall be considered “Terms and Conditions” for purposes of the Plan.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Parties agree as set forth below. Any term capitalized but not defined in this Agreement will have the meaning set forth in the Plan.

ARTICLE I

SUBSCRIPTION

Section 1.1 Subscription Obligation . Upon the terms and subject to the conditions of this Agreement, the Participant hereby agrees that, as of [DATE] (the “ Share Ownership Assessment Date ”), the Participant’s Owned Number of Common Shares shall be no less than the “ Subscription Amount ” (as defined in Annex A to this Agreement). For purposes of this Agreement, the Participant’s “ Owned Number of Common Shares ” shall mean the number of shares Class A Common Stock with respect to which the Participant is the shareholder of record, but shall not include any compensatory awards that have not yet either become vested or been distributed as shares of Class A Common Stock.

Section 1.2 Acceleration Event . If, prior to the Share Ownership Assessment Date set forth in Section 1.1 above, there occurs either (i) a public announcement of a transaction that, if consummated, would constitute a Change in Control or (ii) a termination of the Participant’s Service by reason of death, or Disability, then, for all purposes of this Agreement, the Share Ownership Assessment Date shall be the date on which such event described in clause (i) or (ii) above occurs. If, prior to the Share Ownership Assessment Date set

forth in Section 1.1 above, there occurs a termination of the Participant’s Service by reason of Retirement, then, for all purposes of this Agreement, the Share Ownership Assessment Date shall be the date that is three (3) months prior to the date the Participant delivers to the Company his or her notice of Retirement.

ARTICLE II

STOCK OPTIONS

Section 2.1 Option Grant . In accordance with the terms of the Plan and subject to the terms and conditions of this Agreement, the Company hereby grants to the Participant as of the Grant Date an option (the “Option”) to purchase all or any part of an aggregate of [NUMBER] shares of the Company’s Class A Common Stock (the “Option Shares”). This Option is a nonqualified stock option and is not intended to be an incentive stock option within the meaning of Code Section 422.

Section 2.2 Exercise Price . The Exercise Price of the Option will be the Fair Market Value of a share of the Company’s Class A Common Stock on Grant Date.

Section 2.3 Vesting, Exercisability and Clawback of Option . The Participant may exercise this Option only after it has become vested and exercisable in accordance with the following:


(a)	In General . The Option shall vest and become exercisable on the fifth anniversary of the Grant Date, subject to the Participant’s continuous employment by the Company through such date.


(b)	Change in Control . If, within twelve months following a Change in Control, (i) the Participant is terminated by the Company or an employing Affiliate (that is not a Joint Venture) without Cause or (ii) the Participant resigns from the Company or an employing Affiliate (that is not a Joint Venture) for Good Reason, the Option shall vest and become exercisable.

(c)

Joint Venture . If the Participant becomes an employee of a Joint Venture during the Restriction Period, vesting of the Option shall be tolled beginning on the date the Participant becomes an employee of the Joint Venture and shall recommence on the date the Participant again becomes an Employee. Accordingly, the Restriction Period shall be extended by the number of days the Participant was an employee of the Joint Venture.


(d)	Retirement, Death, or Disability . The Option shall vest and become exercisable to the extent provided in Section 6.1 in the event of the Participant’s termination of Service by reason of Retirement, death, or Disability.


(e)	Forfeiture and Clawback .

(i) Notwithstanding any provision of this Agreement to the contrary, the Option shall be immediately forfeited and canceled in full if, as of the Share Ownership Assessment Date, the Participant’s Owned Number of Common Shares is less than sixty percent (60%) of the Investment Target Value (as defined in Annex A).

(ii) Notwithstanding any provision of this Agreement to the contrary, the Forfeitable Portion (as defined below) shall be immediately forfeited and canceled in full if, as of the Share Ownership Assessment Date, the Participant’s Owned Number of Common Shares is at least sixty percent

(60%) of the Investment Target Value but less than one hundred percent (100%) of the Subscription Amount. “Forfeitable Portion” shall mean, with respect to a Participant on the Share Ownership Assessment Date, the difference between (x) the number of Option Shares minus (y) the product of the Owned Number of Common Shares and three (3) (which number represents the number of matching Options granted to the Participant for each share of the Subscription Amount). To illustrate, assume a Participant’s Investment Target Value is one hundred (100) Common Shares, the Subscription Amount is eighty (80) Common Shares and the Option is for two hundred forty (240) Option Shares. If, on the Share Ownership Assessment Date, the Participant’s Owned Number of Common Shares is seventy (70) (i.e., 70% of the Investment Target Value), then the Forfeitable Portion is thirty (30) Options (two hundred forty (240) minus two hundred ten (210) (which is seventy (70) times three (3)), which Forfeitable Portion shall be immediately forfeited. The remaining two hundred ten (210) Options will remain subject to the terms of this Agreement and the Plan.

(iii) Notwithstanding any provision of this Agreement to the contrary, ten percent (10%) of the Option shall be forfeited upon the Participant’s third (3 ^rd ) failure to provide his or her shareholding statement by the deadline reasonably imposed by the Company and, upon a fourth (4 ^th ) such violation, 100% of the remaining Option shall be forfeited.

Section 2.4 Potential Forfeiture of Matching Award; Platinum Program . The Participant hereby acknowledges and agrees that there shall be no duplication of Awards granted in connection with the Participant’s acquisition of any Common Shares that are included in the Owned Number of Shares. Therefore, notwithstanding any agreement between the Parties to the contrary, the Participant agrees that if, by the Agreement Date, but in any event no later than October 31, 2016, the Participant chooses to keep any portion of the Option based on an Owned Number of Common Shares, then any unvested Restricted Stock Units or other unvested Awards granted in connection with the acquisition such same Common Shares (whether granted under the Company’s “Platinum” program or otherwise) shall be forfeited; provided, however, that if such Award cannot be forfeited without violating applicable law, then the portion of the Option attributable to the acquisition of such same Common Shares shall be forfeited. Any Participant with respect to whom this Section 2.4 shall apply to Awards granted prior to the Grant Date shall execute the acknowledgement in Annex B as a condition to the Option Award in this Agreement.

ARTICLE III

EXPIRATION

Subject to Article VI, the Option will expire on the tenth anniversary of the Grant Date (the “Expiration Date”).

ARTICLE IV

TRANSFERABILITY OF OPTION

Section 4.1 General . Except as provided in Section 4.2, (i) no Option granted under the Plan and this Agreement may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and (ii) the Option shall be exercisable during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. The Committee may, in its sole discretion, require a Participant’s guardian or legal representative to supply it with the evidence the Committee deems necessary to establish the authority of the guardian or legal representative to act on behalf of the Participant.

Section 4.2 Successor Obligations . Subject to applicable law, Options may be transferred to any Successor. Such transferred Options may not be further sold, transferred, pledged, assigned or otherwise alienated by the Successor, and shall be subject in all respects to the terms of this Agreement and the Plan. For a transfer to be effective, the Successor shall promptly furnish the Company with written notice thereof and a copy of such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance of the Successor of the terms and conditions of the Plan.

ARTICLE V

EXERCISE OF OPTION

Section 5.1 Notice of Exercise . After the Option has become exercisable pursuant to Section 2.3, and while it remains exercisable in accordance with the terms of this Agreement, the Participant may exercise the Option in whole or in part on any Exercise Date by delivering a signed, written exercise notice to the Company. The notice shall indicate the number of Shares being purchased. The Option must be exercised as to a whole number of Shares.

Section 5.2 Payment of Exercise Price . The Participant must pay the Exercise Price of the Option at the time of exercise as follows: (i) in cash or by check payable to the order of the Company; (ii) by means of a cashless exercise procedure approved by the Company’s Remuneration and Nomination Committee or its designee; or (iii) any combination of the foregoing.

Section 5.3 Withholding Obligation . The withholding obligation upon the Participant’s exercise of the Option must be satisfied by paying the amount of required withholding to the Company. If the Participant does not pay the amount of required withholding to the Company, the Company will withhold from the Shares to be delivered to the Participant the minimum amount of funds required to cover any Withholding Tax required to be withheld by the Company by reason of such exercise of the Option.

Section 5.5 Use of Shares . Shares used to satisfy the Exercise Price and/or any required withholding tax will be valued at their Fair Market Value, determined in accordance with the Plan.

Section 5.6 Condition of Transfer . The Company will issue no Shares pursuant to the Option before the Participant has paid the Exercise Price and any withholding obligation in full..

ARTICLE VI

TERMINATION OF SERVICE

Upon termination of Service with the Company or an Affiliate, the Participant’s right to exercise the Option will be subject to the following rules:

Section 6.1 Retirement, Disability or Death . In the event a Participant’s Service terminates by reason of Retirement, Disability or death:


(a)	The Applicable Fraction of the portion of the Option remaining after application of the forfeiture provisions in Section 2.3(e) and which has not theretofore become exercisable shall immediately become vested and exercisable with respect to the Applicable Fraction of the Option Shares.


(b)	The portion of an Option that is vested (whether by application of Section 6.1(a) above or otherwise) on the date the Participant terminates Service due to Retirement,

Disability or death shall remain exercisable through the second (2 ^nd ) anniversary of the date of the Participant’s termination of Service and shall thereafter expire.


(c)	Any unvested portion of the Option as of the date of termination (other than any portion thereof that becomes vested pursuant to Section 6.1(a)) shall be forfeited and canceled, without consideration, on the date of Termination of Service.

Section 6.2 Other Termination of Service . Except as provided in Section 2.3(b) if the Participant’s Service terminates for any reason other than Retirement, Disability or death:


(a)	Any unvested portion of the Option as of the date of termination shall be forfeited and canceled on the date of termination, and

(b)

The vested portion, if any, of the Option shall remain exercisable through (A) the date that is six months after the Participant’s termination of Service, if the six month period commences in an open trading window, or (B) if the six month period commences in a closed trading window, the date that is six months from the first day of the next open trading window. Any vested Option remaining outstanding after such date shall thereafter expire.

Section 6.3 Option Expiration . In no event may the Option be exercised after the Expiration Date.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANT

The Participant, severally as to itself only and not jointly as to or with anyone else, hereby represents and warrants to the Company as follows:

Section 7.1 Authority and Enforceability . The Participant has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized and this Agreement constitutes a valid and legally binding obligation of the Participant, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).

Section 7.2 No Conflict; Required Filings and Consents . The execution, delivery and performance by the Participant of this Agreement and the consummation by the Participant of the transactions contemplated hereby do not and will not (a) violate any Law, or (b) require any consent or approval of any person, including any registration or filing with, or notice to any Governmental Authority.

Section 7.3 Investment Purpose; Independent Decision . Any Common Shares the Participant acquires are solely for the Participant’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution attributable to the Common Shares. The Participant acknowledges and agrees that the decision to acquire Common Shares pursuant to this Agreement and the decisions whether, to what extent, and the method used to satisfy the Subscription Amount (whether by borrowing or otherwise) are decisions that he or she makes and executes independently, and that neither the Company nor its agents shall be liable with respect to any action the Participant takes in connection with acquiring Common Shares pursuant to this Agreement.

ARTICLE VIII

GENERAL PROVISIONS

Section 8.1 Plan and Agreement Not a Contract of Employment or Service . Neither the Plan nor this Agreement is a contract of employment or Service, and no terms of the Participant’s employment or Service will be affected in any way by the Plan, this Agreement or related instruments, except to the extent specifically expressed therein. Neither the Plan nor this Agreement will be construed as conferring any legal rights on the Participant to continue to be employed or remain in Service with the Company, nor will it interfere with the Company’s right to discharge the Participant or to deal with him or her regardless of the existence of the Plan, this Agreement or the Option.

