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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2018
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OR
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 001-35964
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Delaware
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13-3823358
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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350 Fifth Avenue, New York, NY
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10118
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(Address of principal executive offices)
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(Zip Code)
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Page
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Three Months Ended
December 31, |
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Six Months Ended
December 31, |
||||||||||||
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2018
|
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2017
|
|
2018
|
|
2017
|
||||||||
Net revenues
|
$
|
2,511.2
|
|
|
$
|
2,637.6
|
|
|
$
|
4,542.5
|
|
|
$
|
4,875.9
|
|
Cost of sales
|
956.7
|
|
|
1,024.9
|
|
|
1,765.8
|
|
|
1,899.1
|
|
||||
Gross profit
|
1,554.5
|
|
|
1,612.7
|
|
|
2,776.7
|
|
|
2,976.8
|
|
||||
Selling, general and administrative expenses
|
1,284.0
|
|
|
1,319.2
|
|
|
2,406.3
|
|
|
2,510.3
|
|
||||
Amortization expense
|
88.5
|
|
|
89.6
|
|
|
181.0
|
|
|
167.8
|
|
||||
Restructuring costs
|
21.5
|
|
|
21.7
|
|
|
37.0
|
|
|
32.9
|
|
||||
Acquisition-related costs
|
—
|
|
|
7.0
|
|
|
—
|
|
|
61.1
|
|
||||
Asset impairment charges
|
965.1
|
|
|
—
|
|
|
977.7
|
|
|
—
|
|
||||
Operating (loss) income
|
(804.6
|
)
|
|
175.2
|
|
|
(825.3
|
)
|
|
204.7
|
|
||||
Interest expense, net
|
68.3
|
|
|
60.3
|
|
|
132.4
|
|
|
126.7
|
|
||||
Other expense, net
|
4.8
|
|
|
4.2
|
|
|
7.5
|
|
|
8.7
|
|
||||
(Loss) income before income taxes
|
(877.7
|
)
|
|
110.7
|
|
|
(965.2
|
)
|
|
69.3
|
|
||||
Provision (benefit) for income taxes
|
78.3
|
|
|
(7.9
|
)
|
|
0.9
|
|
|
(33.2
|
)
|
||||
Net (loss) income
|
(956.0
|
)
|
|
118.6
|
|
|
(966.1
|
)
|
|
102.5
|
|
||||
Net income (loss) attributable to noncontrolling interests
|
0.6
|
|
|
(1.9
|
)
|
|
1.8
|
|
|
(4.1
|
)
|
||||
Net income attributable to redeemable noncontrolling interests
|
4.0
|
|
|
11.3
|
|
|
4.8
|
|
|
17.1
|
|
||||
Net (loss) income attributable to Coty Inc.
|
$
|
(960.6
|
)
|
|
$
|
109.2
|
|
|
$
|
(972.7
|
)
|
|
$
|
89.5
|
|
Net (loss) income attributable to Coty Inc. per common share:
|
|
|
|
|
|
|
|
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|
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Basic
|
$
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(1.28
|
)
|
|
$
|
0.15
|
|
|
$
|
(1.30
|
)
|
|
$
|
0.12
|
|
Diluted
|
(1.28
|
)
|
|
0.15
|
|
|
(1.30
|
)
|
|
0.12
|
|
||||
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
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|
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Basic
|
751.1
|
|
|
749.6
|
|
|
751.0
|
|
|
749.1
|
|
||||
Diluted
|
751.1
|
|
|
752.7
|
|
|
751.0
|
|
|
752.5
|
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (loss) income
|
$
|
(956.0
|
)
|
|
$
|
118.6
|
|
|
$
|
(966.1
|
)
|
|
$
|
102.5
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment
|
(60.0
|
)
|
|
32.0
|
|
|
(108.9
|
)
|
|
271.1
|
|
||||
Net unrealized derivative gain (loss) on cash flow hedges, net of taxes of $5.8 and $(3.9), and $5.5 and $(4.0) during the three and six months ended, respectively
|
(18.7
|
)
|
|
7.4
|
|
|
(17.7
|
)
|
|
7.3
|
|
||||
Pension and other post-employment benefits adjustment, net of tax of $(1.9) and $0.0, and $(1.4) and $0.0 during the three and six months ended, respectively
|
1.5
|
|
|
0.9
|
|
|
1.6
|
|
|
1.6
|
|
||||
Total other comprehensive (loss) income, net of tax
|
(77.2
|
)
|
|
40.3
|
|
|
(125.0
|
)
|
|
280.0
|
|
||||
Comprehensive (loss) income
|
(1,033.2
|
)
|
|
158.9
|
|
|
(1,091.1
|
)
|
|
382.5
|
|
||||
Comprehensive income (loss) attributable to noncontrolling interests:
|
|
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|
|
|
|
|
|
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|
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Net income (loss)
|
0.6
|
|
|
(1.9
|
)
|
|
1.8
|
|
|
(4.1
|
)
|
||||
Foreign currency translation adjustment
|
—
|
|
|
(0.1
|
)
|
|
0.2
|
|
|
0.5
|
|
||||
Total comprehensive income (loss) attributable to noncontrolling interests
|
0.6
|
|
|
(2.0
|
)
|
|
2.0
|
|
|
(3.6
|
)
|
||||
Comprehensive income attributable to redeemable noncontrolling interests:
|
|
|
|
|
|
|
|
||||||||
Net income
|
4.0
|
|
|
11.3
|
|
|
4.8
|
|
|
17.1
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total comprehensive income attributable to redeemable noncontrolling interests
|
4.0
|
|
|
11.3
|
|
|
4.8
|
|
|
17.1
|
|
||||
Comprehensive (loss) income attributable to Coty Inc.
|
$
|
(1,037.8
|
)
|
|
$
|
149.6
|
|
|
$
|
(1,097.9
|
)
|
|
$
|
369.0
|
|
|
December 31,
2018 |
|
June 30,
2018 |
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
417.5
|
|
|
$
|
331.6
|
|
Restricted cash
|
27.5
|
|
|
30.6
|
|
||
Trade receivables—less allowances of $72.8 and $81.8, respectively
|
1,542.7
|
|
|
1,536.0
|
|
||
Inventories
|
1,164.6
|
|
|
1,148.9
|
|
||
Prepaid expenses and other current assets
|
562.1
|
|
|
603.9
|
|
||
Total current assets
|
3,714.4
|
|
|
3,651.0
|
|
||
Property and equipment, net
|
1,625.7
|
|
|
1,680.8
|
|
||
Goodwill
|
7,665.0
|
|
|
8,607.1
|
|
||
Other intangible assets, net
|
7,929.4
|
|
|
8,284.4
|
|
||
Deferred income taxes
|
182.7
|
|
|
107.4
|
|
||
Other noncurrent assets
|
153.5
|
|
|
299.5
|
|
||
TOTAL ASSETS
|
$
|
21,270.7
|
|
|
$
|
22,630.2
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
1,818.9
|
|
|
$
|
1,928.6
|
|
Accrued expenses and other current liabilities
|
1,738.8
|
|
|
1,844.4
|
|
||
Short-term debt and current portion of long-term debt
|
255.7
|
|
|
218.9
|
|
||
Income and other taxes payable
|
51.6
|
|
|
52.1
|
|
||
Total current liabilities
|
3,865.0
|
|
|
4,044.0
|
|
||
Long-term debt, net
|
7,560.9
|
|
|
7,305.4
|
|
||
Pension and other post-employment benefits
|
519.6
|
|
|
533.3
|
|
||
Deferred income taxes
|
840.6
|
|
|
842.5
|
|
||
Other noncurrent liabilities
|
385.7
|
|
|
388.5
|
|
||
Total liabilities
|
13,171.8
|
|
|
13,113.7
|
|
||
COMMITMENTS AND CONTINGENCIES (See Note 18)
|
|
|
|
|
|
||
REDEEMABLE NONCONTROLLING INTERESTS
|
487.6
|
|
|
661.3
|
|
||
EQUITY:
|
|
|
|
|
|
||
Preferred Stock, $0.01 par value; 20.0 shares authorized, 5.0 and 5.0 issued and 1.9 and 5.0 outstanding, respectively, at December 31, 2018 and June 30, 2018
|
—
|
|
|
—
|
|
||
Class A Common Stock, $0.01 par value; 1,000.0 shares authorized, 816.2 and 815.8 issued and 751.2 and 750.7 outstanding, respectively, at December 31, 2018 and June 30, 2018
|
8.1
|
|
|
8.1
|
|
||
Additional paid-in capital
|
10,734.9
|
|
|
10,750.8
|
|
||
Accumulated deficit
|
(1,729.7
|
)
|
|
(626.2
|
)
|
||
Accumulated other comprehensive income
|
33.6
|
|
|
158.8
|
|
||
Treasury stock—at cost, shares: 65.0 at December 31, 2018 and June 30, 2018
|
(1,441.8
|
)
|
|
(1,441.8
|
)
|
||
Total Coty Inc. stockholders’ equity
|
7,605.1
|
|
|
8,849.7
|
|
||
Noncontrolling interests
|
6.2
|
|
|
5.5
|
|
||
Total equity
|
7,611.3
|
|
|
8,855.2
|
|
||
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
|
$
|
21,270.7
|
|
|
$
|
22,630.2
|
|
|
Preferred Stock
|
|
Class A
Common Stock |
|
Additional
Paid-in Capital |
|
(Accumulated Deficit)
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Total Coty Inc.