Section 8.2 Participant to Have No Rights as a Shareholder . Before the date as of which the Participant is recorded on the books of the Company as the holder of any Option Shares, the Participant will have no rights as a shareholder with respect to those Option Shares.

Section 8.3 Securities Law Requirements .

(a)

If at any time the Committee determines that issuing Option Shares would violate applicable securities laws, the Company will not be required to issue such Option Shares. The Committee may declare any provision of these Terms and Conditions or action of its own null and void, if it determines the provision or action fails to comply with the short-swing trading rules. As a condition to exercise, the Company may require the Participant to make written representations it deems necessary or desirable to comply with applicable securities laws.


(b)	No Person who acquires Option Shares under this Agreement may sell the Option Shares, unless they make the offer and sale pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “ Securities Act ”), which is current and includes the Option Shares to be sold, or an exemption from the registration requirements of the Securities Act.

Section 8.5 No Limitation on Rights of the Company . The grant of the Option does not and will not in any way affect the right or power of the Company to make adjustments, reclassifications or changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

Section 8.6 Notice. Any notice or other communication required or permitted under this Agreement must be in writing and must be delivered personally, sent by certified, registered or express mail, or sent by overnight courier, at the sender’s expense. Notice will be deemed given when delivered personally or, if mailed, three (3) days after the date of deposit in the United States mail or, if sent by overnight courier, on the regular business day following the date sent. Notice to the Company should be sent to:

Coty Inc.

350 Fifth Avenue

New York, New York 10118

Attention: General Counsel

Notice to the Participant should be sent to the address on file with the Company. Either party may change the Person and/or address to which the other party must give notice under this Section 8.3 by giving such other party written notice of such change, in accordance with the procedures described above.

Section 8.7 Successors . All obligations of the Company under these Terms and Conditions will be binding on any success to the Company, whether existence of the of the successor results from a direct or indirect purchase of all or substantially all of the business of the Company, or a merger, consolidation, or otherwise.

Section 8.8 Governing Law . To the extent not preempted by federal law, this Agreement will be construed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to its conflicts of law principles that would require the application of the law of any other jurisdiction.

Section 8.9 Plan Document Controls . The rights granted under this Agreement are in all respects subject to the provisions set forth in the Plan to the same extent and with the same effect as if set forth fully in this Agreement. If the terms of this Agreement conflict with the terms of the Plan document, the Plan document will control.

Section 8.10 Amendment of the Agreement . This Agreement may be amended unilaterally by the Committee to the extent provided under the Plan, or by a written instrument signed by both parties.

Section 8.11 Entire Agreement. This Agreement, together with the Plan, constitutes the entire obligation of the parties with respect to the subject matter of this Agreement and supersedes any prior written or oral expressions of intent or understanding with respect to such subject matter.

Section 8.12 Administration . The Committee administers the Plan and this Agreement. The Participant’s rights under this Agreement are expressly subject to the terms and conditions of the Plan, including any guidelines the Committee adopts from time to time. The Participant hereby acknowledges receipt of a copy of the Plan.

Section 8.13 Waiver . No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof. Any such waiver by a party shall be valid only if set forth in writing by such party.

Section 8.14 Third-Party Beneficiaries . Nothing in this Agreement shall confer upon any person other than the parties and their respective successors and permitted assigns any right of any nature.

Section 8.15 Counterparts . This Agreement may be executed in counterparts, including electronic transmission and facsimile counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.



COTY INC.
By:	Address for Notices:
Name:
Title:

PARTICIPANT
By:	Address for Notices:
Name:
Title:

ANNEX A

“Investment Target Value” means $[•].

“Subscription Amount” means a number of shares of Class A Common Stock equal to $___________ divided by the closing price of a share of Class A Common Stock on the NYSE on [DATE].

ANNEX B

Agreement to Forfeiture Provision

The Participant, as identified below, hereby acknowledges and agrees that Section 2.4 of the Elite Subscription and Stock Option Agreement dated [DATE] (“Elite Agreement”) shall have the effect of amending, without any further action required by the Company or Participant, the forfeiture provisions of any Restricted Stock and Restricted Stock Tandem Award Agreement (“Platinum Agreement”) entered into in connection with the acquisition of Common Shares, where such Common Shares are included in the Owned Number of Shares set forth in the Elite Agreement. Neither the Participant nor any beneficiary or representative shall have any right with respect to Restricted Stock Units granted under the Platinum Agreement that are forfeited pursuant to Section 2.4 of the Elite Agreement.



PARTICIPANT
By:
Name:
Title:

Agreed and Accepted by:



COTY INC.
By:
Name:
Title:

Exhibit 10.6

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “ Agreement ”), dated February 16, 2017, is by and between, Coty Inc., a Delaware corporation (the “ Parent ”) and Sébastien Froidefond (the “ Subscriber ”) and collectively as “Parties”.

RECITALS

WHEREAS, Coty Services UK Limited (“ Coty UK ”) and Subscriber are parties to that certain Employment Agreement, dated as of June 7, 2016 (the “ Employment Agreement ”).

WHEREAS, the Parent and the Subscriber desire to enter into this Agreement to obligate the Subscriber to acquire shares of preferred stock of the Parent (as described below) to be delivered to the Subscriber pursuant to and subject to the terms of the Coty Inc. Equity and Long-Term Incentive Plan (the “ Plan ”).

WHEREAS, the Parent desires to issue and sell to Subscriber, and Subscriber desires to purchase from the Parent, 481,539 shares of Series A Preferred Stock of the Parent (the “ Shares ”), with the terms and conditions substantially as set forth in that Certificate of Designations filed with the Secretary of State of the State of Delaware relating to the Shares, including the various and several voting powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof set forth in Annex A hereto, for an aggregate cash payment equal to $4,815.39 (the “ Purchase Price ”), subject to the terms and conditions described herein.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I
PURCHASE AND SALE

Section 1.1 Purchase and Sale of the Shares . Upon the terms and subject to the conditions of this Agreement, at the Closing, subject to Board approval the Parent agrees to issue and sell to the Subscriber, and the Subscriber agrees to purchase from the Parent, the Shares for an aggregate cash purchase price equal to the Purchase Price. The sale and purchase of the Shares shall take place at a closing (the " Closing ") to be held at the offices of Coty Inc., on February 16, 2017, at 350 Fifth Avenue, New York, New York 10119, or at such other place or at such other time or on such other date as the Parent and the Subscriber mutually may agree in writing. The day on which the Closing takes place is referred to as the "Closing Date."

(a) At the Closing, the Parent shall deliver to Wells Fargo Shareowner Services (the “ Transfer Agent ”) an instruction letter authorizing and directing the Transfer Agent to record in the share register of the Parent book entry positions representing the Shares issued in the name of the Subscriber.

(b) At the Closing, the Subscriber shall deliver to the Parent the Purchase Price in cash.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE PARENT

The Parent hereby represents and warrants to the Subscribers as follows:

Section 2.1 Organization and Qualification . The Parent is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware. The Parent has all requisite power, right and authority to carry on its business as now conducted.

Section 2.2 Share Issuance . The Shares to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance with the terms of this Agreement, will be free and clear of all liens and other encumbrances, duly and validly issued and will be fully paid and non-assessable and free from preemptive rights.

Section 2.3 Authority . The Parent has full corporate power and authority to execute, deliver and perform its obligations under this Agreement. This Agreement has been duly executed and delivered by the Parent and is legal, valid, binding and enforceable upon and against the Parent.

Section 2.4 No Conflict; Required Filings and Consents . The execution, delivery and performance by the Parent of this Agreement and the consummation by the Parent of the transactions contemplated hereby do not and will not (a) violate any provision of the certificate of incorporation or bylaws (or similar organizational documents) of the Parent; (b) violate any federal, state or local statute, law, regulation, order, injunction or decree (“ Law ”); or (c) require any consent or approval of any person, including any registration or filing with, or notice to any federal, state or local governmental authority or any agency or instrumentality thereof (a “ Governmental Authority ”).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER

The Subscriber, severally as to itself only and not jointly as to or with anyone else, hereby represents and warrants to the Parent as follows:

Section 3.1 Authority and Enforceability . The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized and this Agreement constitutes a valid and legally binding obligation of the Subscriber, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).

Section 3.2 Legends . The Subscriber understands and agrees that the certificates for the Shares, if any, shall bear substantially the following legend until such Shares shall have been registered under the Securities Act of 1933, as amended (the “ Securities Act ”) and effectively disposed of in accordance with a registration statement that has been declared

effective, and that the Parent has no intention of registering such Shares pursuant to the Securities Act:

THE SHARES REPRESENTED BY THIS [CERTIFICATE/STATEMENT] ARE RESTRICTED FROM SALE, TRANSFER, EXCHANGE OR ASSIGNMENT, EXCEPT PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (I) TO THE PARENT, (II) BY THE LAWS OF DESCENT AND DISTRIBUTION, OR (III) UPON RECEIPT OF A WRITTEN OPINION OF COUNSEL TO THE PARENT OR THE PARENT’S SECRETARY AND GENERAL COUNSEL.

Section 3.3 No Conflict; Required Filings and Consents . The execution, delivery and performance by the Subscriber of this Agreement and the consummation by the Subscriber of the transactions contemplated hereby do not and will not (a) violate any Law, or (b) require any consent or approval of any person, including any registration or filing with, or notice to any Governmental Authority.

Section 3.4 Resale; Accredited Investor . The Subscriber is acquiring the Shares solely for the Subscriber’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution of the Shares. The Subscriber is an “accredited investor” as defined in Rule 501(a) under the Securities Act, and a sophisticated purchaser who has made its own independent investigation, review and analysis of the transactions contemplated hereby. The Subscriber has been furnished with all information (or provided access to all information) regarding the attributes of the Shares for which it is subscribing and the merits and risks of an investment in such Shares that it requested to evaluate the investment in such Shares. The Subscriber is relying solely on the representations, warranties and agreements of the Parent contained in this Agreement, and agrees that at no time was it presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general or public advertising or solicitation.

ARTICLE IV
GENERAL PROVISIONS

Section 4.1 Amendment and Modification . This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party.

Section 4.2 Waiver . No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof. Any such waiver by a party shall be valid only if set forth in writing by such party.

Section 4.3 Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent by facsimile, e‑mail, overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the party to receive such notice, or to such other address as may be designated in writing by such party.

Section 4.4 Entire Agreement . This Agreement, together with the Plan, constitute the entire agreement, and supersedes all prior written agreements, arrangements and

understandings and all prior and contemporaneous oral agreements, arrangements and understandings between the parties with respect to the subject matter of this Agreement. No party to this Agreement shall have any legal obligation to enter into the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties.

Section 4.5 Third-Party Beneficiaries . Nothing in this Agreement shall confer upon any person other than the parties and their respective successors and permitted assigns any right of any nature.

Section 4.6 Governing Law . This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.

Section 4.7 Award Subject to Plan; Administration . This Agreement is and shall be construed as an “Other Stock-Based Award” granted to Subscriber pursuant to the Plan (as such term is defined therein). The Remuneration and Nominating Committee of the Board of Directors of Coty, Inc. (the “ Committee ”) administers the Plan and shall administer this Agreement as an award under the Plan. The Subscriber’s rights under this Agreement are expressly subject to the terms and conditions of the Plan, including any guidelines the Committee adopts from time to time. The Subscriber hereby acknowledges receipt of a copy of the Plan.

Section 4.8 Submission to Jurisdiction . Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by the other party or its successors or assigns may be brought and determined in any New York State or federal court sitting in the Borough of Manhattan in The City of New York (or, if such court lacks subject matter jurisdiction, in any appropriate New York State or federal court), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any action, suit or proceeding relating thereto except in such courts). Each of the parties further agrees to accept service of process in any manner permitted by such courts. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure lawfully to serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

Section 4.9 Assignment; Successors . This Agreement may not be assigned by either party without the prior written consent of the other party, except that the Parent may assign this Agreement to any of its Affiliates. Subject to the preceding sentence, this Agreement will be binding upon the parties and their respective successors and assigns. For

the purposes of this Agreement, the term “Affiliate” shall mean any entity controlling, controlled by or under common control with the named party.

Section 4.10 Severability . If any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

Section 4.11 Counterparts . This Agreement may be executed in counterparts, including electronic transmission and facsimile counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.



COTY INC.				Address for Notices:
By:	/s/Michelle Garcia
Name:			Michelle Garcia
Title:			SVP Corporate & Assistant Secretary
SUBSCRIBER				Address for Notices:
By:		/s/Sébastien Froidefond
Name:			Sébastien Froidefond

Annex A

Section 1. Definitions .

(a) “ Allocable Portion ” shall mean, with respect to an Executive, the product of (i) the aggregate number of shares of Series A Preferred Stock held by such Initial Executive Holder and his Permitted Holders, and (ii) a fraction (A) the numerator of which equals the Minimum Number of Shares minus the number of shares of Class A Common Stock (or Related Common Stock, if any) held by Executive and his Executive Affiliates on the Share Ownership Cure Date, and (B) the denominator of which equals the Minimum Number of Shares, provided that if the number of shares of Class A Common Stock (or Related Common Stock, if any) held by Executive and his Executive Affiliates on the Share Ownership Cure Date is fewer than 60% of the Minimum Number of Shares, the Allocable Portion shall be 100% of the Series A Preferred Stock held by such Initial Executive Holder and his Permitted Holders.

(b) “ Business Day ” shall have the meaning ascribed to such term under the Plan.

(d) “ Cause ” shall have the meaning ascribed to such term under the Plan.

(e) “ Change in Control ” shall have the meaning ascribed to such term under the Plan

(f) “ Closing Price ” means, with respect to any date, the closing sale price per share or other security (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal Exchange on which such share or other security is listed or admitted for trading or, if such share or other security is not listed or admitted for trading on a U.S. national or regional securities exchange, as reported on the quotation system on which such share or other security is quoted. If the share or other security is not listed or admitted for trading on a U.S. national or regional securities exchange and not reported on a quotation system on the relevant date, the “closing price” will be the last quoted bid price for such share or other security in the over-the-counter market on the relevant date as reported by OTC Markets Bureau or another similar organization. If such share or other security is not so quoted, the last reported sale price will be the average of the mid-point of the last bid and ask prices for such share or other security on the relevant date from each of at least three nationally recognized investment banking firms selected by the Parent for this purpose.

(g) “ Disability ” shall have the meaning ascribed to such term in the Plan.

(h) “ Disposition Event ” has the meaning set forth in Section 2(g)(2).

(i) “ Employment Agreement ” means that agreement by and between Coty UK and Executive dated June 7, 2016, relating to the terms and conditions of employment of such Executive, as such agreement may be amended from time to time.

(j) “ Exchange ” means The New York Stock Exchange, The NASDAQ Global Market, or any other U.S. national securities exchange.

(k) “ Exchange Act ” shall have the meaning ascribed to such term under the Plan.

(l) “ Exchange Amount ” has the meaning set forth in Section 2(b)(1).

(m) “ Exchange Date ” has the meaning set forth in Section 2(d).

(n) “ Exchange Price ” has the meaning set forth in Section 2(b)(1).

(o) “ Executive Affiliates ” shall mean, with respect to an Executive, (i) Executive, (ii) his wife, (iii) any business entity in which Executive owns or controls more than a majority of the economic ownership interests in the equity of such entity and has the power to elect a majority of directors of such entity or otherwise has, directly or indirectly, actual control over the business and operations of such entity, (iv) any beneficiary of the Shareholder Trust other than Executive and his wife, but solely to the extent such beneficiary receives a distribution of shares of the Parent’s Class A Common Stock or any Related Common Stock from the Shareholder Trust and (v) any trust other than the Shareholder Trust of which Executive and/or his wife is the grantor and the sole beneficiaries of which are comprised solely of the group consisting of Executive, his wife and Any Permitted Holder.

(p) “ Good Reason ” shall have the meaning ascribed to such term under the Plan.

(q) “ Fair Market Value ” of Class A Common Stock or any other security or property means the fair market value thereof as determined in good faith by the Board, which determination must be set forth in a written resolution of the Board, in accordance with the following rules:

(1) for Class A Common Stock or other security traded or quoted on an Exchange, the Fair Market Value will be the average of the Closing Prices of such security on such Exchange over a ten consecutive trading day period, ending on the trading day immediately prior to the date of determination; or

(2) for any security that is not so traded or quoted, or for any other property, the Fair Market Value shall be determined by the Board (or any duly authorized committee thereof) in good faith assuming a willing buyer and a willing seller in an arms’-length transaction.

(r) “ Initial Executive Holder ” means an Executive reflected as the holder of record of shares of Series A Preferred Stock on the original issue date of such shares on the books and records of the registrar for the Series A Preferred Stock.

(s) “Initial Number of Shares” means 160,513.

(t) “ Majority Shareholder ” shall have the meaning ascribed to such term under the Plan.

(u) “ Mandatory Exchange Date ” means, with respect to the Initial Executive Holder, the date by which a minimum equal to the US Services Vesting Amount must be exchanged in accordance with Section 2(b), which date shall be the March 1 immediately following the calendar year in which shares of Series A Preferred Stock issued to such Initial Executive Holder shall first be deemed Vested Series A Preferred Stock.

(v) “ Minimum Number of Shares ” has the meaning set forth in Section 3(c)(2).

(w) “ original issue date ” means, with respect to shares of Series A Preferred Stock, the date of issue of such shares sold to an Initial Executive Holder pursuant to the terms of such Executive’s Subscription Agreement.

(x) “ Permitted Holder ” has the meaning set forth in Section 4(a).

(y) “ Preferred Net Value ” has the meaning set forth in Section 2(b)(1).

(z) “ Reference Property ” has the meaning set forth in Section 2(g)(2).

(aa) “ Related Common Stock ” means any other capital stock into which such Class A Common Stock may be reclassified or exchanged (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination).

(bb) “ Share Exchange Price ” has the meaning set forth in Section 2(b)(1).

(cc) “ US Services Vesting Amount ” means (i) the total number of shares of Vested Series A Preferred Stock held by a holder on the date of determination multiplied by (ii) the percentage determined by dividing the portion of the Vested Series A Preferred Stock that is deemed attributable to services performed within the United States, as determined applying the principles set forth in U.S. Treasury Regulation §1.861-4(b) (or its successor provision) by the aggregate amount of Vested Series A Preferred Stock held by such holder.

(dd) “ Vested Series A Preferred Stock ” means all shares of Series A Preferred Stock outstanding and held by a holder on the earliest of (i) the fifth anniversary of the original issue date (the “ Fifth Anniversary ”); (ii) the date the applicable Initial Executive Holder’s employment with Coty UK terminates as a result of such Initial Executive Holder’s death or Disability; or (iii) the date of termination of such employment by Coty UK without Cause or by the Executive for Good Reason within 12 months following a Change in Control occurring after the first anniversary of the original issue date, provided that if on the Fifth Anniversary or (if earlier) the date referred to in (ii) or (iii) above the Initial Executive Holder and his Executive Affiliates have not made an aggregate investment of at least the Initial Number of

Shares in Class A Common Stock none of the holder’s Series A Preferred Stock shall be Vested Series A Preferred Stock.

Other capitalized terms not defined in this Agreement shall have the meanings ascribed to them under the Plan.

Section 2. Exchange .

(a) Generally . The holders of shares of Series A Preferred Stock shall not have any right to exchange such shares into shares of any other class or series of securities of the Parent until such time as such shares become Vested Series A Preferred Stock and then only as provided herein.

(b) Exchange at the Option of the Holder .

(2) The right of a holder to exchange any or all shares of Vested Series A Preferred Stock as set forth in Section 2(b)(1) shall also expire and lapse, and be of no further force and effect, on the earliest to occur of: (i) the first (1 ^st ) anniversary of the relevant Initial Executive Holder’s termination of employment due to death or Disability, and (ii) the latest date prior to which Vested Series A Preferred Stock can otherwise be exchanged pursuant to Section 2(b)(1).

(1) Notwithstanding Section 2(b), in the event that a holder has not exercised its exchange right in accordance with Section 2(b) with respect to such number of shares of Vested Series A Preferred Stock as is subject to the Mandatory Exchange Date, then such number of shares of such Vested Series A Preferred Stock as is subject to the Mandatory Exchange Date (reduced by any shares of Vested Series A Preferred Stock as to which a holder

has prior to such date exercised its exchange right in accordance with Section 2(b)) shall automatically be exchanged on the Mandatory Exchange Date into, and such holder shall be entitled to receive within five days following such Mandatory Exchange Date in exchange therefore, either, at the sole option and election of the Parent, the Preferred Net Value per share in cash equal to such shares of Vested Series A Preferred Stock being exchanged on the Mandatory Exchange Date, or the number of duly authorized, validly issued, fully paid and nonassessable shares of Class A Common Stock, or Reference Property, as applicable, whose aggregate value, as measured by the Fair Market Value of a share of such Class A Common Stock, or Reference Property, as applicable, on the Exchange Date, is equal to the Preferred Net Value..

(2) Notwithstanding anything else to the contrary, within 30 Business Days following the date of a Change in Control, the Parent shall have the right to exchange, upon notice to a holder, any Vested Series A Preferred Stock into the Preferred Net Value payable, at the sole option and election of the Parent, either in cash, Class A Common Stock or Reference Property, as applicable.

(d) Exchange Date . In order to exchange shares of Vested Series A Preferred Stock, the holder must surrender such shares (if uncertificated) or the certificates representing such shares, accompanied by transfer instruments reasonably satisfactory to the Parent, free of any adverse interest or liens at the office of the Parent’s transfer agent for the Vested Series A Preferred Stock (or at the principal office of the Parent, if the Parent serves as its own transfer agent), together with written notice that such holder elects to exchange all or such number of shares represented by such certificates as specified therein. The date of receipt of such certificates, together with such notice, by the transfer agent or the Parent will be the date of exchange (the “ Exchange Date ”).

(e) Fractional Shares . No fractional shares of Class A Common Stock will be issued upon exchange of the Vested Series A Preferred Stock. In lieu of fractional shares, the Parent shall pay cash equal to such fractional amount multiplied by the Fair Market Value of the Class A Common Stock as of the Exchange Date. If more than one share of Vested Series A Preferred Stock is being exchanged at one time by the same holder, then the number of full shares issuable upon exchange, if so elected by the Parent, will be calculated on the basis of the aggregate number of shares of Vested Series A Preferred Stock exchanged by such holder at such time.

(f) Mechanics of Exchange .