Stockholders’ Equity |
|
Noncontrolling Interests
|
|
Total Equity
|
|
Redeemable
Noncontrolling Interests |
|||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||||||||||||||
BALANCE as previousl
y reported—July 1, 2018
|
5.0
|
|
|
$
|
—
|
|
|
815.8
|
|
|
$
|
8.1
|
|
|
$
|
10,750.8
|
|
|
$
|
(626.2
|
)
|
|
$
|
158.8
|
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
8,849.7
|
|
|
$
|
5.5
|
|
|
$
|
8,855.2
|
|
|
$
|
661.3
|
|
Adjustment due to the adoption of ASU No. 2016-16 (See Note 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(112.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(112.6
|
)
|
|
|
|
|
(112.6
|
)
|
|
|
|
||||||||||
Adjustment due to the adoption of ASC 606 (See Note 3)
|
|
|
|
|
|
|
|
|
|
|
(18.2
|
)
|
|
|
|
|
|
|
|
(18.2
|
)
|
|
|
|
(18.2
|
)
|
|
|
||||||||||||||||||||
BALANCE as adjusted—July 1, 2018
|
5.0
|
|
|
$
|
—
|
|
|
815.8
|
|
|
$
|
8.1
|
|
|
$
|
10,750.8
|
|
|
$
|
(757.0
|
)
|
|
$
|
158.8
|
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
8,718.9
|
|
|
$
|
5.5
|
|
|
$
|
8,724.4
|
|
|
$
|
661.3
|
|
Exercise of employee stock options and restricted stock units
|
|
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
0.7
|
|
|
|
|
0.7
|
|
|
|
||||||||||||||||||
Share-based compensation expense
|
|
|
|
|
|
|
|
|
6.4
|
|
|
|
|
|
|
|
|
|
|
6.4
|
|
|
|
|
6.4
|
|
|
|
||||||||||||||||||||
Dividends ($0.125 per Common Share)
|
|
|
|
|
|
|
|
|
(94.0
|
)
|
|
|
|
|
|
|
|
|
|
(94.0
|
)
|
|
|
|
(94.0
|
)
|
|
|
||||||||||||||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
(12.1
|
)
|
|
|
|
|
|
|
|
(12.1
|
)
|
|
1.2
|
|
|
(10.9
|
)
|
|
0.8
|
|
||||||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(48.0
|
)
|
|
|
|
|
|
(48.0
|
)
|
|
0.2
|
|
|
(47.8
|
)
|
|
|
|
||||||||||||||||||
Distribution to noncontrolling interests, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(1.3
|
)
|
|
(1.3
|
)
|
|
(4.3
|
)
|
|||||||||||||||||||
Additional redeemable noncontrolling interests due to employee grants (See Note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.6
|
)
|
|
|
|
|
(1.6
|
)
|
|
1.6
|
|
||||||||||
Adjustment of redeemable noncontrolling interests to redemption value
|
|
|
|
|
|
|
|
|
37.2
|
|
|
|
|
|
|
|
|
|
|
37.2
|
|
|
|
|
37.2
|
|
|
(37.2
|
)
|
|||||||||||||||||||
BALANCE—September 30, 2018
|
5.0
|
|
|
$
|
—
|
|
|
815.8
|
|
|
$
|
8.1
|
|
|
$
|
10,699.5
|
|
|
$
|
(769.1
|
)
|
|
$
|
110.8
|
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
8,607.5
|
|
|
$
|
5.6
|
|
|
$
|
8,613.1
|
|
|
$
|
622.2
|
|
Cancellation of Preferred Stock
|
(3.1
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
||||||||||
Exercise of employee stock options and restricted stock units
|
|
|
|
|
|
|
0.4
|
|
|
—
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
0.2
|
|
|
|
|
||||||||||
Shares withheld for employee taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
(1.3
|
)
|
|
|
|
||||||||||
Share-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.4
|
|
|
|
|
||||||||||
Dividends ($0.125 per Common Share)
|
|
|
|
|
|
|
|
|
(94.6
|
)
|
|
|
|
|
|
|
|
|
|
(94.6
|
)
|
|
|
|
(94.6
|
)
|
|
|
||||||||||||||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
(960.6
|
)
|
|
|
|
|
|
|
|
(960.6
|
)
|
|
0.6
|
|
|
(960.0
|
)
|
|
4.0
|
|
||||||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(77.2
|
)
|
|
|
|
|
|
(77.2
|
)
|
|
|
|
(77.2
|
)
|
|
|
||||||||||||||||||||
Distribution to noncontrolling interests, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
(11.9
|
)
|
||||||||||||||||||||
Adjustment of redeemable noncontrolling interests to redemption value
|
|
|
|
|
|
|
|
|
126.7
|
|
|
|
|
|
|
|
|
|
|
126.7
|
|
|
|
|
126.7
|
|
|
(126.7
|
)
|
|||||||||||||||||||
BALANCE—December 31, 2018
|
1.9
|
|
|
$
|
—
|
|
|
816.2
|
|
|
$
|
8.1
|
|
|
$
|
10,734.9
|
|
|
$
|
(1,729.7
|
)
|
|
$
|
33.6
|
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
7,605.1
|
|
|
$
|
6.2
|
|
|
$
|
7,611.3
|
|
|
$
|
487.6
|
|
|
Preferred Stock
|
|
Class A
Common Stock
|
|
Additional
Paid-in Capital
|
|
(Accumulated Deficit)
|
|
Accumulated Other Comprehensive Income
|
|
Treasury Stock
|
|
Total Coty Inc.
Stockholders’ Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
|
Redeemable
Noncontrolling Interests
|
|||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||||||||||||||
BALANCE as previousl
y reported—July 1, 2017
|
4.2
|
|
|
$
|
—
|
|
|
812.9
|
|
|
$
|
8.1
|
|
|
$
|
11,203.2
|
|
|
$
|
(459.2
|
)
|
|
$
|
4.4
|
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
9,314.7
|
|
|
$
|
3.0
|
|
|
$
|
9,317.7
|
|
|
$
|
551.1
|
|
Adjustment due to the adoption of ASU No. 2016-09
|
|
|
|
|
|
|
|
|
|
|
8.3
|
|
|
|
|
|
|
|
|
8.3
|
|
|
|
|
8.3
|
|
|
|
||||||||||||||||||||
BALANCE as adjusted—July 1, 2017
|
4.2
|
|
|
$
|
—
|
|
|
812.9
|
|
|
$
|
8.1
|
|
|
$
|
11,203.2
|
|
|
$
|
(450.9
|
)
|
|
$
|
4.4
|
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
9,323.0
|
|
|
$
|
3.0
|
|
|
$
|
9,326.0
|
|
|
$
|
551.1
|
|
Exercise of employee stock options and restricted stock units and related tax benefits
|
|
|
|
|
1.5
|
|
|
—
|
|
|
11.2
|
|
|
|
|
|
|
|
|
|
|
11.2
|
|
|
|
|
11.2
|
|
|
|
||||||||||||||||||
Shares withheld for employee taxes
|
|
|
|
|
|
|
|
|
(3.1
|
)
|
|
|
|
|
|
|
|
|
|
(3.1
|
)
|
|
|
|
(3.1
|
)
|
|
|
||||||||||||||||||||
Share-based compensation expense
|
|
|
|
|
|
|
|
|
8.1
|
|
|
|
|
|
|
|
|
|
|
8.1
|
|
|
|
|
8.1
|
|
|
|
||||||||||||||||||||
Dividends ($0.125 per common share)
|
|
|
|
|
|
|
|
|
(94.3
|
)
|
|
|
|
|
|
|
|
|
|
(94.3
|
)
|
|
|
|
(94.3
|
)
|
|
|
||||||||||||||||||||
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
(19.7
|
)
|
|
|
|
|
|
|
|
(19.7
|
)
|
|
(2.2
|
)
|
|
(21.9
|
)
|
|
5.8
|
|
||||||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
239.1
|
|
|
|
|
|
|
239.1
|
|
|
0.6
|
|
|
239.7
|
|
|
|
|||||||||||||||||||
Distribution to noncontrolling interests, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
(6.4
|
)
|
||||||||||||||||||||
Dilution of redeemable noncontrolling interest due to additional contribution
|
|
|
|
|
|
|
|
|
17.0
|
|
|
|
|
|
|
|
|
|
|
17.0
|
|
|
|
|
17.0
|
|
|
(17.0
|
)
|
|||||||||||||||||||
Adjustment of redeemable noncontrolling interests to redemption value
|
|
|
|
|
|
|
|
|
(29.0
|
)
|
|
|
|
|
|
|
|
|
|
(29.0
|
)
|
|
|
|
(29.0
|
)
|
|
29.0
|
|
|||||||||||||||||||
BALANCE—September 30, 2017
|
4.2
|
|
|
$
|
—
|
|
|
814.4
|
|
|
$
|
8.1
|
|
|
$
|
11,113.1
|
|
|
$
|
(470.6
|
)
|
|
$
|
243.5
|
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
9,452.3
|
|
|
$
|
1.4
|
|
|
$
|
9,453.7
|
|
|
$
|
562.5
|
|
Issuance of Preferred Stock
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
||||||||||||||||||||
Exercise of employee stock options and restricted stock units and related tax benefits
|
|
|
|
|
0.4
|
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
2.5
|
|
|
|
|
2.5
|
|
|
|
|||||||||||||||||||
Shares withheld for employee taxes
|
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
|
||||||||||||||||||||
Share-based compensation expense
|
|
|
|
|
|
|
|
|
9.0
|
|
|
|
|
|
|
|
|
|
|
9.0
|
|
|
|
|
9.0
|
|
|
|
||||||||||||||||||||
Dividends ($0.125 per common share)
|
|
|
|
|
|
|
|
|
(94.4
|
)
|
|
|
|
|
|
|
|
|
|
(94.4
|
)
|
|
|
|
(94.4
|
)
|
|
|
||||||||||||||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
109.2
|
|
|
|
|
|
|
|
|
109.2
|
|
|
(1.9
|
)
|
|
107.3
|
|
|
11.3
|
|
||||||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
40.4
|
|
|
|
|
|
|
40.4
|
|
|
(0.1
|
)
|
|
40.3
|
|
|
|
|||||||||||||||||||
Distribution to noncontrolling interests, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
(25.3
|
)
|
||||||||||||||||||||
Additional redeemable noncontrolling interests due to employee grants (See Note 17)
|
|
|
|
|
|
|
|
|
(8.3
|
)
|
|
|
|
|
|
|
|
|
|
(8.3
|
)
|
|
|
|
(8.3
|
)
|
|
8.3
|
|
|||||||||||||||||||
Proceeds from redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
0.2
|
|
||||||||||||||||||||
Adjustment of redeemable noncontrolling interests to redemption value
|
|
|
|
|
|
|
|
|
(81.3
|
)
|
|
|
|
|
|
|
|
|
|
(81.3
|
)
|
|
|
|
(81.3
|
)
|
|
81.3
|
|
|||||||||||||||||||
BALANCE—December 31, 2017
|
5.2
|
|
|
$
|
—
|
|
|
814.8
|
|
|
$
|
8.1
|
|
|
$
|
10,940.3
|
|
|
$
|
(361.4
|
)
|
|
$
|
283.9
|
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
9,429.1
|
|
|
$
|
(0.6
|
)
|
|
$
|
9,428.5
|
|
|
$
|
638.3
|
|
|
Six Months Ended
December 31, |
||||||
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||
Net (loss) income
|
$
|
(966.1
|
)
|
|
$
|
102.5
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
367.7
|
|
|
350.5
|
|
||
Deferred income taxes
|
(55.9
|
)
|
|
(75.1
|
)
|
||
Provision for bad debts
|
9.4
|
|
|
9.0
|
|
||
Provision for pension and other post-employment benefits
|
18.2
|
|
|
22.2
|
|
||
Share-based compensation
|
8.2
|
|
|
16.2
|
|
||
Asset impairment charges
|
977.7
|
|
|
—
|
|
||
Non-cash restructuring charges
|
23.8
|
|
|
0.2
|
|
||
Other
|
26.4
|
|
|
(5.3
|
)
|
||
Change in operating assets and liabilities, net of effects from purchase of acquired companies:
|
|
|
|
|
|
||
Trade receivables
|
(45.5
|
)
|
|
(246.6
|
)
|
||
Inventories
|
(35.2
|
)
|
|
(22.2
|
)
|
||
Prepaid expenses and other current assets
|
19.7
|
|
|
(47.6
|
)
|
||
Accounts payable
|
(28.6
|
)
|
|
18.7
|
|
||
Accrued expenses and other current liabilities
|
(87.4
|
)
|
|
185.6
|
|
||
Income and other taxes payable
|
12.8
|
|
|
19.5
|
|
||
Other noncurrent assets
|
24.7
|
|
|
(14.9
|
)
|
||
Other noncurrent liabilities
|
(32.2
|
)
|
|
(4.9
|
)
|
||
Net cash provided by operating activities
|
237.7
|
|
|
307.8
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Capital expenditures
|
(259.3
|
)
|
|
(232.2
|
)
|
||
Payment for business combinations and asset acquisitions, net of cash acquired
|
(40.8
|
)
|
|
(264.6
|
)
|
||
Proceeds from sale of asset
|
—
|
|
|
2.8
|
|
||
Net cash used in investing activities
|
(300.1
|
)
|
|
(494.0
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Net proceeds from short-term debt, original maturity less than three months
|
39.7
|
|
|
71.5
|
|
||
Proceeds from revolving loan facilities
|
1,076.6
|
|
|
1,437.0
|
|
||
Repayments of revolving loan facilities
|
(644.8
|
)
|
|
(1,166.4
|
)
|
||
Repayments of term loans and other long-term debt
|
(95.6
|
)
|
|
(95.5
|
)
|
||
Dividend payment
|
(188.4
|
)
|
|
(188.1
|
)
|
||
Net proceeds from issuance of Class A Common Stock and Series A Preferred Stock
|
0.9
|
|
|
13.7
|
|
||
Net proceeds from foreign currency contracts
|
2.4
|
|
|
8.2
|
|
||
Distributions to noncontrolling interests, redeemable noncontrolling interests and mandatorily redeemable financial instruments
|
(22.9
|
)
|
|
(40.0
|
)
|
||
Payment of debt issuance costs
|
(10.7
|
)
|
|
(4.0
|
)
|
||
All other
|
(3.5
|
)
|
|
(3.2
|
)
|
||
Net cash provided by financing activities
|
153.7
|
|
|
33.2
|
|
||
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(8.5
|
)
|
|
8.0
|
|
||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
82.8
|
|
|
(145.0
|
)
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period
|
362.2
|
|
|
570.7
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period
|
$
|
445.0
|
|
|
$
|
425.7
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
|
|
|
|
|
|
||
Cash paid during the period for interest
|
$
|
140.7
|
|
|
$
|
129.4
|
|
Cash received during the period for settlement of interest rate swaps (See Note 13)
|
43.2
|
|
|
—
|
|
||
Cash paid during the period for income taxes, net of refunds received
|
57.6
|
|
|
57.5
|
|
||
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Accrued capital expenditure additions
|
$
|
83.3
|
|
|
$
|
72.6
|
|
Non-cash contingent consideration for business combination (see Note 5)
|
—
|
|
|
5.0
|
|
|
Three Months Ended
December 31, 2017 |
|
Six Months Ended
December 31, 2017 |
||||||||||||||||||||
|
As Previously Reported
|
|
Effect of Adoption of ASU No. 2017-07
|
|
As Adjusted
|
|
As Previously Reported
|
|
Effect of Adoption of ASU No. 2017-07
|
|
As Adjusted
|
||||||||||||
Cost of sales
|
$
|
1,025.0
|
|
|
$
|
(0.1
|
)
|
|
$
|
1,024.9
|
|
|
$
|
1,899.3
|
|
|
$
|
(0.2
|
)
|
|
$
|
1,899.1
|
|
Selling, general and administrative expenses
|
1,319.9
|
|
|
(0.7
|
)
|
|
1,319.2
|
|
|
2,511.7
|
|
|
(1.4
|
)
|
|
2,510.3
|
|
||||||
Operating income
|
174.4
|
|
|
0.8
|
|
|
175.2
|
|
|
203.1
|
|
|
1.6
|
|
|
204.7
|
|
||||||
Other expense, net
|
3.4
|
|
|
0.8
|
|
|
4.2
|
|
|
7.1
|
|
|
1.6
|
|
|
8.7
|
|
||||||
Net income
|
118.6
|
|
|
—
|
|
|
118.6
|
|
|
102.5
|
|
|
—
|
|
|
102.5
|
|
|
As reported (New Revenue Standard)
|
|
Current period adjustments
|
|
As adjusted (previous revenue standard)
|
||||||
Net revenues
|
$
|
2,511.2
|
|
|
$
|
(23.9
|
)
|
|
$
|
2,487.3
|
|
Selling, general and administrative expenses
|
1,284.0
|
|
|
0.2
|
|
|
1,284.2
|
|
|||
Net loss
|
(956.0
|
)
|
|
(18.3
|
)
|
|
(974.3
|
)
|
|||
Net loss attributable to Coty Inc.