(1) In the event the Parent elects to exchange Vested Series A Preferred Stock into shares of Class A Common Stock or Reference Property, as applicable, in accordance with Section 2(b)(1), as soon as practicable after the Exchange Date (and in any event within ten (10) Business Days), the Parent shall issue and deliver to such holder the number of shares of Class A Common Stock or such amount of Reference Property, as applicable, to which such holder is entitled, together with a check or cash for payment of fractional shares, if any, in exchange for such shares (if uncertificated) or for the certificates formerly representing shares of Vested Series A Preferred Stock being so exchanged. Such

exchange will be deemed to have been made on the Exchange Date, and the person entitled to receive the shares of Class A Common Stock or Reference Property, as applicable, issuable upon such exchange shall be treated for all purposes as the record holder of such shares of Class A Common Stock, or Reference Property, as applicable, on such Exchange Date. In case fewer than all the shares represented by any such certificate are to be exchanged, a new certificate shall be issued representing the shares not exchanged without cost to the holder thereof, except for any documentary, stamp or similar issue or transfer tax due because any certificates for shares of Class A Common Stock or Vested Series A Preferred Stock are issued in a name other than the name of the exchanging holder. The Parent shall pay any documentary, stamp or similar issue or transfer tax due on the issue of Class A Common Stock upon exchange or due upon the issuance of a new certificate for any shares of Vested Series A Preferred Stock not exchanged other than any such tax due because shares of Class A Common Stock or a certificate for shares of Vested Series A Preferred Stock are issued in a name other than the name of the exchanging holder.

(2) In the event the Parent elects to exchange Vested Series A Preferred Stock into cash in accordance with Section 2(b)(1), as soon as practicable after the Exchange Date (and in any event within ten (10) Business Days), the Parent shall pay such amount to such holder, to the extent of funds legally available therefor. Such exchange will be deemed to have been made on the Exchange Date.

(3) From and after the Exchange Date, the shares of Vested Series A Preferred Stock to be exchanged on such Exchange Date will no longer be deemed outstanding and all rights of the holder thereof as a holder of Series A Preferred Stock (except the right to receive from the Parent the Preferred Net Value in cash or Class A Common Stock or Reference Property, as applicable, upon exchange, together with the right to receive any payment in lieu of a fractional share of Class A Common Stock if payment of the Preferred Net Value is to be made in Class A Common Stock or Reference Property, as applicable) shall cease and terminate with respect to such shares; provided , that in the event that a share of Vested Series A Preferred Stock is not exchanged, such share of Vested Series A Preferred Stock will remain outstanding and will be entitled to all of the rights as provided herein. Any shares of Vested Series A Preferred Stock that have been exchanged will, after such exchange, upon issuance of the shares of Class A Common Stock or Reference Property, as applicable, issuable upon exchange thereof and cash in lieu of fractional shares of Class A Common Stock or Reference Property, as applicable, or payment of cash in the amount of the Preferred Net Value, be deemed cancelled and retired as set forth in Section 14 of the Certificate of Designations.

(4) The Parent shall comply with all federal and state laws, rules and regulations and applicable rules and regulations of the Exchange on which shares of the Class A Common Stock or Reference Property, as applicable, are then listed. Notwithstanding the other terms contained herein, the Parent shall not be required to exchange any Vested Series A Preferred Stock into any Class A Common Stock or Reference Property, as applicable, or issue or deliver the same, to the extent such exchange, issuance or delivery would require: (i) registration with or approval of any person under any federal or state law before such shares

may be validly issued or delivered upon exchange, (ii) approval from the Exchange on which shares of the Class A Common Stock or Reference Property, as applicable, are then listed (the “ Relevant Exchange ”), unless such approval has been received, or (iii) approval by the Parent’s stockholders pursuant to the rules or regulations of the Relevant Exchange, unless such approval has been received.

(5) All shares of Class A Common Stock or other securities of the Parent issued upon exchange of the shares of Vested Series A Preferred Stock will, upon issuance by the Parent, be duly and validly issued, fully paid and nonassessable, not issued in violation of any preemptive rights arising under law or contract and free from all taxes, liens and charges with respect to the issuance thereof, and the Parent shall take no action which will cause a contrary result.

(g) Adjustments to Exchange Price .

(1) Adjustment for Change In Capital Stock .

(i)

If the Parent shall, at any time and from time to time while any shares of Series A Preferred Stock are outstanding, issue a dividend or make a distribution on its Class A Common Stock payable in shares of Class A Common Stock to all or substantially all holders of its Class A Common Stock, then each of the Share Exchange Price and the Cash Exchange Price will be adjusted by multiplying each by a fraction:


I	the numerator of which shall be the number of shares of Class A Common Stock outstanding at the close of business on the Business Day immediately preceding the applicable dividend or distribution date; and


II	the denominator of which shall be the sum of the number of shares of Class A Common Stock outstanding at the close of business on the Business Day immediately preceding the applicable dividend or distribution date, plus the total number of shares of Class A Common Stock constituting such dividend or other distribution.

(ii)

If the Parent shall, at any time or from time to time while any shares of Series A Preferred Stock are outstanding, subdivide or reclassify its outstanding shares of Class A Common Stock into a greater number of shares of Class A Common Stock, then each of the Share Exchange Price and the Cash Exchange Price in effect at the opening of business on the day upon which such subdivision becomes effective shall be proportionately decreased, and conversely, if the Parent shall, at any time or from time to time while any shares of Series A Preferred Stock are outstanding, combine or reclassify its outstanding shares of Class A Common Stock in to a smaller number of shares of Class A Common

Stock, then each of the Share Exchange Price and the Cash Exchange Price in effect at the opening of business on the day upon which such combination or reclassification becomes effective shall be proportionately increased. In each such case, each of the Share Exchange Price and the Cash Exchange Price shall be adjusted by multiplying each such Share Exchange Price and Cash Exchange Price by a fraction, the numerator of which shall be the number of shares of Class A Common Stock outstanding immediately prior to such subdivision or combination and the denominator of which shall be the number of shares of Class A Common Stock outstanding immediately after giving effect to such subdivision, combination or reclassification. Such increase or reduction, as the case may be, shall become effective immediately after the opening of business on the day upon which such subdivision, combination or reclassification becomes effective.

(2) Disposition Events . Subject to Section 2(c)(2), if any of the following events occurs (other than (i) any stock split or combination to which Section 2(g)(1) is applicable or (ii) a liquidation, dissolution, winding up or other transaction to which “Section 5. Liquidation” of the Certificate of Designations is applicable) (any such event, a “ Disposition Event ”):


(i)	any reclassification or exchange of the Class A Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination);


(ii)	any merger, consolidation or other combination to which the Parent is a constituent party;


(iii)	any sale, conveyance, lease, or other disposal of all or substantially all the properties and assets of the Parent to any other person; or


(iv)	the payment of an extraordinary cash dividend which would be treated as a “corporate transaction” within the meaning of the regulations promulgated under Section 424(a) of the U.S. Internal Revenue Code (or any successor provision); and

in each case, as a result of which event, all of the holders of Class A Common Stock shall be entitled to receive cash, securities or other property for their shares of Class A Common Stock, the Parent or the successor or purchasing person, as the case may be, shall provide that any Vested Series A Preferred Stock exchanged following the effective date of any Disposition Event, may be exchanged, in lieu of the Class A Common Stock that the Parent otherwise had the option of delivering in lieu of cash upon exchange of Vested Series A Preferred Stock, into the same amount and type (in the same proportion) of cash, securities or other property (collectively, “ Reference Property ”) received upon the occurrence of such Disposition Event by a holder of Class A Common Stock, with the amount of such Reference Property to be received for each share of Vested Series A Preferred Stock determined based upon the

Exchange Amount in effect immediately prior to such Disposition Event; provided that if the Disposition Event provides the holders of Class A Common Stock with the right to receive more than a single type of consideration determined based in part upon any form of stockholder election, the Reference Property shall be comprised of the weighted average of the types and amounts of consideration received by the holders of the Class A Common Stock.

(3) Minimum Adjustment . Notwithstanding the foregoing, the Exchange Price will not be adjusted if the amount of such adjustment would be an amount less than $0.01, but any such amount will be carried forward and adjustment with respect thereto will be made at the time that such amount, together with any subsequent amounts so carried forward, aggregates to $0.01 or more.

(4) Rules of Calculation; Treasury Stock . All calculations will be made to the nearest one-hundredth of a cent or to the nearest one-ten thousandth of a share. Except as explicitly provided herein, the number of shares of Class A Common Stock outstanding will be calculated on the basis of the number of issued and outstanding shares of Class A Common Stock, not including shares held in the treasury of the Parent. The Parent shall not pay any dividend on or make any distribution to shares of Class A Common Stock held in treasury.

(5) Par Value . Anything in this Section 2 notwithstanding, no adjustment to the Exchange Price shall reduce the Exchange Price below the then par value per share of Class A Common Stock, and any such purported adjustment shall instead reduce the Exchange Price to such par value.

(6) No Duplication . If any action would require adjustment of the Exchange Price pursuant to more than one of the provisions described in this Section 2 in a manner such that such adjustments are duplicative, only one adjustment shall be made.

(h) Notice of Record Date . In the event of:

(1) any stock split or combination of the outstanding shares of Class A Common Stock;

(2) any declaration or making of a dividend or other distribution to holders of Class A Common Stock in additional shares of Class A Common Stock, any other capital stock, other securities or other property (including but not limited to cash and evidences of indebtedness);

(3) any reclassification or change to which Section 2(g)(1)(ii) applies;

(4) the dissolution, liquidation or winding up of the Parent;

(5) any other event constituting a Change in Control; or

(6) any other event that would cause or allow for the exchange of any Vested Series A Preferred Stock in accordance with this Section 2,

then the Parent shall send to the holders of the Vested Series A Preferred Stock, which notice will be deemed effective if sent to their last addresses as shown on the records of the Parent, at least 10 days prior to the record date specified in (i) below or 10 days prior to the date specified in (ii) below, a notice stating:


(i)	the record date of such stock split, combination, dividend or other distribution, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock of record to be entitled to such stock split, combination, dividend or other distribution are to be determined, or

(ii)

the date on which such reclassification, change, dissolution, liquidation, winding up or other event constituting a Change in Control any other event that would cause or allow for the exchange of any Vested Series A Preferred Stock in accordance with this Section 2 is estimated to become effective, and the date as of which it is expected that holders of Class A Common Stock of record will be entitled to exchange their shares of Class A Common Stock for the capital stock, other securities or other property (including but not limited to cash and evidences of indebtedness) deliverable upon such reclassification, change, liquidation, dissolution, winding up or other Change in Control.

No failure to provide such notice will affect the validity of any such actions.

(i) Certificate of Adjustments . Upon the occurrence of each adjustment or readjustment of the Exchange Price pursuant to this Section 2, the Parent shall promptly as reasonably practicable compute such adjustment or readjustment in accordance with the terms of the Subscription Agreement and furnish to each holder of Vested Series A Preferred Stock a certificate, signed by an officer of the Parent, setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based and shall file a copy of such certificate with its corporate records. The Parent shall, upon the reasonable written request of any holder of Vested Series A Preferred Stock, furnish to such holder a similar certificate setting forth (i) the calculation of such adjustments and readjustments in reasonable detail, (ii) the Exchange Price then in effect, and (iii) the number of shares of Class A Common Stock and the amount, if any, of capital stock, other securities or other property (including but not limited to cash and evidences of indebtedness) which then would be received upon the exchange of Vested Series A Preferred Stock.

Section 3. Redemption at the Option of the Parent .

(a) In Whole Upon Maturity, Death or Disability . To the extent then still outstanding, the Parent shall have the right to redeem all, but not less than all, shares of Series A Preferred Stock at a redemption price equal to $0.01 per share, at the earliest of (i) on or after latest date prior to which Vested Series A Preferred Stock may be exchanged pursuant

to Section 2(b)(1), and (ii) on or after the first (1 ^st ) anniversary following the termination of the relevant Initial Executive Holder’s employment due to death or Disability.

(b) In Whole or in Part Upon Certain Other Events .

(1) In the event that the employment of the relevant Initial Executive Holder by Coty UK shall terminate for any reason other than death or Disability of such Initial Executive Holder prior to the fifth (5 ^th ) anniversary of the original issue date with respect to the shares of Series A Preferred Stock issued to him in accordance with the terms of the Subscription Agreement, the Parent shall have the right to redeem all, or any portion of, the shares of Series A Preferred Stock held by the holder at a redemption price per share of Series A Preferred Stock equal to the lesser of (i) the purchase price per share paid by the Initial Executive Holder for such Series A Preferred Stock in accordance with the terms of the Subscription Agreement and (ii) the then fair market value per share of such Series A Preferred Stock, as determined at or about the date of redemption by an independent qualified professional appraisal firm selected by the Board, whose determination of the fair market value per share of such Series A Preferred Stock will be conclusive and binding for all purposes hereunder.

(2) The right of the Parent to redeem any shares of Series A Preferred Stock set forth in Section 3(b)(1) shall expire and lapse, and be of no force or effect, if the relevant Initial Executive Holder’s employment is terminated by Coty UK without “Cause” or by the Executive for Good Reason within 12 months following any Change in Control occurring after the first anniversary of the original issue date with respect to the shares of Series A Preferred Stock issued to him.

(1) Within ten (10) Business Days after the original issue date with respect to his shares of Series A Preferred Stock, an Executive shall, and shall use reasonable best commercial efforts to cause any Executive Affiliate to, notify the Corporation in writing of the number of shares of Class A Common Stock held of record by such persons or entities, if any. Such Executive shall, and shall use his reasonable best commercial efforts to cause any Executive Affiliate to, notify the Corporation promptly in writing, and in any event within ten (10) Business Days, of any changes in such entity’s or person’s holdings, whether direct, beneficial or otherwise, in respect of Class A Common Stock or Related Common Stock, if any. If any Executive Affiliate fails to provide such notice on a timely basis, the Corporation shall so notify Executive, and Executive shall, within five (5) Business Days of receipt of such notice from the Corporation, provide the Corporation with any information that the Executive knows, should know or reasonably believes to be true, regarding the holdings of such Executive Affiliate.

(2) If, at any time from the first 10 November following the original issue date with respect to his shares of Series A Preferred Stock and prior to the date that the right of the Corporation to redeem shares of Series A Preferred Stock expires and

lapses in accordance with Section 3(b)(2), the Executive and such Executive’s Executive Affiliates shall, in the aggregate, hold a number of shares of Class A Common Stock or, if applicable, Related Common Stock, which is less than the Initial Number of Shares (collectively, the “Minimum Number of Shares”), and Executive and Executive Affiliates do not, in the aggregate, acquire sufficient additional shares of Class A Common Stock or Related Common Stock, as applicable, to restore their aggregate ownership of Class A Common Stock and Related Common Stock, as applicable, to at least the Minimum Number of Shares within 120 calendar days (the “ Share Ownership Cure Date ”) after the initial date on which less than the Minimum Number of Shares was collectively held, as reported pursuant to Section 3(c)(1) or as otherwise known to the Corporation, then the Corporation shall have the option to redeem up to the Allocable Portion at a redemption price equal to $0.01 per share of Series A Preferred Stock.

(3) In case of any redemption in accordance with this Section 3(c), the shares of Series A Preferred Stock to be redeemed shall be selected either pro rata , by lot or in such other manner as the Corporation may determine to be equitable.

Section 4. Restrictions on Transfer .

(a) An Initial Executive Holder shall not be entitled to sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any shares of Series A Preferred Stock, except that such Initial Executive Holder may transfer shares of Series A Preferred Stock to any “family members”, as such term is defined on Form S-8 promulgated by the U.S. Securities and Exchange Commission under the U.S. Securities Act of 1933, as amended, as such form may be amended from time to time (such persons, such Executive’s “ Permitted Holders ”).

(b) Following any permitted transfer under Section 4(a), shares of Series A Preferred Stock held by a Permitted Holder, if any, shall remain subject to the same rights, privileges, limitations and conditions relating to such shares of Series A Preferred Stock as set forth herein that would otherwise have applied had the Initial Executive Holder continued to hold such shares of Series A Preferred Stock, including, without limitation, those transfer restrictions set forth in Section 4(a).

Section 5. Information.

(a) Within ten (10) Business Days after the original issue date with respect to his shares of Series A Preferred Stock, the Initial Executive Holder shall, and shall use reasonable best commercial efforts to cause any Executive Affiliate to, notify the Parent in writing of the number of shares of Class A Common Stock held of record by such persons or entities, if any, and the amount paid for such shares. Such Initial Executive Holder shall notify the Parent promptly in writing, and in any event within ten (10) Business Days, of any changes in such Initial Executive Holder’s or any Executive Affiliate’s holdings, whether direct, beneficial or otherwise, in respect of Class A Common Stock or Related Common Stock, if any.

(b) Mechanics of Redemption . If any shares of Series A Preferred Stock are to be redeemed in accordance with this Section 5, the notice of redemption shall be given by first class mail to the holders of record of Series A Preferred Stock to be redeemed, mailed not less than 15 days nor more than 30 days prior to the date fixed for redemption thereof. Each notice of redemption will include a statement setting forth: (1) the redemption date; (2) the number of shares of Series A Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; (4) the place or places where the certificates evidencing shares of Series A Preferred Stock are to be surrendered for payment of the redemption price; and (5) that the Parent may withdraw its notice of redemption with respect to all or a portion of the shares of Series A Preferred Stock to be redeemed at any time prior to 5:00 p.m. (New York City time) on the Business Day immediately preceding an applicable redemption date. On and after any redemption date, any such shares of Series A Preferred Stock so redeemed shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price, if any.

[ Remainder of page intentionally left blank. ]

Coty Services UK Ltd.

Eureka Park

Ashford, Kent TN25 4AQ UK

Sébastien Froidefond
20 Eastbourne Terrace

London, England

March 31, 2017

Dear Sébastien,

I refer to the subscription agreement, dated as of February 16, 2017, entered into between you and Coty, Inc “ Coty ”), attached hereto as Annex 1, and as may be amended from time to time (the “ Subscription Agreement ”), pursuant to which you purchased from Coty 481,539 shares of Series A Preferred Stock. This letter sets out our agreement in respect of certain related matters. Capitalized terms used in, but not defined in, this letter shall have the meanings given to them in the Subscription Agreement.

Coty Services UK Limited (the “ Company ”) shall pay to you a bonus of £350,000 (the “Additional Bonus”), less any deductions required by law. In the event that your employment terminates prior to the Exchange Date, you shall repay to the Company an amount equal to the Additional Bonus within 30 days of the date on which your employment terminates, except where the termination is due to either: (i) a termination by the Company without Cause; or (ii) a termination as a result of your death or Disability; or (iii) a termination by you for Good Reason within 12 months following a Change in Control occurring after the first anniversary of the original issue date of the Series A Preferred Stock under the Subscription Agreement. You agree that the Company may deduct any amount payable by you pursuant to the terms of this letter from any amounts due to you.

In the event of the exchange of any Vested Series A Preferred Stock in accordance with the terms of the Subscription Agreement where the Fair Market Value of a share of Class A Common Stock on the Exchange Date is greater than the amount set forth in the Subscription Agreement you shall be entitled to receive a cash bonus equal to the number of Vested Series A Preferred Stock which are exchanged multiplied by US$2.62, less any deductions required by law. A bonus payable under this paragraph shall be paid within 30 days of the relevant Exchange Date. Notwithstanding anything else contained in this letter to the contrary, if and to the extent that any portion of the bonus payable under this paragraph is attributable to services performed in the United States or is otherwise subject to US taxation because you are resident in the United States, such amount will be payable not later than March 15 of the year following the year in which the preferred stock of Coty purchased by you pursuant to the Subscription Agreement become Vested Series A Preferred Stock (unless otherwise deferred in accordance with the requirements of Section 409A of the Internal Revenue Code).

You shall indemnify the Company for itself and on behalf of each affiliated entity in relation to any national, local and any other applicable taxes and national insurance contributions and other social charges or taxes not already deducted from the amounts payable to you under this letter (or any taxes replacing the same) for which the Company or any affiliated entity has an obligation at any

time to account (whether during the your employment by the Company or after its termination) in relation to Executive and your authorise each the Company and each affiliated entity to deduct any indemnified amount from any amount otherwise payable to Executive.

This letter shall be governed by and construed in accordance with the laws of England and the parties submit to the jurisdiction of the courts of England and Wales.

Please sign below to acknowledge your agreement to the terms of this letter.

Yours sincerely,

/s/Bryce Dyer

For and on behalf of Coty Services UK Limited

Acknowledged and agreed:

/s/Sébastien Froidefond

Sébastien Froidefond

Exhibit 10.8

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “ Agreement ”), dated March 27, 2017, is by and between, Coty Inc., a Delaware corporation (the “ Company ”) and Lambertus J.H. Becht (the “ Subscriber ”) and collectively as “Parties”.

RECITALS

WHEREAS, the Subscriber is the independent chairman of the board of directors of the Company.

WHEREAS, the Company and the Subscriber desire to enter into this Agreement to obligate the Subscriber to acquire shares of preferred stock of the Company (as described below) to be delivered to the Subscriber.

WHEREAS, the Company desires to issue and sell to Subscriber, and Subscriber desires to purchase from the Company, 1,000,000 shares of Series A Preferred Stock of the Company (the “ Shares ”), with the terms and conditions substantially as set forth in that Certificate of Designations filed with the Secretary of State of the State of Delaware relating to the Shares, including the various and several voting powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof set forth in Annex A hereto, at par value of $0.01 per Share, the aggregate being $10,000 (the “ Purchase Price ”), subject to the terms and conditions described herein.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I
PURCHASE AND SALE

Section 1.1 Purchase and Sale of the Shares . Upon the terms and subject to the conditions of this Agreement, at the Closing, subject to Board approval the Company agrees to issue and sell to the Subscriber, and the Subscriber agrees to purchase from the Company, the Shares for an aggregate cash purchase price equal to the Purchase Price.

Section 1.2 Closing .

(a) The sale and purchase of the Shares shall take place at a closing (the “ Closing ”) to be held at the offices of Coty Inc., on March 27, 2017, at 350 Fifth Avenue, New York, New York 10118, or at such other place or at such other time or on such other date as the Company and the Subscriber mutually may agree in writing. The day on which the Closing takes place is referred to as the “Closing Date.”

(b) At the Closing, the Company shall deliver to Wells Fargo Shareowner Services (the “ Transfer Agent ”) an instruction letter authorizing and directing the Transfer Agent to record in the share register of the Company book entry positions representing the Shares issued in the name of the Subscriber.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Subscriber as follows:

Section 2.1 Organization and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware. The Company has all requisite power, right and authority to carry on its business as now conducted.

Section 2.3 Authority . The Company has full corporate power and authority to execute, deliver and perform its obligations under this Agreement. This Agreement has been duly executed and delivered by the Company and is legal, valid, binding and enforceable upon and against the Company.

Section 2.4 No Conflict; Required Filings and Consents . The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not (a) violate any provision of the certificate of incorporation or bylaws (or similar organizational documents) of the Company; (b) violate any federal, state or local statute, law, regulation, order, injunction or decree (“ Law ”); or (c) require any consent or approval of any person, including any registration or filing with, or notice to any federal, state or local governmental authority or any agency or instrumentality thereof (a “ Governmental Authority ”).

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER

The Subscriber, severally as to itself only and not jointly as to or with anyone else, hereby represents and warrants to the Company as follows:

THE SHARES REPRESENTED BY THIS [CERTIFICATE/STATEMENT] ARE RESTRICTED FROM SALE, TRANSFER, EXCHANGE OR ASSIGNMENT, EXCEPT PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (I) TO THE COMPANY, (II) BY THE LAWS OF DESCENT AND DISTRIBUTION, OR (III) UPON RECEIPT OF A WRITTEN OPINION OF COUNSEL TO THE COMPANY OR THE COMPANY’S SECRETARY AND GENERAL COUNSEL.