|
(960.6
|
)
|
|
(18.1
|
)
|
|
(978.7
|
)
|
|||
|
|
|
|
|
|
||||||
Net loss attributable to Coty Inc. per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.28
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(1.30
|
)
|
Diluted
|
(1.28
|
)
|
|
(0.02
|
)
|
|
(1.30
|
)
|
|
As reported (New Revenue Standard)
|
|
Current period adjustments
|
|
As adjusted (previous revenue standard)
|
||||||
Net revenues
|
$
|
4,542.5
|
|
|
$
|
(16.7
|
)
|
|
$
|
4,525.8
|
|
Selling, general and administrative expenses
|
2,406.3
|
|
|
1.3
|
|
|
2,407.6
|
|
|||
Net loss
|
(966.1
|
)
|
|
(13.4
|
)
|
|
(979.5
|
)
|
|||
Net loss attributable to Coty Inc.
|
(972.7
|
)
|
|
(13.6
|
)
|
|
(986.3
|
)
|
|||
|
|
|
|
|
|
||||||
Net loss attributable to Coty Inc. per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.30
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(1.32
|
)
|
Diluted
|
(1.30
|
)
|
|
(0.02
|
)
|
|
(1.32
|
)
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
SEGMENT DATA
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
Luxury
|
$
|
1,017.5
|
|
|
$
|
951.2
|
|
|
$
|
1,810.4
|
|
|
$
|
1,715.6
|
|
Consumer Beauty
|
967.8
|
|
|
1,138.6
|
|
|
1,796.6
|
|
|
2,182.0
|
|
||||
Professional Beauty
|
525.9
|
|
|
547.8
|
|
|
935.5
|
|
|
978.3
|
|
||||
Total
|
$
|
2,511.2
|
|
|
$
|
2,637.6
|
|
|
$
|
4,542.5
|
|
|
$
|
4,875.9
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Luxury
|
$
|
113.6
|
|
|
$
|
85.1
|
|
|
$
|
162.3
|
|
|
$
|
141.8
|
|
Consumer Beauty
|
(906.9
|
)
|
|
99.3
|
|
|
(925.5
|
)
|
|
161.2
|
|
||||
Professional Beauty
|
73.8
|
|
|
73.5
|
|
|
78.8
|
|
|
71.8
|
|
||||
Corporate
|
(85.1
|
)
|
|
(82.7
|
)
|
|
(140.9
|
)
|
|
(170.1
|
)
|
||||
Total
|
$
|
(804.6
|
)
|
|
$
|
175.2
|
|
|
$
|
(825.3
|
)
|
|
$
|
204.7
|
|
Reconciliation:
|
|
|
|
|
|
|
|
||||||||
Operating (loss) income
|
$
|
(804.6
|
)
|
|
$
|
175.2
|
|
|
$
|
(825.3
|
)
|
|
$
|
204.7
|
|
Interest expense, net
|
68.3
|
|
|
60.3
|
|
|
132.4
|
|
|
126.7
|
|
||||
Other expense, net
|
4.8
|
|
|
4.2
|
|
|
7.5
|
|
|
8.7
|
|
||||
(Loss) income before income taxes
|
$
|
(877.7
|
)
|
|
$
|
110.7
|
|
|
$
|
(965.2
|
)
|
|
$
|
69.3
|
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||
PRODUCT CATEGORY
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Fragrance
|
43.5
|
%
|
|
40.7
|
%
|
|
42.3
|
%
|
|
39.1
|
%
|
Color Cosmetics
|
23.3
|
|
|
24.1
|
|
|
24.7
|
|
|
26.3
|
|
Hair Care
|
24.4
|
|
|
24.5
|
|
|
24.3
|
|
|
24.2
|
|
Skin & Body Care
|
8.8
|
|
|
10.7
|
|
|
8.7
|
|
|
10.4
|
|
Total Coty Inc.
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Estimated
fair value as previously reported (a) |
|
Measurement period adjustments
(b)
|
|
Final fair value as adjusted
|
|
Estimated
useful life (in years) |
||||||
Inventories
|
$
|
47.9
|
|
|
$
|
—
|
|
|
$
|
47.9
|
|
|
|
Property, plant and equipment
|
5.8
|
|
|
—
|
|
|
5.8
|
|
|
1 - 3
|
|||
License and distribution rights
|
177.8
|
|
|
6.7
|
|
|
184.5
|
|
|
3 - 15
|
|||
Goodwill
|
34.9
|
|
|
(9.4
|
)
|
|
25.5
|
|
|
Indefinite
|
|||
Net other liabilities
|
(10.1
|
)
|
|
2.7
|
|
|
(7.4
|
)
|
|
|
|||
Total purchase price
|
$
|
256.3
|
|
|
$
|
—
|
|
|
$
|
256.3
|
|
|
|
|
|
(a)
|
As previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018.
|
(b)
|
The Company recorded measurement period adjustments in the first quarter of fiscal 2019. The measurement period adjustments related to an increase in the value of the License and distribution rights due to changes in assumptions that were used at the date of acquisition for valuation purposes. The measurement period adjustment related to the decrease in net other liabilities acquired was a result of obtaining new facts and circumstances about acquired accrued expenses that existed as of the acquisition date. All measurement period adjustments were offset against Goodwill.
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Global Integration Activities
|
$
|
22.2
|
|
|
$
|
15.1
|
|
|
$
|
28.7
|
|
|
$
|
24.9
|
|
2018 Restructuring Actions
|
(0.3
|
)
|
|
10.8
|
|
|
8.8
|
|
|
11.9
|
|
||||
Other Restructuring
|
(0.4
|
)
|
|
(4.2
|
)
|
|
(0.5
|
)
|
|
(3.9
|
)
|
||||
Total
|
$
|
21.5
|
|
|
$
|
21.7
|
|
|
$
|
37.0
|
|
|
$
|
32.9
|
|
|
Severance and Employee Benefits
|
|
Third-Party Contract Terminations
|
|
Fixed Asset Write-offs
|
|
Other Exit Costs
|
|
Total
|
||||||||||
Fiscal 2017
|
$
|
333.9
|
|
|
$
|
22.4
|
|
|
$
|
4.6
|
|
|
$
|
3.3
|
|
|
$
|
364.2
|
|
Fiscal 2018
|
67.5
|
|
|
19.3
|
|
|
14.3
|
|
|
5.4
|
|
|
106.5
|
|
|||||
Fiscal 2019
|
1.6
|
|
|
1.8
|
|
|
23.8
|
|
|
1.5
|
|
|
28.7
|
|
|||||
Cumulative through December 31, 2018
|
$
|
403.0
|
|
|
$
|
43.5
|
|
|
$
|
42.7
|
|
|
$
|
10.2
|
|
|
$
|
499.4
|
|
|
Severance and
Employee Benefits |
|
Third-Party
Contract Terminations |
|
Fixed Asset Write-offs
|
|
Other
Exit Costs |
|
Total
Program Costs |
||||||||||
Balance—July 1, 2018
|
$
|
203.0
|
|
|
$
|
17.0
|
|
|
$
|
—
|
|
|
$
|
3.1
|
|
|
$
|
223.1
|
|
Restructuring charges
|
7.1
|
|
|
1.8
|
|
|
23.8
|
|
|
1.7
|
|
|
34.4
|
|
|||||
Payments
|
(75.7
|
)
|
|
(6.1
|
)
|
|
—
|
|
|
(2.2
|
)
|
|
(84.0
|
)
|
|||||
Changes in estimates
|
(5.5
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(5.7
|
)
|
|||||
Non-cash utilization
|
—
|
|
|
—
|
|
|
(23.8
|
)
|
|
—
|
|
|
(23.8
|
)
|
|||||
Effect of exchange rates
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|||||
Balance—December 31, 2018
|
$
|
127.4
|
|
|
$
|
12.7
|
|
|
$
|
—
|
|
|
$
|
2.4
|
|
|
$
|
142.5
|
|
|
Severance and Employee Benefits
|
|
Third-Party Contract Terminations
|
|
Fixed Asset Write-offs
|
|
Other Exit Costs
|
|
Total
|
||||||||||
Fiscal 2018
|
$
|
63.5
|
|
|
$
|
0.2
|
|
|
$
|
1.3
|
|
|
$
|
3.4
|
|
|
$
|
68.4
|
|
Fiscal 2019
|
7.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
8.8
|
|
|||||
Cumulative through December 31, 2018
|
$
|
71.4
|
|
|
$
|
0.2
|
|
|
$
|
1.3
|
|
|
$
|
4.3
|
|
|
$
|
77.2
|
|
|
Severance and
Employee
Benefits
|
|
Third-Party
Contract
Terminations
|
|
Other Exit Costs
|
|
Total
Program
Costs
|
||||||||
Balance—July 1, 2018
|
$
|
48.0
|
|
|
$
|
0.2
|
|
|
$
|
3.3
|
|
|
$
|
51.5
|
|
Restructuring charges
|
9.2
|
|
|
—
|
|
|
0.9
|
|
|
10.1
|
|
||||
Payments
|
(30.4
|
)
|
|
—
|
|
|
(1.3
|
)
|
|
(31.7
|
)
|
||||
Changes in estimates
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
||||
Effect of exchange rates
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
||||
Balance—December 31, 2018
|
$
|
24.8
|
|
|
$
|
0.2
|
|
|
$
|
2.9
|
|
|
$
|
27.9
|
|
|
December 31,
2018 |
|
June 30,
2018 |
||||
Raw materials
|
$
|
289.6
|
|
|
$
|
278.6
|
|
Work-in-process
|
18.4
|
|
|
21.8
|
|
||
Finished goods
|
856.6
|
|
|
848.5
|
|
||
Total inventories
|
$
|
1,164.6
|
|
|
$
|
1,148.9
|
|
|
Luxury
|
|
Consumer Beauty
|
|
Professional Beauty
|
|
Total
|
||||||||
Gross balance at June 30, 2018
|
$
|
3,366.6
|
|
|
$
|
4,927.5
|
|
|
$
|
953.8
|
|
|
$
|
9,247.9
|
|
Accumulated impairments
|
(403.7
|
)
|
|
(237.1
|
)
|
|
—
|
|
|
(640.8
|
)
|
||||
Net balance at June 30, 2018
|
$
|
2,962.9
|
|
|
$
|
4,690.4
|
|
|
$
|
953.8
|
|
|
$
|
8,607.1
|
|
|
|
|
|
|
|
|
|
||||||||
Changes during the period ended December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Measurement period adjustments
(a)
|
(10.5
|
)
|
|
0.6
|
|
|
0.5
|
|
|
(9.4
|
)
|
||||
Foreign currency translation
|
(30.2
|
)
|
|
(51.5
|
)
|
|
(18.5
|
)
|
|
(100.2
|
)
|
||||
Impairment charges
|
—
|
|
|
(832.5
|
)
|
|
—
|
|
|
(832.5
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Gross balance at December 31, 2018
|
$
|
3,325.9
|
|
|
$
|
4,876.6
|
|
|
$
|
935.8
|
|
|
$
|
9,138.3
|
|
Accumulated impairments
|
(403.7
|
)
|
|
(1,069.6
|
)
|
|
—
|
|
|
(1,473.3
|
)
|
||||
Net balance at December 31, 2018
|
$
|
2,922.2
|
|
|
$
|
3,807.0
|
|
|
$
|
935.8
|
|
|
$
|
7,665.0
|
|
|
|
|
December 31, 2018
|
|
June 30,
2018 |
||||
Indefinite-lived other intangible assets
|
$
|
3,052.0
|
|
|
$
|
3,186.2
|
|
Finite-lived other intangible assets, net
|
4,877.4
|
|
|
5,098.2
|
|
||
Total Other intangible assets, net
|
$
|
7,929.4
|
|
|
$
|
8,284.4
|
|
|
Luxury
|
|
Consumer Beauty
|
|
Professional Beauty
|
|
Total
|
||||||||
Gross balance at June 30, 2018
|
$
|
414.6
|
|
|
$
|
1,703.1
|
|
|
$
|
1,266.3
|
|
|
$
|
3,384.0
|
|
Accumulated impairments
|
(118.8
|
)
|
|
(75.9
|
)
|
|
(3.1
|
)
|
|
(197.8
|
)
|
||||
Net balance at June 30, 2018
|
295.8
|
|
|
1,627.2
|
|
|
1,263.2
|
|
|
3,186.2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Changes during the period ended December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
(5.8
|
)
|
|
(7.1
|
)
|
|
(7.7
|
)
|
|
(20.6
|
)
|
||||
Impairment charges
|
(22.8
|
)
|
|
(90.8
|
)
|
|
—
|
|
|
(113.6
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Gross balance at December 31, 2018
|
408.8
|
|
|
1,696.0
|
|
|
1,258.6
|
|
|
3,363.4
|
|
||||
Accumulated impairments
|
(141.6
|
)
|
|
(166.7
|
)
|
|
(3.1
|
)
|
|
(311.4
|
)
|
||||
Net balance at December 31, 2018
|
$
|
267.2
|
|
|
$
|
1,529.3
|
|
|
$
|
1,255.5
|
|
|
$
|
3,052.0
|
|
|
Cost
|
|
Accumulated Amortization
|
|
Accumulated Impairment
|
|
Net
|
||||||||
June 30, 2018
|
|
|
|
|
|
|
|
||||||||
License agreements
|
$
|
3,362.7
|
|
|
$
|
(792.9
|
)
|
|
$
|
—
|
|
|
$
|
2,569.8
|
|
Customer relationships
|
1,960.5
|
|
|
(508.7
|
)
|
|
(5.5
|
)
|
|
1,446.3
|
|
||||
Trademarks
|
1,002.1
|
|
|
(185.5
|
)
|
|
(0.4
|
)
|
|
816.2
|
|
||||
Product formulations and technology
|
361.2
|
|
|
(95.3
|
)
|
|
—
|
|
|
265.9
|
|
||||
Total
|
$
|
6,686.5
|
|
|
$
|
(1,582.4
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
5,098.2
|
|
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
License agreements
(a)
|
$
|
3,259.9
|
|
|
$
|
(810.7
|
)
|
|
$
|
(19.6
|
)
|
|
$
|
2,429.6
|
|
Customer relationships
(a)
|
1,949.7
|
|
|
(572.0
|
)
|
|
(5.5
|
)
|
|
1,372.2
|
|
||||
Trademarks
(b)
|
1,040.2
|
|
|
(207.1
|
)
|
|
(0.4
|
)
|
|
832.7
|
|
||||
Product formulations and technology
|
353.9
|
|
|
(111.0
|
)
|
|
—
|
|
|
242.9
|
|
||||
Total
|
$
|
6,603.7
|
|
|
$
|
(1,700.8
|
)
|
|
$
|
(25.5
|
)
|
|
$
|
4,877.4
|
|
|
|
|
December 31, 2018
|
|
June 30,
2018 |
||||
Short-term debt
|
$
|
54.3
|
|
|
$
|
9.2
|
|
2018 Coty Credit Agreement
|
|
|
|
||||
2018 Coty Revolving Credit Facility due April 2023
|
783.9
|
|
|
368.1
|
|
||
2018 Coty Term A Facility due April 2023
|
3,242.6
|
|
|
3,371.5
|
|
||
2018 Coty Term B Facility due April 2025
|
2,359.6
|
|
|
2,390.5
|
|
||
Senior Unsecured Notes
|
|
|
|
||||
2026 Dollar Notes due April 2026
|
550.0
|
|
|
550.0
|
|
||
2023 Euro Notes due April 2023
|
628.6
|
|
|
640.9
|
|
||
2026 Euro Notes due April 2026
|
285.7
|
|
|
291.4
|
|
||
Other long-term debt and capital lease obligations
|
1.3
|
|
|
1.6
|
|
||
Total debt
|
7,906.0
|
|
|
7,623.2
|
|
||
Less: Short-term debt and current portion of long-term debt
|
(255.7
|
)
|
|
(218.9
|
)
|
||
Total Long-term debt
|
7,650.3
|
|
|
7,404.3
|
|
||
Less: Unamortized debt issuance costs
(a)
|
(77.7
|
)
|
|
(86.2
|
)
|
||
Less: Discount on Long-term debt
|
(11.7
|
)
|
|
(12.7
|
)
|
||
Total Long-term debt, net
|
$
|
7,560.9
|
|
|
$
|
7,305.4
|
|
|
|
•
|
LIBOR of the applicable qualified currency, of which the Company can elect the applicable one, two, three, six or twelve month rate, plus the applicable margin; or
|
•
|
Alternate base rate (“ABR”) plus the applicable margin.
|
Pricing Tier
|
|
Total Net Leverage Ratio:
|
|
LIBOR plus:
|
|
Alternative Base Rate Margin:
|
1.0
|
|
Greater than or equal to 4.75:1
|
|
2.000%
|
|
1.000%
|
2.0
|
|
Less than 4.75:1 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%
|
|
—%
|
Pricing Tier
|
|
Debt Ratings S&P/Moody’s:
|
|
LIBOR plus:
|
|
Alternative Base Rate Margin:
|
5.0
|
|
Less than BB+/Ba1
|
|
2.000%
|
|
1.000%
|
4.0
|
|
BB+/Ba1
|
|
1.750%
|
|
0.750%
|
3.0
|
|
BBB-/Baa3
|
|
1.500%
|
|
0.500%
|
2.0
|
|
BBB/Baa2
|
|
1.250%
|
|
0.250%
|
1.0
|
|
BBB+/Baa1 or higher
|
|
1.125%
|
|
0.125%
|
|
December 31, 2018
|
|
June 30, 2018
|
||||||||
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
||||
2018 Coty Credit Agreement
|
6,386.1
|
|
|
5,947.8
|
|
|
6,130.1
|
|
|
6,070.8
|
|
Senior Unsecured Notes
|
1,464.3
|
|
|
1,278.3
|
|
|
1,482.3
|
|
|
1,449.9
|
|
Quarterly Test Period Ending
|
Total Net Leverage Ratio
(a)
|
December 31, 2018
|
5.50 to 1.00
|
March 31, 2019 through June 30, 2019
|
5.25 to 1.00
|
September 30, 2019 through December 31, 2019
|
5.00 to 1.00
|
March 31, 2020 through June 30, 2020
|
4.75 to 1.00
|
September 30, 2020 through December 31, 2020
|
4.50 to 1.00
|
March 31, 2021 through June 30, 2021
|
4.25 to 1.00
|
September 30, 2021 through June 30, 2023
|
4.00 to 1.00
|
|
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest expense
|
$
|
74.1
|
|
|
$
|
69.6
|
|
|
$
|
146.5
|
|
|
$
|
137.0
|
|
Foreign exchange gains, net of derivative contracts
|
(0.2
|
)
|
|
(6.9
|
)
|
|
(3.8
|
)
|
|
(5.9
|
)
|
||||
Interest income
|
(5.6
|
)
|
|
(2.4
|
)
|
|
(10.3
|
)
|
|
(4.4
|
)
|
||||
Total interest expense, net
|
$
|
68.3
|
|
|
$
|
60.3
|
|
|
$
|
132.4
|
|
|
$
|
126.7
|
|
|
Three Months Ended December 31,
|
||||||||||||||||||||||||||||||
|
Pension Plans
|
|
Other Post-
Employment Benefits
|
|
|
||||||||||||||||||||||||||
|
U.S.
|
|
International
|
|
|
Total
|
|||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8.6
|
|
|
$
|
9.8
|
|
|
$
|
0.3
|
|
|
$
|
0.5
|
|
|
$
|
8.9
|
|
|
$
|
10.3
|
|
Interest cost
|
0.2
|
|
|
0.1
|
|
|
3.3
|
|
|
3.1
|
|
|
0.5
|
|
|
0.6
|
|
|
4.0
|
|
|
3.8
|
|
||||||||
Expected return on plan assets
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
(1.9
|
)
|
||||||||
Amortization of prior service cost (credit)
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
(1.5
|
)
|
|
(1.4
|
)
|
|
(1.4
|
)
|
|
(1.3
|
)
|
||||||||
Amortization of net (gain) loss
|
(0.2
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
0.4
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|
0.2
|
|
||||||||
Net periodic benefit cost (credit)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9.8
|
|
|
$
|
11.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
9.1
|
|
|
$
|
11.1
|
|
|
Six Months Ended December 31,
|
||||||||||||||||||||||||||||||
|
Pension Plans
|
|
Other Post-
Employment Benefits |
|
|
||||||||||||||||||||||||||
|
U.S.