Section 3.4 Resale; Accredited Investor . The Subscriber is acquiring the Shares solely for the Subscriber’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution of the Shares. The Subscriber is an “accredited investor” as defined in Rule 501(a) under the Securities Act, and a sophisticated purchaser who has made its own independent investigation, review and analysis of the transactions contemplated hereby. The Subscriber has been furnished with all information (or provided access to all information) regarding the attributes of the Shares for which it is subscribing and the merits and risks of an investment in such Shares that it requested to evaluate the investment in such Shares. The Subscriber is relying solely on the representations, warranties and agreements of the Company contained in this Agreement, and agrees that at no time was it presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general or public advertising or solicitation.

ARTICLE IV
GENERAL PROVISIONS

Section 4.3 Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent by facsimile, e‑mail,

overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the party to receive such notice, or to such other address as may be designated in writing by such party.

Section 4.4 Entire Agreement . This Agreement constitutes the entire agreement, and supersedes all prior written agreements, arrangements and understandings and all prior and contemporaneous oral agreements, arrangements and understandings between the parties with respect to the subject matter of this Agreement. No party to this Agreement shall have any legal obligation to enter into the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties.

Section 4.5 Third-Party Beneficiaries . Nothing in this Agreement shall confer upon any person other than the parties and their respective successors and permitted assigns any right of any nature.

Section 4.7 Submission to Jurisdiction . Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by the other party or its successors or assigns may be brought and determined in any New York State or federal court sitting in the Borough of Manhattan in The City of New York (or, if such court lacks subject matter jurisdiction, in any appropriate New York State or federal court), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any action, suit or proceeding relating thereto except in such courts). Each of the parties further agrees to accept service of process in any manner permitted by such courts. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure lawfully to serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

Section 4.8 Assignment; Successors . This Agreement may not be assigned by either party without the prior written consent of the other party, except that the Company may assign this Agreement to any of its Affiliates. Subject to the preceding sentence, this Agreement will be binding upon the parties and their respective successors and assigns. For the purposes of this Agreement, the term “Affiliate” shall mean any entity controlling, controlled by or under common control with the named party.

Section 4.9 Severability . If any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any

applicable Law, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

Section 4.10 Counterparts . This Agreement may be executed in counterparts, including electronic transmission and facsimile counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.



COTY INC.		Address for Notices:

By:	/s/Sébastien Froidefond
Name:	Sébastien Froidefond
Title:	Chief Human Resources Officer
SUBSCRIBER		Address for Notices:

By:	/s/Lambertus J.H. Becht
Name:	Lambertus J.H. Becht
Title:	Chairman, Coty Inc.

Annex A

Section 1. Definitions .

(a) “ Board ” means the Board of Directors of the Company.

(b) “ Business Day ” shall have the meaning ascribed to such term under the Plan.

(d) “ Change in Control ” shall have the meaning ascribed to such term under the Plan

(e) “ Closing Price ” means, with respect to any date, the closing sale price per share or other security (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal Exchange on which such share or other security is listed or admitted for trading or, if such share or other security is not listed or admitted for trading on a U.S. national or regional securities exchange, as reported on the quotation system on which such share or other security is quoted. If the share or other security is not listed or admitted for trading on a U.S. national or regional securities exchange and not reported on a quotation system on the relevant date, the “closing price” will be the last quoted bid price for such share or other security in the over-the-counter market on the relevant date as reported by OTC Markets Bureau or another similar organization. If such share or other security is not so quoted, the last reported sale price will be the average of the mid-point of the last bid and ask prices for such share or other security on the relevant date from each of at least three nationally recognized investment banking firms selected by the Company for this purpose.

(f) “ Disability ” shall have the meaning ascribed to such term in the Plan.

(g) “ Disposition Event ” has the meaning set forth in Section 2(g)(2).

(h) “ Exchange ” means The New York Stock Exchange, The NASDAQ Global Market, or any other U.S. national securities exchange.

(i) “ Exchange Act ” shall have the meaning ascribed to such term under the Plan.

(j) “ Exchange Amount ” has the meaning set forth in Section 2(b)(1).

(k) “ Exchange Date ” has the meaning set forth in Section 2(d).

(l) “ Exchange Price ” has the meaning set forth in Section 2(b)(1).

(m) “ Fair Market Value ” of Class A Common Stock or any other security or property means the fair market value thereof as determined in good faith by the Board, which determination must be set forth in a written resolution of the Board, in accordance with the following rules:

(n) “ Majority Shareholder ” shall have the meaning ascribed to such term under the Plan.

(o) “ Minimum Number of Shares ” has the meaning set forth in Section 3(c)(2).

(p) “ original issue date ” means, with respect to shares of Series A Preferred Stock, the date of issue of such shares sold to the Subscriber pursuant to the terms of the Subscriber’s Subscription Agreement.

(q) “ Permitted Holder ” has the meaning set forth in Section 4(a).

(r) “ Plan ” means the Coty Inc 2007 Stock Plan for Directors (as amended and restated from time to time).

(s) “ Preferred Net Value ” has the meaning set forth in Section 2(b)(1).

(t) “ Reference Property ” has the meaning set forth in Section 2(g)(2).

(u) “ Related Common Stock ” means any other capital stock into which such Class A Common Stock may be reclassified or exchanged (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination).

(v) “ Service ” has the meaning ascribed to such term in the Plan.

(w) “ Share Exchange Price ” has the meaning set forth in Section 2(b)(1).

(x) “ Subscriber Affiliates ” shall mean, with respect to the Subscriber, (i) himself, (ii) his wife, (iii) any business entity in which the Subscriber owns or controls more than a majority of the economic ownership interests in the equity of such entity and

has the power to elect a majority of directors of such entity or otherwise has, directly or indirectly, actual control over the business and operations of such entity and (iv) any trust of which the Subscriber and/or his wife is the grantor and the sole beneficiaries of which are comprised solely of the group consisting of the Subscriber, his wife and any Permitted Holder.

(y) “ Vested Series A Preferred Stock ” means all shares of Series A Preferred Stock outstanding and held by a holder on the earliest of (i) the fifth anniversary of the original issue date (the “ Fifth Anniversary ”); (ii) the date the Subscriber’s death or Disability.

Other capitalized terms not defined in this Agreement shall have the meanings ascribed to them under the Plan.

Section 2. Exchange .

(a) Generally . The holders of shares of Series A Preferred Stock shall not have any right to exchange such shares into shares of any other class or series of securities of the Company until such time as such shares become Vested Series A Preferred Stock and then only as provided herein.

(b) Exchange at the Option of the Holder .

(1) Subject to Section 2(b)(2), a holder is entitled to exchange, at the option and election of such holder, any or all Vested Series A Preferred Stock held by such holder at any time and from time to time by notice given to the Company prior to or on the seventh anniversary of the original issue date , into, at the sole election of the Company, either: (i) an amount in cash payable in U.S. dollars per share so exchanged equal to (I) the Fair Market Value of a share of Class A Common Stock, or Reference Property, as applicable, on the Exchange Date minus (II) an amount equal to the sum of US$3.50 (the “ Cash Exchange Price ”) plus the Fair Market Value of a share of such Class A Common Stock on the original issue date of such Vested Series A Preferred Stock, subject to adjustment from time to time as provided herein (the “ Share Exchange Price ” and aggregated with the Cash Exchange Price, the “ Exchange Price ”) (such difference, the “ Preferred Net Value ”), or (ii) the number of duly authorized, validly issued, fully paid and nonassessable shares of Class A Common Stock, or Reference Property, as applicable, whose aggregate value, as measured by the Fair Market Value of a share of such Class A Common Stock, or Reference Property, as applicable, on the Exchange Date, is equal to the Preferred Net Value (such amount of shares of Class A Common Stock, the “ Exchange Amount ”); provided , however , that notwithstanding anything herein to the contrary, the Company shall elect on the Exchange Date to pay the Preferred Net Value in cash payable in U.S. dollars and shall not issue any shares of Class A Common Stock or Reference Property, as applicable, unless, to the extent required by the rules and regulations of the Relevant Exchange (as defined below), the issuance of such shares of Class A Common Stock or Reference Property, as applicable, has been approved by holders of a majority of the outstanding shares of Class A Common Stock or Reference Property, as applicable, at

the time of such approval and in accordance with the rules and regulations of such Relevant Exchange and by the Relevant Exchange prior to the Exchange Date.

(2) The right of a holder to exchange any or all shares of Vested Series A Preferred Stock as set forth in Section 2(b)(1) shall also expire and lapse, and be of no further force and effect, on the earliest to occur of: (i) the first (1 ^st ) anniversary of the termination of the Subscriber’s Service due to death or Disability, and (ii) the latest date prior to which Vested Series A Preferred Stock can otherwise be exchanged pursuant to Section 2(b)(1).

(c) Automatic Exchange . Notwithstanding anything else to the contrary, within 30 Business Days following the date of a Change in Control, the Company shall have the right to exchange, upon notice to a holder, any Vested Series A Preferred Stock into the Preferred Net Value payable, at the sole option and election of the Company, either in cash, Class A Common Stock or Reference Property, as applicable, subject to the provisio contained in Section 2(b)(1).

(d) Exchange Date . In order to exchange shares of Vested Series A Preferred Stock, the holder must surrender such shares (if uncertificated) or the certificates representing such shares, accompanied by transfer instruments reasonably satisfactory to the Company, free of any adverse interest or liens at the office of the Company’s transfer agent for the Vested Series A Preferred Stock (or at the principal office of the Company, if the Company serves as its own transfer agent), together with written notice that such holder elects to exchange all or such number of shares represented by such certificates as specified therein. The date of receipt of such certificates, together with such notice, by the transfer agent or the Company will be the date of exchange (the “ Exchange Date ”).

(e) Fractional Shares . No fractional shares of Class A Common Stock will be issued upon exchange of the Vested Series A Preferred Stock. In lieu of fractional shares, the Company shall pay cash equal to such fractional amount multiplied by the Fair Market Value of the Class A Common Stock as of the Exchange Date. If more than one share of Vested Series A Preferred Stock is being exchanged at one time by the same holder, then the number of full shares issuable upon exchange, if so elected by the Company, will be calculated on the basis of the aggregate number of shares of Vested Series A Preferred Stock exchanged by such holder at such time.

(f) Mechanics of Exchange .

(1) In the event the Company elects to exchange Vested Series A Preferred Stock into shares of Class A Common Stock or Reference Property, as applicable, in accordance with Section 2(b)(1), as soon as practicable after the Exchange Date (and in any event within ten (10) Business Days), the Company shall issue and deliver to such holder the number of shares of Class A Common Stock or such amount of Reference Property, as applicable, to which such holder is entitled, together with a check or cash for payment of fractional shares, if any, in exchange for such shares (if uncertificated) or for the certificates formerly representing shares of Vested Series A Preferred Stock being so

exchanged. Such exchange will be deemed to have been made on the Exchange Date, and the person entitled to receive the shares of Class A Common Stock or Reference Property, as applicable, issuable upon such exchange shall be treated for all purposes as the record holder of such shares of Class A Common Stock, or Reference Property, as applicable, on such Exchange Date. In case fewer than all the shares represented by any such certificate are to be exchanged, a new certificate shall be issued representing the shares not exchanged without cost to the holder thereof, except for any documentary, stamp or similar issue or transfer tax due because any certificates for shares of Class A Common Stock or Vested Series A Preferred Stock are issued in a name other than the name of the exchanging holder. The Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of Class A Common Stock upon exchange or due upon the issuance of a new certificate for any shares of Vested Series A Preferred Stock not exchanged other than any such tax due because shares of Class A Common Stock or a certificate for shares of Vested Series A Preferred Stock are issued in a name other than the name of the exchanging holder.