|
|
International
|
|
|
Total
|
|||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16.8
|
|
|
$
|
19.6
|
|
|
$
|
0.6
|
|
|
$
|
1.0
|
|
|
$
|
17.4
|
|
|
$
|
20.6
|
|
Interest cost
|
0.4
|
|
|
0.3
|
|
|
6.6
|
|
|
6.2
|
|
|
1.0
|
|
|
1.2
|
|
|
8.0
|
|
|
7.7
|
|
||||||||
Expected return on plan assets
|
—
|
|
|
—
|
|
|
(4.2
|
)
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
(4.2
|
)
|
|
(3.8
|
)
|
||||||||
Amortization of prior service cost (credit)
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
(3.0
|
)
|
|
(2.8
|
)
|
|
(2.8
|
)
|
|
(2.6
|
)
|
||||||||
Amortization of net (gain) loss
|
(0.4
|
)
|
|
(0.3
|
)
|
|
0.2
|
|
|
0.7
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
0.3
|
|
||||||||
Net periodic benefit cost (credit)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19.6
|
|
|
$
|
22.9
|
|
|
$
|
(1.4
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
18.2
|
|
|
$
|
22.2
|
|
Gain (Loss) Recognized in OCI
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Foreign exchange forward contracts
|
$
|
0.4
|
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
$
|
(0.2
|
)
|
Interest rate swap contracts
|
(21.0
|
)
|
|
11.0
|
|
|
(15.9
|
)
|
|
11.5
|
|
||||
Net investment hedge
|
74.3
|
|
|
(10.9
|
)
|
|
78.6
|
|
|
(33.0
|
)
|
Condensed Consolidated Statements of Operations
Classification of Gain (Loss) Reclassified from AOCI/(L) |
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Foreign exchange forward contracts:
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
Cost of sales
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.5
|
|
||||
Interest rate swap contracts:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
$
|
3.9
|
|
|
$
|
(0.6
|
)
|
|
$
|
7.7
|
|
|
$
|
(0.9
|
)
|
Condensed Consolidated Statements of Operations
Classification of Gain (Loss) Recognized in Operations |
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Selling, general and administrative expenses
|
$
|
0.1
|
|
|
$
|
0.3
|
|
|
$
|
0.1
|
|
|
$
|
(0.9
|
)
|
Interest expense, net
|
(5.6
|
)
|
|
5.0
|
|
|
(1.6
|
)
|
|
13.1
|
|
||||
Other expense, net
|
0.1
|
|
|
(0.2
|
)
|
|
1.4
|
|
|
—
|
|
Declaration Date
|
|
Dividend Type
|
|
Dividend Per Share
|
|
Holders of Record Date
|
|
Dividend Value
|
|
Dividend Payment Date
|
|
Dividends Paid
|
|
Dividends Payable
(a)
|
||||||||
Fiscal 2019
|
||||||||||||||||||||||
August 21, 2018
|
|
Quarterly
|
|
$
|
0.125
|
|
|
August 31, 2018
|
|
$
|
94.6
|
|
|
September 14, 2018
|
|
$
|
93.8
|
|
|
$
|
0.8
|
|
November 7, 2018
|
|
Quarterly
|
|
$
|
0.125
|
|
|
November 30, 2018
|
|
$
|
95.1
|
|
|
December 14, 2018
|
|
$
|
93.9
|
|
|
$
|
1.2
|
|
Fiscal 2019
|
|
|
|
$
|
0.250
|
|
|
|
|
$
|
189.7
|
|
|
|
|
$
|
187.7
|
|
|
$
|
2.0
|
|
|
|
(a)
|
The dividend payable is the value of the remaining dividends payable upon settlement of the RSUs and phantom units outstanding as of the Holders of Record Date.
|
|
|
|
Foreign Currency Translation Adjustments
|
|
|
|
|
||||||||||||
|
Gain (loss) on Cash Flow Hedges
|
|
Gain on Net Investment Hedge
|
|
Other Foreign Currency Translation Adjustments
|
|
Pension and Other Post-Employment Benefit Plans
(a)
|
|
Total
|
||||||||||
Balance—July 1, 2018
|
$
|
31.7
|
|
|
$
|
115.0
|
|
|
$
|
(44.3
|
)
|
|
$
|
56.4
|
|
|
$
|
158.8
|
|
Other comprehensive (loss) income before reclassifications
|
(11.8
|
)
|
|
78.6
|
|
|
(187.7
|
)
|
|
—
|
|
|
(120.9
|
)
|
|||||
Net amounts reclassified from AOCI/(L)
|
(5.9
|
)
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
(4.3
|
)
|
|||||
Net current-period other comprehensive (loss) income
|
(17.7
|
)
|
|
78.6
|
|
|
(187.7
|
)
|
|
1.6
|
|
|
(125.2
|
)
|
|||||
Balance—December 31, 2018
|
$
|
14.0
|
|
|
$
|
193.6
|
|
|
$
|
(232.0
|
)
|
|
$
|
58.0
|
|
|
$
|
33.6
|
|
|
|
|
|
|
Foreign Currency Translation Adjustments
|
|
|
|
|
||||||||||||
|
Gain on Cash Flow Hedges
|
|
Loss on Net Investment Hedges
|
|
Other Foreign Currency Translation Adjustments
|
|
Pension and Other Post-Employment Benefit Plans
|
|
Total
|
||||||||||
Balance—July 1, 2017
|
$
|
12.6
|
|
|
$
|
(23.7
|
)
|
|
$
|
(20.8
|
)
|
|
$
|
36.3
|
|
|
$
|
4.4
|
|
Other comprehensive income (loss) before reclassifications
|
7.2
|
|
|
(33.0
|
)
|
|
303.6
|
|
|
1.6
|
|
|
279.4
|
|
|||||
Net amounts reclassified from AOCI/(L)
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
Net current-period other comprehensive income (loss)
|
7.3
|
|
|
(33.0
|
)
|
|
303.6
|
|
|
1.6
|
|
|
279.5
|
|
|||||
Balance—December 31, 2017
|
$
|
19.9
|
|
|
$
|
(56.7
|
)
|
|
$
|
282.8
|
|
|
$
|
37.9
|
|
|
$
|
283.9
|
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Equity plan expense
|
$
|
4.4
|
|
|
$
|
9.0
|
|
|
$
|
10.8
|
|
|
$
|
17.1
|
|
Liability plan (income) expense
|
(2.6
|
)
|
|
0.4
|
|
|
(2.6
|
)
|
|
(0.9
|
)
|
||||
Fringe expense
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
1.8
|
|
||||
Total share-based compensation expense
|
$
|
2.3
|
|
|
$
|
9.9
|
|
|
$
|
8.7
|
|
|
$
|
18.0
|
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except per share data)
|
||||||||||||||
Net (loss) income attributable to Coty Inc.
|
$
|
(960.6
|
)
|
|
$
|
109.2
|
|
|
$
|
(972.7
|
)
|
|
$
|
89.5
|
|
Weighted-average common shares outstanding—Basic
|
751.1
|
|
|
749.6
|
|
|
751.0
|
|
|
749.1
|
|
||||
Effect of dilutive stock options and Series A Preferred Stock
(a)
|
—
|
|
|
1.2
|
|
|
—
|
|
|
1.4
|
|
||||
Effect of restricted stock and RSUs
(b)
|
—
|
|
|
1.9
|
|
|
—
|
|
|
2.0
|
|
||||
Weighted-average common shares outstanding—Diluted
|
751.1
|
|
|
752.7
|
|
|
751.0
|
|
|
752.5
|
|
||||
Net (loss) income attributable to Coty Inc. per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(1.28
|
)
|
|
$
|
0.15
|
|
|
$
|
(1.30
|
)
|
|
$
|
0.12
|
|
Diluted
|
(1.28
|
)
|
|
0.15
|
|
|
(1.30
|
)
|
|
0.12
|
|
|
|
(a)
|
For the
three and six months ended December 31, 2018
, outstanding stock options and Series A Preferred Stock with purchase or conversion rights to purchase shares of common stock were excluded in the computation of diluted loss per share due to the net loss incurred during the period. For the
three and six months ended December 31, 2017
, outstanding stock options and Series A Preferred Stock with purchase or conversion rights to purchase
15.3 million
and
13.6 million
shares of common stock, respectively, were excluded in the computation of diluted EPS as their inclusion would be anti-dilutive.
|
(b)
|
For the
three and six months ended December 31, 2018
, RSUs were excluded in the computation of diluted loss per share due to the net loss incurred during the period. For the
three and six months ended December 31, 2017
,
2.6 million
and
4.1 million
of outstanding RSUs, respectively, were excluded in the computation of diluted EPS as their inclusion would be anti-dilutive.
|
•
|
our ability to develop and achieve our global business strategies, our ability to compete effectively in the beauty industry and achieve the benefits contemplated by our strategic initiatives within the expected time frame or at all;
|
•
|
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 launches or relaunches and their associated costs and discounting, and consumer receptiveness to our marketing and consumer engagement activities (including digital marketing and media);
|
•
|
use of estimates and assumptions in preparing our financial statements, including with regard to revenue recognition, income taxes, the assessment of goodwill, other intangible assets and long-lived assets for impairment, the market value of inventory, pension expense and the fair value of acquired assets and liabilities associated with acquisitions and the fair value of redeemable noncontrolling interests;
|
•
|
the impact of any future impairments;
|
•
|
managerial, integration, operational, regulatory, legal and financial risks, including diversion of management attention to and management of cash flows, expenses and costs associated with multiple ongoing and future strategic initiatives and internal reorganizations;
|
•
|
the continued integration of the P&G Beauty Business and other recent acquisitions with our business, operations, systems, financial data and culture and the ability to realize synergies, avoid future supply chain and other business disruptions, reduce costs (including through our cash efficiency initiatives) and realize other potential efficiencies and benefits (including through our restructuring initiatives) at the levels and at the costs and within the time frames contemplated or at all;
|
•
|
increased competition, consolidation among retailers, shifts in consumers’ preferred distribution and marketing channels (including to digital and luxury channels), distribution and shelf-space resets or reductions, compression of go-to-market cycles, changes in product and marketing requirements by retailers, reductions in retailer inventory levels and order lead-times or changes in purchasing patterns, and other changes in the retail, e-commerce and wholesale environment in which we do business and sell our products and our ability to respond to such changes;
|
•
|
our and our business partners’ and licensors’ abilities to obtain, maintain and protect the intellectual property used in our and their respective businesses, protect our and their respective reputations (including those of our and their executives or influencers), public goodwill, and defend claims by third parties for infringement of intellectual property rights;
|
•
|
any change to our capital allocation and/or cash management priorities;
|
•
|
any unanticipated problems, liabilities or other challenges associated with an acquired business which could result in increased risk or new, unanticipated or unknown liabilities, including with respect to environmental, competition and other regulatory, compliance or legal matters;
|
•
|
our international operations and joint ventures, including enforceability and effectiveness of our joint venture agreements and reputational, compliance, regulatory, economic and foreign political risks, including difficulties and costs associated with maintaining compliance with a broad variety of complex local and international regulations;
|
•
|
our dependence on certain licenses (especially in our Luxury division) and our ability to renew expiring licenses on favorable terms or at all;
|
•
|
our dependence on entities performing outsourced functions, including outsourcing of distribution functions, third-party manufacturers, logistics and supply chain suppliers, and other suppliers, including third-party software providers;
|
•
|
administrative, product development and other difficulties in meeting the expected timing of market expansions, product launches and marketing efforts;
|
•
|
global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect our business, financial performance, operations or products, including the impact of Brexit, the current U.S. administration, the results of elections in European countries and in Brazil, changes in the U.S. tax code and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in the U.S. and in other regions where we operate including the European Union and China;
|
•
|
currency exchange rate volatility and currency devaluation;
|
•
|
the number, type, outcomes (by judgment, order or settlement) and costs of current or future legal, compliance, tax, regulatory or administrative proceedings, investigations and/or litigation;
|
•
|
our ability to manage seasonal factors and other variability and to anticipate future business trends and needs;
|
•
|
disruptions in operations and sales, including due to disruptions in supply chain, logistics, restructurings and other business alignment activities, manufacturing or information technology systems, labor disputes, extreme weather and natural disasters, and the impact of such disruptions on our ability to generate profits, stabilize or grow revenues or cash flows, comply with our contractual obligations and accurately forecast demand and supply needs and/or future results, and on our relationships with licensors and retailers, our in-store execution and product launches and promotions;
|
•
|
restrictions imposed on us through our license agreements, credit facilities and senior unsecured bonds or other material contracts, our ability to generate cash flow to repay, refinance or recapitalize debt and otherwise comply with our debt instruments, and changes in the manner in which we finance our debt and future capital needs, including access to capital under current market conditions;
|
•
|
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 or other changes to information technology systems, including our digital transformation initiatives, and the cost of compliance or our failure to comply with any privacy or data security laws (including the European Union General Data Protection Regulation (the “GDPR”)) or to protect against theft of customer, employee and corporate sensitive information;
|
•
|
our ability to attract and retain key personnel and the impact of the recent senior management transitions;
|
•
|
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.
|
•
|
warehouse and planning center consolidation disruptions in Europe and in North America, which impacted all three divisions; and
|
•
|
component shortages from certain external suppliers, which impacted our Luxury and Consumer Beauty divisions (together, the “Supply Chain Disruptions”).
|
•
|
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 some of the Adjusted Performance Measures.
|
•
|
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.
|
•
|
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 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.
|
•
|
Interest and other (income) expense: We have excluded foreign currency impacts associated with acquisition-related and debt financing-related forward contracts, as well as debt financing transaction costs as the nature and amount of such charges are not consistent and are significantly impacted by the timing and size of such transactions.
|
•
|
Noncontrolling interests: This adjustment represents the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interests based on the relevant noncontrolling interest percentage.
|
•
|
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.
|
•
|
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.
|
Period of acquisition, divestiture, or termination
|
|
Acquisition, divestiture, or termination
|
|
Impact on basis of presentation
|
First quarter fiscal 2018
|
|
n/a
|
|
n/a
|
Second quarter fiscal 2018
|
|
Acquisition
: Burberry Beauty Business (Luxury segment)
|
|
First quarter fiscal 2019 financial contribution excluded
|
Third quarter fiscal 2018
|
|
Termination
: Guess (Consumer Beauty segment)
|
|
First and second quarter fiscal 2018 financial contribution excluded
|
Fourth quarter fiscal 2018
|
|
Divestitures of licenses
: Playboy (Consumer Beauty segment) and Cerruti (Luxury segment)
|
|
First quarter and second quarter fiscal 2018 financial contribution excluded
|
(i)
|
Lower sales volume as a result of negative market share trends in the color cosmetics, hair color and mass fragrance categories as a result of shelf-space losses in North America and Europe in the Consumer Beauty segment;
|
(ii)
|
Lower sales volume due to the Supply Chain Disruptions;
|
(iii)
|
Positive pricing impacts within the color cosmetics category of the Consumer Beauty segment due to the prior year impact of higher markdowns and trade spending for fiscal 2018 relaunch activities;
|
(iv)
|
Positive pricing impacts within the body care category of the Consumer Beauty segment due to a decrease in sales discounts in Brazil; and
|
(v)
|
Positive mix impacts with a proportionate increase in Luxury sales volumes and the corresponding proportionate decrease in Consumer Beauty sales volumes.
|
|
Three Months Ended
December 31, |
|
|
|||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
|||||
NET REVENUES
|
|
|
|
|
|
|||||
Luxury
|
$
|
1,017.5
|
|
|
$
|
951.2
|
|
|
7
|
%
|
Consumer Beauty
|
967.8
|
|
|
1,138.6
|
|
|
(15
|
%)
|
||
Professional Beauty
|
525.9
|
|
|
547.8
|
|
|
(4
|
%)
|
||
Total
|
$
|
2,511.2
|
|
|
$
|
2,637.6
|
|
|
(5
|
%)
|
(i)
|
Negative market share trends in the color cosmetics, hair color and mass fragrance categories as a result of shelf-space losses in North America and Europe for
CoverGirl, Rimmel
and
Clairol;
|
(ii)
|
The Supply Chain Disruptions which resulted in lower net revenues mainly in the color cosmetics category, namely the
Rimmel
,
Max Factor
and
Bourjois
brands;
|
(iii)
|
Reduced net revenues for
Max Factor, Bourjois, Adidas
and the retail hair line of
Wella
hair products due to decreased sales volume to improve retailer trade inventory levels;
|
(iv)
|
Negative overall category trends in the color cosmetics and mass fragrance categories; and
|
(v)
|
Reduced net revenues from
Younique
due to a decline in product sales and presenter sponsorship as we continue to refine our product offerings and compensation plan structure to drive improvements in presenter sales activity, recruitment and retention.
|
(i)
|
An increase in net revenues from
CoverGirl
due to the prior year impact of higher markdowns and trade spending for fiscal 2018 relaunch activities; and
|
(ii)
|
Pricing improvements in
Monange
and
Bozzano
from decreased sales discounts in Brazil.
|
|
Three Months Ended
December 31, |
|
(bps rounded to the nearest tenth)
|
2018/2017
|
|
Advertising and consumer promotion costs
|
90
|
|
Administrative costs
|
—
|
|
Distribution & Warehousing
|
30
|
|
Foreign currency exchange impact
|
10
|
|
Bad Debt Expense
|
10
|
|
Share-based compensation
|
(30
|
)
|
Other selling, general, and administrative expenses
|
—
|
|
Total basis point increase
|
110
|
|
|
Three Months Ended
December 31, |
|
(bps rounded to nearest tenth)
|
2018/2017
|
|
Asset impairment charges
|
(3,840
|
)
|
Selling, general and administrative expenses
|
(110
|
)
|
Amortization
|
(10
|
)
|
Cost of sales
|
80
|
|
Restructuring
|
(10
|
)
|
Acquisition-related costs
|
30
|
|
Total basis point decrease
|
(3,860
|
)
|
|
Three Months Ended
December 31, |
|
|
|||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
|||||
Operating income (loss)
|
|
|
|
|
|
|||||
Luxury
|
$
|
113.6
|
|
|
$
|
85.1
|
|
|
33
|
%
|
Consumer Beauty
|
(906.9
|
)
|
|
99.3
|
|
|
<(100%)
|
|
||
Professional Beauty
|
73.8
|
|
|
73.5
|
|
|
—
|
%
|
||
Corporate
|
(85.1
|
)
|
|
(82.7
|
)
|
|
(3
|
%)
|
||
Total
|
(804.6
|
)
|
|
175.2
|
|
|
<(100%)
|
|
|
Three Months Ended December 31, 2018
|
||||||||||
(in millions)
|
Reported
(GAAP) |
|
Adjustments
(a)
|
|
Adjusted
(Non-GAAP) |
||||||
Operating income (loss)
|
|
|
|
|
|
||||||
Luxury
|
$
|
113.6
|
|
|
$
|
(63.3
|
)
|
|
$
|
176.9
|
|
Consumer Beauty
|
(906.9
|
)
|
|
(961.0
|
)
|
|
54.1
|
|
|||
Professional Beauty
|
73.8
|
|
|
(17.3
|
)
|
|
91.1
|
|
|||
Corporate
|
(85.1
|
)
|
|
(85.3
|
)
|
|
0.2
|
|
|||
Total
|
(804.6
|
)
|
|
(1,126.9
|
)
|
|
322.3
|
|
|
Three Months Ended December 31, 2017
|
||||||||||
(in millions)
|
Reported
(GAAP) |
|
Adjustments
(a)
|
|
Adjusted
(Non-GAAP) |
||||||
Operating income (loss)
|
|
|
|
|
|
||||||
Luxury
|
$
|
85.1
|
|
|
$
|
(40.3
|
)
|
|
$
|
125.4
|
|
Consumer Beauty
|
99.3
|
|
|
(32.6
|
)
|
|
131.9
|
|
|||
Professional Beauty
|
73.5
|
|
|
(16.7
|
)
|
|
90.2
|
|
|||
Corporate
|
(82.7
|
)
|
|
(83.5
|
)
|
|
0.8
|
|
|||
Total
|
175.2
|
|
|
(173.1
|
)
|
|
348.3
|
|
(a)
|
See a reconciliation of reported operating income to adjusted operating income and a description of the adjustments under “Adjusted Operating (Loss) Income for Coty Inc.” below. All adjustments are reflected in Corporate, except for amortization expense, which is reflected in the Luxury, Consumer Beauty and Professional Beauty divisions, and asset impairment charges, which are reflected in the Luxury and Consumer Beauty divisions.
|
|
Three Months Ended
December 31, |
|
|
|||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
|||||
Reported operating (loss) income
|
$
|
(804.6
|
)
|
|
$
|
175.2
|
|
|
<(100%)
|
|
% of net revenues
|
(32.0
|
%)
|
|
6.6
|
%
|
|
|
|||
Asset impairment charges
|
965.1
|
|
|
—
|
|
|
N/A
|
|
||
Amortization expense
|
88.5
|
|
|
89.6
|
|
|
(1
|
%)
|
||
Restructuring and other business realignment costs
|
73.3
|
|
|
75.6
|
|
|
(3
|
%)
|
||
Costs related to acquisition activities
|
—
|
|
|
7.9
|
|
|
(100
|
%)
|
||
Total adjustments to reported operating income
|
1,126.9
|
|
|
173.1
|
|
|
>100%
|
|
||
Adjusted operating income
|
$
|
322.3
|
|
|
$
|
348.3
|
|
|
(7
|
%)
|
% of net revenues
|
12.8
|
%
|
|
13.2
|
%
|
|
|
•
|
We incurred restructuring costs of
$21.5
primarily related to the Global Integration Activities, included in the Condensed Consolidated Statements of Operations.
|
•
|
We incurred business structure realignment costs of
$51.8
primarily related to our Global Integration Activities and certain other programs. This amount includes
$47.2
reported in selling, general and administrative expenses and
$4.6
reported in cost of sales in the Condensed Consolidated Statements of Operations, primarily due to costs incurred for the realignment of the business due to the P&G Beauty Business.
|
•
|
We incurred restructuring costs of $21.7 primarily related to the Global Integration Activities, included in the Condensed Consolidated Statements of Operations.
|
•
|
We incurred business structure realignment costs of $53.9 primarily related to our Global Integration Activities and certain other programs. This amount includes $43.7 reported in Selling, general and administrative expenses and $10.2 reported in Cost of sales in the Condensed Consolidated Statements of Operations, primarily due to costs incurred for the realignment of the business due to the P&G Beauty Business.
|
|
Three Months Ended
December 31, 2018 |
|
Three Months Ended
December 31, 2017 |
||||||||||||||||||
(in millions)
|
(Loss) Before Income Taxes
|
|
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
|
$
|
(877.7
|
)
|
|
$
|
78.3
|
|
|
(8.9
|
%)
|
|
$
|
110.7
|
|
|
$
|
(7.9
|
)
|
|
(7.1
|
%)
|
Adjustments to reported operating income
(a) (b)
|
1,126.9
|
|
|
(19.2
|
)
|
|
|
|
173.1
|
|
|
37.2
|
|
|
|
||||||
Adjusted income before income taxes
|
$
|
249.2
|
|
|
$
|
59.1
|
|
|
23.7
|
%
|
|
$
|
283.8
|
|
|
$
|
29.3
|
|
|
10.3
|
%
|
|
|
(a)
|
See a description of adjustments under “adjusted (loss) operating income for Coty Inc.”
|
(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.
|
|
Three Months Ended
December 31, |
|
|
|||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
|||||
Reported net (loss) income attributable to Coty Inc.
|
$
|
(960.6
|
)
|
|
$
|
109.2
|
|
|
<(100%)
|
|
% of net revenues
|
(38.3
|
%)
|
|
4.1
|
%
|
|
|
|||
Adjustments to reported operating income
(a)
|
1,126.9
|
|
|
173.1
|
|
|
>100%
|
|
||
Adjustments to noncontrolling interests
(b)
|
(3.6
|
)
|
|
(7.9
|
)
|
|
54
|
%
|
||
Change in tax provision due to adjustments to reported net income attributable to Coty Inc.