(2) In the event the Company elects or is required to exchange Vested Series A Preferred Stock into cash in accordance with Section 2(b)(1), as soon as practicable after the Exchange Date (and in any event within ten (10) Business Days), the Company shall pay such amount to such holder, to the extent of funds legally available therefor. Such exchange will be deemed to have been made on the Exchange Date.

(3) From and after the Exchange Date, the shares of Vested Series A Preferred Stock to be exchanged on such Exchange Date will no longer be deemed outstanding and all rights of the holder thereof as a holder of Series A Preferred Stock (except the right to receive from the Company the Preferred Net Value in cash or Class A Common Stock or Reference Property, as applicable, upon exchange, together with the right to receive any payment in lieu of a fractional share of Class A Common Stock if payment of the Preferred Net Value is to be made in Class A Common Stock or Reference Property, as applicable) shall cease and terminate with respect to such shares; provided , that in the event that a share of Vested Series A Preferred Stock is not exchanged, such share of Vested Series A Preferred Stock will remain outstanding and will be entitled to all of the rights as provided herein. Any shares of Vested Series A Preferred Stock that have been exchanged will, after such exchange, upon issuance of the shares of Class A Common Stock or Reference Property, as applicable, issuable upon exchange thereof and cash in lieu of fractional shares of Class A Common Stock or Reference Property, as applicable, or payment of cash in the amount of the Preferred Net Value, be deemed cancelled and retired as set forth in Section 14 of the Certificate of Designations.

(4) The Company shall comply with all federal and state laws, rules and regulations and applicable rules and regulations of the Exchange on which shares of the Class A Common Stock or Reference Property, as applicable, are then listed. Notwithstanding the other terms contained herein, the Company shall not be required to exchange any Vested Series A Preferred Stock into any Class A Common Stock or Reference Property, as applicable, or issue or deliver the same, to the extent such exchange,

issuance or delivery would require: (i) registration with or approval of any person under any federal or state law before such shares may be validly issued or delivered upon exchange, (ii) approval from the Exchange on which shares of the Class A Common Stock or Reference Property, as applicable, are then listed (the “ Relevant Exchange ”), unless such approval has been received, or (iii) approval by the Company’s stockholders pursuant to the rules or regulations of the Relevant Exchange, unless such approval has been received or is not otherwise required by the Relevant Exchange.

(5) All shares of Class A Common Stock or other securities of the Company issued upon exchange of the shares of Vested Series A Preferred Stock will, upon issuance by the Company, be duly and validly issued, fully paid and nonassessable, not issued in violation of any preemptive rights arising under law or contract and free from all taxes, liens and charges with respect to the issuance thereof, and the Company shall take no action which will cause a contrary result.

(g) Adjustments to Exchange Price .

(1) Adjustment for Change In Capital Stock .

(i)

If the Company shall, at any time and from time to time while any shares of Series A Preferred Stock are outstanding, issue a dividend or make a distribution on its Class A Common Stock payable in shares of Class A Common Stock to all or substantially all holders of its Class A Common Stock, then each of the Share Exchange Price and the Cash Exchange Price will be adjusted by multiplying each by a fraction:


I	the numerator of which shall be the number of shares of Class A Common Stock outstanding at the close of business on the Business Day immediately preceding the applicable dividend or distribution date; and


II	the denominator of which shall be the sum of the number of shares of Class A Common Stock outstanding at the close of business on the Business Day immediately preceding the applicable dividend or distribution date, plus the total number of shares of Class A Common Stock constituting such dividend or other distribution.

(ii)

If the Company shall, at any time or from time to time while any shares of Series A Preferred Stock are outstanding, subdivide or reclassify its outstanding shares of Class A Common Stock into a greater number of shares of Class A Common Stock, then each of the Share Exchange Price and the Cash Exchange Price in effect at the opening of business on the day upon which such subdivision becomes effective shall be proportionately decreased, and

conversely, if the Company shall, at any time or from time to time while any shares of Series A Preferred Stock are outstanding, combine or reclassify its outstanding shares of Class A Common Stock in to a smaller number of shares of Class A Common Stock, then each of the Share Exchange Price and the Cash Exchange Price in effect at the opening of business on the day upon which such combination or reclassification becomes effective shall be proportionately increased. In each such case, each of the Share Exchange Price and the Cash Exchange Price shall be adjusted by multiplying each such Share Exchange Price and Cash Exchange Price by a fraction, the numerator of which shall be the number of shares of Class A Common Stock outstanding immediately prior to such subdivision or combination and the denominator of which shall be the number of shares of Class A Common Stock outstanding immediately after giving effect to such subdivision, combination or reclassification. Such increase or reduction, as the case may be, shall become effective immediately after the opening of business on the day upon which such subdivision, combination or reclassification becomes effective.

(2) Disposition Events . Subject to Section 2(c), if any of the following events occurs (other than (i) any stock split or combination to which Section 2(g)(1) is applicable or (ii) a liquidation, dissolution, winding up or other transaction to which “Section 5. Liquidation” of the Certificate of Designations is applicable) (any such event, a “ Disposition Event ”):


(i)	any reclassification or exchange of the Class A Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination);


(ii)	any merger, consolidation or other combination to which the Company is a constituent party;


(iii)	any sale, conveyance, lease, or other disposal of all or substantially all the properties and assets of the Company to any other person; or


(iv)	the payment of an extraordinary cash dividend which would be treated as a “corporate transaction” within the meaning of the regulations promulgated under Section 424(a) of the U.S. Internal Revenue Code (or any successor provision); and

any Disposition Event, may be exchanged, in lieu of the Class A Common Stock that the Company otherwise had the option of delivering in lieu of cash upon exchange of Vested Series A Preferred Stock, into the same amount and type (in the same proportion) of cash, securities or other property (collectively, “ Reference Property ”) received upon the occurrence of such Disposition Event by a holder of Class A Common Stock, with the amount of such Reference Property to be received for each share of Vested Series A Preferred Stock determined based upon the Exchange Amount in effect immediately prior to such Disposition Event, subject to the proviso in Section 2(b)(1); provided that if the Disposition Event provides the holders of Class A Common Stock with the right to receive more than a single type of consideration determined based in part upon any form of stockholder election, the Reference Property shall be comprised of the weighted average of the types and amounts of consideration received by the holders of the Class A Common Stock.

(4) Rules of Calculation; Treasury Stock . All calculations will be made to the nearest one-hundredth of a cent or to the nearest one-ten thousandth of a share. Except as explicitly provided herein, the number of shares of Class A Common Stock outstanding will be calculated on the basis of the number of issued and outstanding shares of Class A Common Stock, not including shares held in the treasury of the Company. The Company shall not pay any dividend on or make any distribution to shares of Class A Common Stock held in treasury.

(h) Notice of Record Date . In the event of:

(1) any stock split or combination of the outstanding shares of Class A Common Stock;

(3) any reclassification or change to which Section 2(g)(1)(ii) applies;

(4) the dissolution, liquidation or winding up of the Company;

(5) any other event constituting a Change in Control; or

(6) any other event that would cause or allow for the exchange of any Vested Series A Preferred Stock in accordance with this Section 2, then the Company shall send to the holders of the Vested Series A Preferred Stock, which notice will be deemed effective if sent to their last addresses as shown on the records of the Company, at least 10 days prior to the record date specified in (i) below or 10 days prior to the date specified in (ii) below, a notice stating:


(i)	the record date of such stock split, combination, dividend or other distribution, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock of record to be entitled to such stock split, combination, dividend or other distribution are to be determined, or

(ii)

No failure to provide such notice will affect the validity of any such actions.

(i) Certificate of Adjustments . Upon the occurrence of each adjustment or readjustment of the Exchange Price pursuant to this Section 2, the Company shall promptly as reasonably practicable compute such adjustment or readjustment in accordance with the terms of the Subscription Agreement and furnish to each holder of Vested Series A Preferred Stock a certificate, signed by an officer of the Company, setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based and shall file a copy of such certificate with its corporate records. The Company shall, upon the reasonable written request of any holder of Vested Series A Preferred Stock, furnish to such holder a similar certificate setting forth (i) the calculation of such adjustments and readjustments in reasonable detail, (ii) the Exchange Price then in effect, and (iii) the number of shares of Class A Common Stock and the amount, if any, of capital stock, other securities or other property (including but not limited to cash and

evidences of indebtedness) which then would be received upon the exchange of Vested Series A Preferred Stock.

Section 3. Redemption at the Option of the Company .

(a) In Whole Upon Maturity, Death or Disability . To the extent then still outstanding, the Company shall have the right to redeem all, but not less than all, shares of Series A Preferred Stock at a redemption price equal to $0.01 per share, at the earliest of (i)] on or after latest date prior to which Vested Series A Preferred Stock may be exchanged pursuant to Section 2(b)(1), and (ii) on or after the first (1 ^st ) anniversary following the Subscriber’s death or Disability.

Section 4. Restrictions on Transfer .

(a) The Subscriber shall not be entitled to sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any shares of Series A Preferred Stock, except that the Subscriber may transfer shares of Series A Preferred Stock to any “family members”, as such term is defined on Form S-8 promulgated by the U.S. Securities and Exchange Commission under the U.S. Securities Act of 1933, as amended, as such form may be amended from time to time (such persons, the Subscriber ’s “ Permitted Holders ”).

(b) Following any permitted transfer under Section 4(a), shares of Series A Preferred Stock held by a Permitted Holder, if any, shall remain subject to the same rights, privileges, limitations and conditions relating to such shares of Series A Preferred Stock as set forth herein that would otherwise have applied had the Subscriber continued to hold such shares of Series A Preferred Stock, including, without limitation, those transfer restrictions set forth in Section 4(a).

Section 5. Information .

(a) Within ten (10) Business Days after the original issue date with respect to his shares of Series A Preferred Stock, the Subscriber shall, and shall use reasonable best commercial efforts to cause any Subscriber Affiliate to, notify the Company in writing of the number of shares of Class A Common Stock held of record by such persons or entities, if any, and the amount paid for such shares. The Subscriber shall notify the Company promptly in writing, and in any event within ten (10) Business Days, of any changes in the Subscriber’s or any Subscriber Affiliate’s holdings, whether direct, beneficial or otherwise, in respect of Class A Common Stock or Related Common Stock, if any.

shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; (4) the place or places where the certificates evidencing shares of Series A Preferred Stock are to be surrendered for payment of the redemption price; and (5) that the Company may withdraw its notice of redemption with respect to all or a portion of the shares of Series A Preferred Stock to be redeemed at any time prior to 5:00 p.m. (New York City time) on the Business Day immediately preceding an applicable redemption date. On and after any redemption date, any such shares of Series A Preferred Stock so redeemed shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price, if any.

Coty Inc.