|
19.2
|
|
|
(37.2
|
)
|
|
>100%
|
|
||
Adjusted net income attributable to Coty Inc.
|
$
|
181.9
|
|
|
$
|
237.2
|
|
|
(23
|
%)
|
% of net revenues
|
7.2
|
%
|
|
9.0
|
%
|
|
|
|
||
Per Share Data
|
|
|
|
|
|
|||||
Adjusted weighted-average common shares
|
|
|
|
|
|
|||||
Basic
|
751.1
|
|
|
749.6
|
|
|
|
|||
Diluted
|
752.5
|
|
|
752.7
|
|
|
|
|||
Adjusted net income attributable to Coty Inc. per common share
|
|
|
|
|
|
|||||
Basic
|
$
|
0.24
|
|
|
$
|
0.32
|
|
|
|
|
Diluted
|
0.24
|
|
|
0.32
|
|
|
|
|
|
(a)
|
See a description of adjustments under “Adjusted Operating (Loss) Income for Coty Inc.”
|
(b)
|
The amounts represent the impact of non-GAAP adjustments to net income attributable to noncontrolling interest related to the Company’s majority-owned consolidated subsidiaries. The amounts are based on the relevant noncontrolling interest’s percentage ownership in the related subsidiary, for which the non-GAAP adjustments were made.
|
(i)
|
Lower sales volume as a result of negative market share trends in the color cosmetics, hair color and mass fragrance categories as a result of shelf-space losses in North America and Europe in the Consumer Beauty segment;
|
(ii)
|
Lower sales volume due to the Supply Chain Disruptions;
|
(iii)
|
Lower sales volume due to retailer-driven changes in optimal trade inventory levels;
|
(iv)
|
Positive price mix due to a proportionate increase in Luxury sales volumes and the corresponding proportionate decrease in Consumer Beauty sales volumes; and
|
(v)
|
Positive pricing impacts within the body care category of the Consumer Beauty segment due to a decrease in sales discounts in Brazil.
|
|
Six Months Ended
December 31, |
|
|
||||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
||||||
Net revenues
|
|
|
|
|
|
|
|||||
Luxury
|
$
|
1,810.4
|
|
|
|
$
|
1,715.6
|
|
|
6
|
%
|
Consumer Beauty
|
1,796.6
|
|
|
|
2,182.0
|
|
|
(18
|
%)
|
||
Professional Beauty
|
935.5
|
|
|
|
978.3
|
|
|
(4
|
%)
|
||
Total
|
$
|
4,542.5
|
|
|
|
$
|
4,875.9
|
|
|
(7
|
%)
|
(i)
|
Negative market share trends in the color cosmetics, hair color and mass fragrance categories as a result of shelf-space losses in North America and Europe for
CoverGirl, Rimmel
and
Clairol;
|
(ii)
|
The Supply Chain Disruptions which resulted in lower net revenues mainly in the color cosmetics category, namely the
Rimmel, Max Factor
and
Bourjois
brands;
|
(iii)
|
Reduced net revenues for
Max Factor, Bourjois, Adidas
and the retail hair line of
Wella
hair products due to decreased sales volume to optimize retailer trade inventory levels; and
|
(iv)
|
Reduced net revenues from
Younique
due to a decline in product sales and presenter sponsorship as we continue to refine our product offerings and compensation plan structure to drive improvements in presenter sales activity, recruitment and retention.
|
|
Six Months Ended
December 31, |
|
|
|||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
|||||
Net revenues
|
|
|
|
|
|
|||||
North America
|
$
|
1,387.1
|
|
|
$
|
1,494.3
|
|
|
(7
|
%)
|
Europe
|
2,073.8
|
|
|
2,264.1
|
|
|
(8
|
%)
|
||
ALMEA
|
1,081.6
|
|
|
1,117.5
|
|
|
(3
|
%)
|
||
Total
|
$
|
4,542.5
|
|
|
$
|
4,875.9
|
|
|
(7
|
%)
|
|
Six Months Ended
December 31, |
|
(bps rounded to the nearest tenth)
|
2018/2017
|
|
Administrative costs
|
60
|
|
Distribution & Warehousing costs
|
50
|
|
Advertising and consumer promotion costs
|
30
|
|
Foreign currency exchange impact
|
20
|
|
Share-based compensation
|
(20
|
)
|
Bad Debt Expense
|
—
|
|
Other selling, general, and administrative expenses
|
10
|
|
Total basis point increase
|
150
|
|
|
Six Months Ended
December 31, |
|
(bps rounded to nearest tenth)
|
2018/2017
|
|
Asset impairment charges
|
(2,150
|
)
|
Selling, general and administrative expenses
|
(150
|
)
|
Amortization
|
(60
|
)
|
Acquisition-related costs
|
130
|
|
Restructuring
|
(10
|
)
|
Cost of sales
|
—
|
|
Total basis point decrease
|
(2,240
|
)
|
|
Six Months Ended
December 31, |
|
|
|||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
|||||
Operating income (loss)
|
|
|
|
|
|
|||||
Luxury
|
$
|
162.3
|
|
|
$
|
141.8
|
|
|
14
|
%
|
Consumer Beauty
|
(925.5
|
)
|
|
161.2
|
|
|
<(100%)
|
|
||
Professional Beauty
|
78.8
|
|
|
71.8
|
|
|
10
|
%
|
||
Corporate
|
(140.9
|
)
|
|
(170.1
|
)
|
|
17
|
%
|
||
Total
|
(825.3
|
)
|
|
204.7
|
|
|
<(100%)
|
|
|
Six Months Ended December 31, 2018
|
||||||||||
(in millions)
|
Reported
(GAAP) |
|
Adjustments
(a)
|
|
Adjusted
(Non-GAAP) |
||||||
Operating income (loss)
|
|
|
|
|
|
||||||
Luxury
|
$
|
162.3
|
|
|
$
|
(116.2
|
)
|
|
$
|
278.5
|
|
Consumer Beauty
|
(925.5
|
)
|
|
(994.4
|
)
|
|
68.9
|
|
|||
Professional Beauty
|
78.8
|
|
|
(36.1
|
)
|
|
114.9
|
|
|||
Corporate
|
(140.9
|
)
|
|
(141.7
|
)
|
|
0.8
|
|
|||
Total
|
(825.3
|
)
|
|
(1,288.4
|
)
|
|
463.1
|
|
|
Six Months Ended December 31, 2017
|
||||||||||
(in millions)
|
Reported
(GAAP) |
|
Adjustments
(a)
|
|
Adjusted
(Non-GAAP) |
||||||
Operating income (loss)
|
|
|
|
|
|
||||||
Luxury
|
$
|
141.8
|
|
|
$
|
(73.5
|
)
|
|
$
|
215.3
|
|
Consumer Beauty
|
161.2
|
|
|
(59.0
|
)
|
|
220.2
|
|
|||
Professional Beauty
|
71.8
|
|
|
(35.3
|
)
|
|
107.1
|
|
|||
Corporate
|
(170.1
|
)
|
|
(171.7
|
)
|
|
1.6
|
|
|||
Total
|
204.7
|
|
|
(339.5
|
)
|
|
544.2
|
|
(a)
|
See a reconciliation of reported operating income to adjusted operating income and a description of the adjustments under “adjusted operating (Loss) Income for Coty Inc.” below. All adjustments are reflected in Corporate, except for amortization expense, which is reflected in the Luxury, Consumer Beauty and Professional Beauty divisions, and asset impairment charges, which are reflected in the Luxury and Consumer Beauty divisions.
|
|
Six Months Ended
December 31, |
|
|
|||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
|||||
Reported operating (loss) income
|
$
|
(825.3
|
)
|
|
$
|
204.7
|
|
|
<(100%)
|
|
% of net revenues
|
(18.2
|
)%
|
|
4.2
|
%
|
|
|
|||
Asset impairment charges
|
977.7
|
|
|
—
|
|
|
N/A
|
|
||
Amortization expense
|
181.0
|
|
|
167.8
|
|
|
8
|
%
|
||
Restructuring and other business realignment costs
|
129.7
|
|
|
106.2
|
|
|
22
|
%
|
||
Costs related to acquisition activities
|
—
|
|
|
65.5
|
|
|
(100
|
%)
|
||
Total adjustments to reported operating income
|
1,288.4
|
|
|
339.5
|
|
|
>100%
|
|
||
Adjusted operating income
|
$
|
463.1
|
|
|
$
|
544.2
|
|
|
(15
|
%)
|
% of net revenues
|
10.2
|
%
|
|
11.2
|
%
|
|
|
|
•
|
We incurred restructuring costs of
$37.0
primarily related to the Global Integration Activities and 2018 Restructuring Actions, included in the Condensed Consolidated Statements of Operations.
|
•
|
We incurred business structure realignment costs of
$92.7
primarily related to our Global Integration Activities and certain other programs. Of this amount
$82.9
is included in selling, general and administrative expenses and
$9.8
is included in cost of sales, primarily due to costs incurred for the realignment of the business due to the P&G Beauty Business.
|
•
|
We incurred Restructuring costs of $32.9 primarily related to the Global Integration Activities, included in the Condensed Consolidated Statements of Operations.
|
•
|
We incurred business structure realignment costs of $73.3 primarily related to our Global Integration Activities, Organizational Redesign and certain other programs. Of this amount $52.6 is included in Selling, general and administrative expenses and $20.7 is included in Cost of sales, primarily due to costs incurred for the realignment of the business due to the P&G Beauty Business.
|
|
Six Months Ended
December 31, 2018 |
|
Six Months Ended
December 31, 2017 |
||||||||||||||||||
(in millions)
|
(Loss) Before Income Taxes
|
|
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
|
$
|
(965.2
|
)
|
|
$
|
0.9
|
|
|
(0.1
|
%)
|
|
$
|
69.3
|
|
|
$
|
(33.2
|
)
|
|
(47.9
|
%)
|
Adjustments to reported operating income
(a)(b)
|
1,288.4
|
|
|
45.9
|
|
|
|
|
339.5
|
|
|
96.8
|
|
|
|
||||||
Adjusted income before income taxes
|
$
|
323.2
|
|
|
$
|
46.8
|
|
|
14.5
|
%
|
|
$
|
408.8
|
|
|
$
|
63.6
|
|
|
15.6
|
%
|
|
|
(a)
|
See a description of adjustments under “adjusted operating (loss) income for Coty Inc.”.
|
(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.
|
|
Six Months Ended
December 31, |
|
|
|||||||
(in millions)
|
2018
|
|
2017
|
|
Change %
|
|||||
Reported net (loss) income attributable to Coty Inc.
|
$
|
(972.7
|
)
|
|
$
|
89.5
|
|
|
<(100%)
|
|
% of net revenues
|
(21.4
|
%)
|
|
1.8
|
%
|
|
|
|||
Adjustments to reported operating income
(a)
|
1,288.4
|
|
|
339.5
|
|
|
>100%
|
|
||
Adjustments to noncontrolling interests
(b)
|
(7.4
|
)
|
|
(18.7
|
)
|
|
60
|
%
|
||
Change in tax provision due to adjustments to reported net income attributable to Coty Inc.
|
(45.9
|
)
|
|
(96.8
|
)
|
|
53
|
%
|
||
Adjusted net income attributable to Coty Inc.
|
262.4
|
|
|
313.5
|
|
|
(16
|
%)
|
||
% of net revenues
|
5.8
|
%
|
|
6.4
|
%
|
|
|
|
||
Per Share Data
|
|
|
|
|
|
|||||
Adjusted weighted-average common shares
|
|
|
|
|
|
|||||
Basic
|
751.0
|
|
|
749.1
|
|
|
|
|||
Diluted
|
752.6
|
|
|
752.5
|
|
|
|
|||
Adjusted net income attributable to Coty Inc. per common share
|
|
|
|
|
|
|||||
Basic
|
$
|
0.35
|
|
|
$
|
0.42
|
|
|
|
|
Diluted
|
0.35
|
|
|
0.42
|
|
|
|
|
|
(a)
|
See a description of adjustments under “Adjusted Operating (Loss) Income for Coty Inc.”