Subsidiary List

as of March 31, 2017



Subsidiary Name	Jurisdiction
Coty Argentina S.A.	Argentina
Cosmetic Suppliers PTY. LTD.	Australia
Coty Australia Pty. Limited	Australia
Gresham Cosmetics Pty Ltd	Australia
HFC Prestige International Australia PTY Ltd	Australia
Jemella Australia Pty Limited	Australia
Revolver Distribution Pty Ltd	Australia
Coty Austria GmbH	Austria
HFC Prestige International Austria GmbH	Austria
Bourjois SA	Belgium
Coty Benelux S.A.	Belgium
HFC Prestige Products N.V.	Belgium
Younique Corporation	Belize
Coty Brasil Comércio Ltda	Brazil
HFC Brasil Comercio De Cosmeticos Ltda	Brazil
Lancaster do Brasil Cosmeticos Ltda.	Brazil
Savoy Indústria de Cosméticos S.A.	Brazil
StarAsia Distributions (Cambodia) Ltd.	Cambodia
Coty Canada Inc.	Canada
HFC Prestige International Canada, Inc.	Canada
TJoy Holdings Co. Ltd.	Cayman Islands
Coty Cosméticos Chile Limitada	Chile
Coty China Holding Limited	China
Coty Hong Kong Distribution Ltd.	China
Coty International Trade (Shanghai) Co., Ltd.	China
Coty Prestige Shanghai Ltd.	China
Coty R&D (Suzhou) Co. Ltd.	China
HFC (Shanghai) Cosmetics Co., Ltd	China
Nanjing Yanting Trade Co. Ltd.	China
Suzhou Ganon Trading Co., Ltd.	China
Suzhou Jiahua Biochemistry Co. Ltd	China
HFC Prestige Service Costa Rica S.R.L.	Costa Rica
Coty Ceska republika, s.r.o.	Czech Republic
GHD Scandinavia ApS	Denmark
HFC Prestige International Denmark ApS	Denmark
Ghd Finland Oy	Finland
HFC Prestige International Finland Oy	Finland
Coty S.A.S.	France
Coty France S.A.S.	France
Else France S.A.S.	France
Fragrance Production S.A.S.	France
GHD France S.á r.l.	France
HFC Prestige Holding France	France
Wella France SAS	France

Coty Inc.

Subsidiary List

as of March 31, 2017



Coty Brands Management GmbH	Germany
Coty Germany GmbH	Germany
Coty Services and Logistics GmbH	Germany
Ghd Deutschland GmbH	Germany
HFC Prestige International Germany GmbH	Germany
HFC Prestige Manufacturing Cologne Germany GmbH	Germany
HFC Prestige Manufacturing Germany GmbH	Germany
HFC Prestige Products GmbH	Germany
HFC Prestige Service Germany GmbH	Germany
Sebastian Europe GmbH	Germany
Wella Grundstuecks- und Vermoegensverwalturngs GmbH & Co. KG	Germany
Coty Hellas S.A.	Greece
Wella Hellas MEPE	Greece
Bourjois Limited	Hong Kong
Chi Chun Industrial Co. Ltd.	Hong Kong
Coty Hong Kong Limited (Kuiqui Holding Ltd.)	Hong Kong
Coty Prestige Hong Kong Ltd.	Hong Kong
Coty Prestige Shanghai (HK) Ltd.	Hong Kong
Coty Prestige Southeast Asia (HK) Limited	Hong Kong
GHD Hong Kong Limited	Hong Kong
HFC Prestige International Hong Kong Ltd.	Hong Kong
Ming-De Investment Co. Ltd.	Hong Kong
Super Globe Holdings Ltd.	Hong Kong
Younique Hong Kong, Limited	Hong Kong
Coty Hungary Kft.	Hungary
Coty India Beauty and Fragrance Products Private Limited	India
Wella India Private Limited	India
PT Star Asia Distributions Indonesia	Indonesia
PT. Coty Prestige Southeast Asia Indonesia	Indonesia
Coty Ireland Ltd.	Ireland
HFC Prestige Manufacturing Ireland Ltd.	Ireland
Wella Ireland	Ireland
Coty Italia S.R.L.	Italy
GHD Italia S.r.l.	Italy
Labocos Srl	Italy
Younique Products Italy S.r.l	Italy
HFC Prestige Japan Godo Kaisha	Japan
OPI-Japan K.K.	Japan
Coty Korea Ltd.	Korea, Republic Of
HFC Prestige International Holding Luxembourg SARL	Luxembourg
HFC Prestige International Luxembourg SARL	Luxembourg
Coty Malaysia Sdn. Bhd.	Malaysia
Coty Prestige Southeast Asia (M) Sdn. Bhd.	Malaysia
HFC Prestige International Malaysia Sdn. Bhd.	Malaysia
Coty Beauty Mexico, S.A. de C.V.	Mexico

Coty Inc.

Subsidiary List

as of March 31, 2017



Coty México, S.A. de C.V.	Mexico
Galería Productora de Cosméticos, S. de R.L. de C.V.	Mexico
HFC Cosmetics S. de R.L. de C.V.	Mexico
HFC Prestige International S. de R.L. de C.V.	Mexico
YQ Products MEX	Mexico
Coty Lancaster S.A.M.	Monaco
Coty B.V.	Netherlands
Coty Benelux B.V.	Netherlands
Coty Global 1 B.V.	Netherlands
Coty Global 2 B.V.	Netherlands
Coty Global 3 B.V.	Netherlands
Coty Global 4 B.V.	Netherlands
Coty Global 5 B.V.	Netherlands
Coty Investments B.V.	Netherlands
HFC Prestige International Netherlands B.V.	Netherlands
HFC Prestige International Netherlands Holding B.V.	Netherlands
Lancaster B.V.	Netherlands
Younique Products B.V	Netherlands
Younique Products Cooperatief U.A.	Netherlands
HFC Prestige International New Zealand Limited	New Zealand
Jemella New Zealand Limited	New Zealand
GHD Scandinavia NFU (Norwegian Branch)	Norway
HFC Prestige International Norway AS	Norway
Coty Prestige Southeast Asia Philippines, Inc.	Philippines
Coty Polska Sp z.o.o.	Poland
HFC Prestige International Poland Sp. z.o.o.	Poland
HFC Prestige Service Poland Sp. z.o.o.	Poland
Wella Prestige Products Portugal S.A.	Portugal
Coty Puerto Rico Inc.	Puerto Rico
HFC Prestige International Puerto Rico LLC	Puerto Rico
Coty Cosmetics Romania SRL	Romania
Bourjois Paris LLC	Russia
Coty Beauty LLC	Russia
Coty Russia ZAO	Russia
LLC Capella	Russia
Russwell Ltd	Russia
Coty Arabia Trading Company LLC	Saudi Arabia
Coty Asia Pte. Ltd.	Singapore
Coty Prestige Southeast Asia Pte. Ltd.	Singapore
Coty Singapore Pte. Ltd.	Singapore
Coty Southeast Asia Pte. Limited	Singapore
HFC Prestige International Operations Switzerland SARL Singapore Branch	Singapore
HFC Prestige International Singapore Pte. Ltd.	Singapore
Coty Slovenská Republika s.r.o.	Slovakia

Coty Inc.

Subsidiary List

as of March 31, 2017



Coty Beauty South Africa (PTY) Ltd.	South Africa
Coty South Africa (Proprietary) Limited	South Africa
Good Hair Day South Africa (Proprietary) Limited	South Africa
Coty Spain S.L., Sociedad Unipersonal	Spain
GHD Spain, S A U	Spain
HFC Prestige Products S.A.U.	Spain
Productos Cosmeticos, S.L.U	Spain
Professional Care Logistics SL	Spain
Younique Spain SL	Spain
GHD Sverige AB	Sweden
HFC Prestige International Sweden AB	Sweden
Coty (Schweiz) AG	Switzerland
Coty Geneva SARL Versoix	Switzerland
Coty International S.a.r.l.	Switzerland
HFC Prestige International Holding Switzerland Sàrl	Switzerland
HFC Prestige International Operations Switzerland Sàrl	Switzerland
HFC Prestige International Switzerland Sàrl	Switzerland
Coty Prestige (Taiwan) Ltd.	Taiwan, Province Of China
StarAsia Taiwan Co., Ltd.	Taiwan, Province Of China
Coty Prestige Southeast Asia (Thailand) Company Limited	Thailand
HFC Prestige Manufacturing (Thailand) Ltd.	Thailand
HFC Prestij Satış ve Dağıtım Ltd. Şti.	Turkey
Coty Distribution Emirates L.L.C.	United Arab Emirates
Coty Middle East Fzco	United Arab Emirates
Coty Regional Trading FZE	United Arab Emirates
HFC Prestige International Operations SARL	United Arab Emirates
Beamly Ltd.	United Kingdom
Beauty International Ltd.	United Kingdom
Bourjois Limited	United Kingdom
Coty Brands Group Limited	United Kingdom
Coty Export U.K. Ltd.	United Kingdom
Coty Manufacturing UK Ltd.	United Kingdom
Coty Services U.K. Ltd.	United Kingdom
Coty U.K. Limited	United Kingdom
Del Laboratories (U.K.) Limited	United Kingdom
ghd BondCo plc	United Kingdom
GHD EBT Company Ltd	United Kingdom
GHD Group Holdings Limited	United Kingdom
GHD Group Limited	United Kingdom
GHD Holdings Limited	United Kingdom
ghd Nominees Limited	United Kingdom
HFC Prestige Manufacturing UK Ltd	United Kingdom
HFC Prestige Products Ltd.	United Kingdom
HFC Prestige Service UK Ltd	United Kingdom
Jemella Group (Holdings) Limited	United Kingdom

Coty Inc.

Subsidiary List

as of March 31, 2017



Jemella Group Limited	United Kingdom
Jemella Limited	United Kingdom
Lancaster Group, Ltd.	United Kingdom
Lena White Limited	United Kingdom
Lion/Gloria Bidco Limited	United Kingdom
Lion/Gloria Holdco Limited	United Kingdom
Lion/Gloria Midco 2 Limited	United Kingdom
Lion/Gloria Midco 3 Limited	United Kingdom
Lion/Gloria Midco Limited	United Kingdom
Lion/Gloria Topco Limited	United Kingdom
Power Promotions Limited	United Kingdom
Power Wizards Limited	United Kingdom
Rimmel International Ltd.	United Kingdom
Wella (UK) Ltd	United Kingdom
Wonderful Life Limited	United Kingdom
Wonderful Life UK Limited	United Kingdom
Noxell Corporation	United Sates - MD
GHD Professional, North America, Inc.	United States - CA
HFC Prestige Products, Inc.	United States - CT
Beamly Inc.	United States - DE
Calvin Klein Cosmetic Corporation	United States - DE
Coty Brands Management Inc.	United States - DE
Coty Holdings, Inc.	United States - DE
Coty Inc.	United States - DE
Coty International LLC	United States - DE
Coty US Holdings Inc.	United States - DE
Coty US LLC	United States - DE
DLI International Holding I LLC	United States - DE
DLI International Holding II Corp	United States - DE
Foundation, LLC	United States - DE
Galleria Co.	United States - DE
Graham Webb International, Inc.	United States - DE
HFC Prestige International U.S. LLC	United States - DE
O P I Products, Inc.	United States - DE
Rimmel Inc.	United States - DE
The Wella Corporation	United States - DE
Younique DISC Corporation	United States - UT
Younique International Holdings LLC	United States - UT
Younique, LLC	United States - UT
Coty Beauty Vietnam Company Limited	Vietnam

Exhibit 31.1

Certification

I, Camillo Pane, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Coty Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 10, 2017	/s/ Camillo Pane
		Camillo Pane
		Chief Executive Officer

Exhibit 31.2

Certification

I, Patrice de Talhouët, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Coty Inc.;

d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 10, 2017	/s/ Patrice de Talhouët
		Patrice de Talhouët
		Chief Financial Officer

Exhibit 32.1

Certification

Pursuant to Rule 13a-14(b) or

Rule 15d-14(b) and 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002)

Pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), the undersigned officer of Coty Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (the “Report”) of the Company fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated:	May 10, 2017	/s/ Camillo Pane
		Camillo Pane
		Chief Executive Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and for no other purpose.

Exhibit 32.2

Certification

Pursuant to Rule 13a-14(b) or

Rule 15d-14(b) and 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002)



Dated:	May 10, 2017	/s/ Patrice de Talhouët
		Patrice de Talhouët
		Chief Financial Officer