|
(b)
|
The amounts represent the impact of non-GAAP adjustments to net income attributable to noncontrolling interest related to the Company’s majority-owned consolidated subsidiaries. The amounts are based on the relevant noncontrolling interest’s percentage ownership in the related subsidiary, for which the non-GAAP adjustments were made.
|
|
December 31, 2018
|
|
June 30,
2018 |
||||
Short-term debt
|
$
|
54.3
|
|
|
$
|
9.2
|
|
2018 Coty Credit Agreement
|
|
|
|
||||
2018 Coty Revolving Credit Facility due April 2023
|
783.9
|
|
|
368.1
|
|
||
2018 Coty Term A Facility due April 2023
|
3,242.6
|
|
|
3,371.5
|
|
||
2018 Coty Term B Facility due April 2025
|
2,359.6
|
|
|
2,390.5
|
|
||
Senior Unsecured Notes
|
|
|
|
||||
2026 Dollar Notes due April 2026
|
550.0
|
|
|
550.0
|
|
||
2023 Euro Notes due April 2023
|
628.6
|
|
|
640.9
|
|
||
2026 Euro Notes due April 2026
|
285.7
|
|
|
291.4
|
|
||
Other long-term debt and capital lease obligations
|
1.3
|
|
|
1.6
|
|
||
Total debt
|
7,906.0
|
|
|
7,623.2
|
|
||
Less: Short-term debt and current portion of long-term debt
|
(255.7
|
)
|
|
(218.9
|
)
|
||
Total Long-term debt
|
7,650.3
|
|
|
7,404.3
|
|
||
Less: Unamortized debt issuance costs
|
(77.7
|
)
|
|
(86.2
|
)
|
||
Less: Discount on Long-term debt
|
(11.7
|
)
|
|
(12.7
|
)
|
||
Total Long-term debt, net
|
$
|
7,560.9
|
|
|
$
|
7,305.4
|
|
•
|
LIBOR of the applicable qualified currency, of which we can elect the applicable one, two, three, six or twelve month rate, plus the applicable margin; or
|
•
|
Alternate base rate (“ABR”) plus the applicable margin.
|
Pricing Tier
|
|
Total Net Leverage Ratio:
|
|
LIBOR plus:
|
|
Alternative Base Rate Margin:
|
1.0
|
|
Greater than or equal to 4.75:1
|
|
2.000%
|
|
1.000%
|
2.0
|
|
Less than 4.75:1 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%
|
|
—%
|
Pricing Tier
|
|
Debt Ratings S&P/Moody’s:
|
|
LIBOR plus:
|
|
Alternative Base Rate Margin:
|
5.0
|
|
Less than BB+/Ba1
|
|
2.000%
|
|
1.000%
|
4.0
|
|
BB+/Ba1
|
|
1.750%
|
|
0.750%
|
3.0
|
|
BBB-/Baa3
|
|
1.500%
|
|
0.500%
|
2.0
|
|
BBB/Baa2
|
|
1.250%
|
|
0.250%
|
1.0
|
|
BBB+/Baa1 or higher
|
|
1.125%
|
|
0.125%
|
Quarterly Test Period Ending
|
Total Net Leverage Ratio
(a)
|
December 31, 2018
|
5.50 to 1.00
|
March 31, 2019 through June 30, 2019
|
5.25 to 1.00
|
September 30, 2019 through December 31, 2019
|
5.00 to 1.00
|
March 31, 2020 through June 30, 2020
|
4.75 to 1.00
|
September 30, 2020 through December 31, 2020
|
4.50 to 1.00
|
March 31, 2021 through June 30, 2021
|
4.25 to 1.00
|
September 30, 2021 through June 30, 2023
|
4.00 to 1.00
|
|
|
|
Six Months Ended
December 31, |
||||||
|
2018
|
|
2017
|
||||
Condensed Consolidated Statements of Cash Flows Data:
(in millions)
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
237.7
|
|
|
$
|
307.8
|
|
Net cash used in investing activities
|
(300.1
|
)
|
|
(494.0
|
)
|
||
Net cash provided by financing activities
|
153.7
|
|
|
33.2
|
|
Declaration Date
|
|
Dividend Type
|
|
Dividend Per Share
|
|
Holders of Record Date
|
|
Dividend Value
|
|
Dividend Payment Date
|
|
Dividends Paid
|
|
Dividends Payable
(a)
|
||||||||
Fiscal 2019
|
||||||||||||||||||||||
August 21, 2018
|
|
Quarterly
|
|
$
|
0.125
|
|
|
August 31, 2018
|
|
$
|
94.6
|
|
|
September 14, 2018
|
|
$
|
93.8
|
|
|
$
|
0.8
|
|
November 7, 2018
|
|
Quarterly
|
|
$
|
0.125
|
|
|
November 30, 2018
|
|
$
|
95.1
|
|
|
December 14, 2018
|
|
$
|
93.9
|
|
|
$
|
1.2
|
|
Fiscal 2019
|
|
|
|
$
|
0.250
|
|
|
|
|
$
|
189.7
|
|
|
|
|
$
|
187.7
|
|
|
$
|
2.0
|
|
|
|
(a)
|
The dividend payable is the value of the remaining dividends payable upon settlement of the RSUs and phantom units outstanding as of the Holders of Record Date.
|
•
|
Revenue Recognition
|
•
|
Goodwill, Other Intangible Assets and Long-Lived Assets
|
•
|
Business Combinations
|
•
|
Inventory
|
•
|
Pension Benefit Costs
|
•
|
Income Taxes
|
•
|
Redeemable noncontrolling interests
|
•
|
take actions contrary to our requests or contrary to our policies or objectives, including actions that may violate applicable law;
|
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)
|
||||||
October 1, 2018 - October 31, 2018
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
November 1, 2018 - November 30, 2018
|
8,200,000
|
|
9.02
|
|
—
|
|
—
|
|
||
December 1, 2018 - December 31, 2018
|
—
|
|
—
|
|
—
|
|
—
|
|
||
Total
|
8,200,000
|
|
$
|
9.02
|
|
—
|
|
—
|
|
|
|
Exhibit Number
|
|
Description
|
|
||
|
||
|
||
|
||
|
||
|
||
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.
|
†
|
Exhibit is a management contract or compensatory plan or arrangement.
|
|
|
COTY INC.
|
|
|
|
|
|
Date: February 8, 2019
|
|
By:
|
/s/Pierre Laubies
|
|
|
|
Name: Pierre Laubies
|
|
|
|
Title: Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/Pierre-André Terisse
|
|
|
|
Name: Pierre-André Terisse
|
|
|
|
Title: Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
By:
|
/s/Michelle Garcia
|
Name:
|
Michelle Garcia
|
Title:
|
Assistant Secretary and Senior Vice President, Corporate Legal
|
Coty Inc.
Subsidiary List
as of December 31, 2018
|
|
Entity Name
|
Domestic Jurisdiction
|
Coty Argentina S.A.
|
Argentina
|
Coty Australia Holdings PTY Ltd.
|
Australia
|
Coty Australia Legacy Pty. Limited
|
Australia
|
Coty Australia PTY. Limited
|
Australia
|
Gresham Cosmetics Pty Ltd
|
Australia
|
HFC Prestige International Australia PTY Ltd
|
Australia
|
Jemella Australia Pty Limited
|
Australia
|
Coty Beauty Austria GmbH
|
Austria
|
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
|
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.
|
Czechia
|
HFC Prestige International Denmark ApS
|
Denmark
|
Coty Holdings UK Limited
|
England and Wales
|
Quest Beauty Limited
|
England and Wales
|
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
|
Coty Beauty Germany GmbH
|
Germany
|
Coty Brands Management GmbH
|
Germany
|
Coty Germany Holding GmbH
|
Germany
|
Coty Services and Logistics GmbH
|
Germany
|
Ghd Deutschland GmbH
|
Germany
|
HFC Prestige Manufacturing Cologne Germany GmbH
|
Germany
|
HFC Prestige Manufacturing Germany GmbH
|
Germany
|
HFC Prestige Service Germany GmbH
|
Germany
|
Sebastian Europe GmbH
|
Germany
|
Wella Grundstuecks- und Vermoegensverwalturngs GmbH & Co. KG
|
Germany
|
Zadafo Verwaltungsgesellschaft mbH
|
Germany
|
Coty Hellas S.A.
|
Greece
|
Wella Hellas MEPE
|
Greece
|
Chi Chun Industrial Co. Ltd.
|
Hong Kong
|
Coty Hong Kong Limited
|
Hong Kong
|
Coty INT Hong Kong Limited
|
Hong Kong
|
Coty Prestige Shanghai (HK) Ltd.
|
Hong Kong
|
Coty Prestige Southeast Asia (HK) Limited
|
Hong Kong
|
GHD Hong Kong Limited
|
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 StarAsia Distributions Indonesia
|
Indonesia
|
PT. Coty Prestige Southeast Asia Indonesia
|
Indonesia
|
Coty Ireland Ltd.
|
Ireland
|
Coty UK&I Ltd
|
Ireland
|
HFC Prestige Manufacturing Ireland Ltd.
|
Ireland
|
Coty Italia Retail S.R.L.
|
Italy
|
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 INT Malaysia Sdn. Bhd.
|
Malaysia
|
Coty Prestige Southeast Asia (M) Sdn. Bhd.
|
Malaysia
|
Coty Beauty Mexico, S.A. de C.V.
|
Mexico
|
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 S.de R.L. de C.V.
|
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 Global Holdings 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 NUF (Norwegian Branch)
|
Norway
|
HFC Prestige International Norway AS
|
Norway
|
Coty Prestige Southeast Asia Philippines, Inc.
|
Philippines
|
Coty Eastern Europe sp. z.o.o.
|
Poland
|
HFC Prestige Service Poland Sp. z.o.o.
|
Poland
|
Wella Prestige Products Portugal S.A.
|
Portugal
|
HFC Prestige International Puerto Rico LLC
|
Puerto Rico
|
Coty Cosmetics Romania SRL
|
Romania
|
Bourjois Paris LLC
|
Russian Federation
|
Coty Beauty LLC
|
Russian Federation
|
LLC Capella
|
Russian Federation
|
Russwell Ltd
|
Russian Federation
|
Coty Arabia Trading Company LLC
|
Saudi Arabia
|
Coty Scot 1 LP
|
Scotland
|
Coty Scot 2 LP
|
Scotland
|
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 Beauty South Africa (PTY) Ltd.
|
South Africa
|
Coty South Africa (Proprietary) Limited
|
South Africa
|
Good Hair Day South Africa (Proprietary) Limited
|
South Africa
|
Coty Beauty Spain, S.L.U.
|
Spain
|
Coty Spain S.L., Sociedad Unipersonal
|
Spain
|
GHD Spain, S A U
|
Spain
|
HFC Prestige Products S.A.U.
|
Spain
|
Younique Spain SL
|
Spain
|
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
|
So Be Cosmetics S.A.
|
Switzerland
|
Coty Prestige (Taiwan) Ltd.
|
Taiwan, Province Of China
|
StarAsia Taiwan Co., Ltd.
|
Taiwan, Province Of China
|
|
/s/Pierre Laubies
|
|
|
Pierre Laubies
|
|
|
Chief Executive Officer
|
|
|
/s/Pierre-André Terisse
|
|
|
Pierre-André Terisse
|
|
|
Chief Financial Officer
|
Date: February 8, 2019
|
/s/Pierre Laubies
|
|
|
Pierre Laubies
|
|
|
Chief Executive Officer
|
Date: February 8, 2019
|
/s/Pierre-André Terisse
|
|
|
Pierre-André Terisse
|
|
|
Chief Financial Officer
|