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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
|
SEPTEMBER 30, 2019
|
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|
OR
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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
|
||
|
COMMISSION FILE NUMBER
|
001-35964
|
|
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|
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|
Delaware
|
|
13-3823358
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
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350 Fifth Avenue,
|
|
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New York,
|
NY
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10118
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(Address of principal executive offices)
|
|
(Zip Code)
|
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Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
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|
|
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|
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. ¨
|
||||
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Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
|
Class A Common Stock, $0.01 par value
|
COTY
|
New York Stock Exchange
|
|
|
|
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|
Page
|
|
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||
|
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||
|
|
||
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||
|
|
||
|
|
||
|
|
||
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|
|
|
|
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|
|
|
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Net revenues
|
$
|
1,942.8
|
|
|
$
|
2,031.3
|
|
|
Cost of sales
|
738.4
|
|
|
809.1
|
|
||
|
Gross profit
|
1,204.4
|
|
|
1,222.2
|
|
||
|
Selling, general and administrative expenses
|
1,072.6
|
|
|
1,122.3
|
|
||
|
Gain on sale of business (See Note 5)
|
(84.5
|
)
|
|
—
|
|
||
|
Amortization expense
|
84.3
|
|
|
92.5
|
|
||
|
Restructuring costs
|
6.0
|
|
|
15.5
|
|
||
|
Asset impairment charges
|
—
|
|
|
12.6
|
|
||
|
Operating income (loss)
|
126.0
|
|
|
(20.7
|
)
|
||
|
Interest expense, net
|
77.4
|
|
|
64.1
|
|
||
|
Other expense, net
|
2.2
|
|
|
2.7
|
|
||
|
Income (loss) before income taxes
|
46.4
|
|
|
(87.5
|
)
|
||
|
Benefit for income taxes
|
(9.9
|
)
|
|
(77.4
|
)
|
||
|
Net income (loss)
|
56.3
|
|
|
(10.1
|
)
|
||
|
Net income attributable to noncontrolling interests
|
2.8
|
|
|
1.2
|
|
||
|
Net income attributable to redeemable noncontrolling interests
|
1.2
|
|
|
0.8
|
|
||
|
Net income (loss) attributable to Coty Inc.
|
$
|
52.3
|
|
|
$
|
(12.1
|
)
|
|
Net income (loss) attributable to Coty Inc. per common share:
|
|
|
|
|
|
||
|
Basic
|
$
|
0.07
|
|
|
$
|
(0.02
|
)
|
|
Diluted
|
0.07
|
|
|
(0.02
|
)
|
||
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
||
|
Basic
|
754.2
|
|
|
750.8
|
|
||
|
Diluted
|
758.9
|
|
|
750.8
|
|
||
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Net income (loss)
|
$
|
56.3
|
|
|
$
|
(10.1
|
)
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||
|
Foreign currency translation adjustment
|
(122.6
|
)
|
|
(48.9
|
)
|
||
|
Net unrealized derivative (loss) gain on cash flow hedges, net of taxes of $0.2 and $(0.3), during the three months ended, respectively
|
(1.2
|
)
|
|
1.0
|
|
||
|
Pension and other post-employment benefits adjustment, net of tax of $0.0 and $0.5 during the three months ended, respectively
|
(0.8
|
)
|
|
0.1
|
|
||
|
Total other comprehensive loss, net of tax
|
(124.6
|
)
|
|
(47.8
|
)
|
||
|
Comprehensive loss
|
(68.3
|
)
|
|
(57.9
|
)
|
||
|
Comprehensive income (loss) attributable to noncontrolling interests:
|
|
|
|
|
|
||
|
Net income
|
2.8
|
|
|
1.2
|
|
||
|
Foreign currency translation adjustment
|
—
|
|
|
0.2
|
|
||
|
Total comprehensive income attributable to noncontrolling interests
|
2.8
|
|
|
1.4
|
|
||
|
Comprehensive income attributable to redeemable noncontrolling interests:
|
|
|
|
||||
|
Net income
|
1.2
|
|
|
0.8
|
|
||
|
Comprehensive loss attributable to Coty Inc.
|
$
|
(72.3
|
)
|
|
$
|
(60.1
|
)
|
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
|
ASSETS
|
|
|
|
|
|
||
|
Current assets:
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
$
|
350.4
|
|
|
$
|
340.4
|
|
|
Restricted cash
|
31.0
|
|
|
40.0
|
|
||
|
Trade receivables—less allowances of $55.3 and $48.1, respectively
|
1,036.6
|
|
|
1,161.2
|
|
||
|
Inventories
|
1,150.8
|
|
|
1,153.3
|
|
||
|
Prepaid expenses and other current assets
|
563.9
|
|
|
577.8
|
|
||
|
Total current assets
|
3,132.7
|
|
|
3,272.7
|
|
||
|
Property and equipment, net
|
1,469.9
|
|
|
1,600.6
|
|
||
|
Goodwill
|
4,917.3
|
|
|
5,073.8
|
|
||
|
Other intangible assets, net
|
6,963.8
|
|
|
7,422.3
|
|
||
|
Operating lease right-of-use assets (See Note 3)
|
491.9
|
|
|
—
|
|
||
|
Deferred income taxes
|
156.0
|
|
|
146.3
|
|
||
|
Other noncurrent assets
|
151.9
|
|
|
149.7
|
|
||
|
TOTAL ASSETS
|
$
|
17,283.5
|
|
|
$
|
17,665.4
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
|
Current liabilities:
|
|
|
|
|
|
||
|
Accounts payable
|
$
|
1,548.1
|
|
|
$
|
1,732.7
|
|
|
Accrued expenses and other current liabilities
|
1,343.7
|
|
|
1,483.7
|
|
||
|
Short-term debt and current portion of long-term debt
|
185.4
|
|
|
193.8
|
|
||
|
Current operating lease liabilities (See Note 3)
|
96.5
|
|
|
—
|
|
||
|
Income and other taxes payable
|
63.7
|
|
|
66.9
|
|
||
|
Total current liabilities
|
3,237.4
|
|
|
3,477.1
|
|
||
|
Long-term debt, net
|
7,453.5
|
|
|
7,469.9
|
|
||
|
Long-term operating lease liabilities (See Note 3)
|
457.9
|
|
|
—
|
|
||
|
Pension and other post-employment benefits
|
570.0
|
|
|
593.5
|
|
||
|
Deferred income taxes
|
630.9
|
|
|
652.5
|
|
||
|
Other noncurrent liabilities
|
374.9
|
|
|
427.2
|
|
||
|
Total liabilities
|
12,724.6
|
|
|
12,620.2
|
|
||
|
COMMITMENTS AND CONTINGENCIES (See Note 17)
|
|
|
|
|
|
||
|
REDEEMABLE NONCONTROLLING INTERESTS
|
94.6
|
|
|
451.8
|
|
||
|
EQUITY:
|
|
|
|
|
|
||
|
Preferred Stock, $0.01 par value; 20.0 shares authorized, 9.4 and 9.4 issued and outstanding, respectively, at September 30, 2019 and June 30, 2019
|
0.1
|
|
|
0.1
|
|
||
|
Class A Common Stock, $0.01 par value; 1,000.0 shares authorized, 822.5 and 819.2 issued and 757.0 and 754.2 outstanding, respectively, at September 30, 2019 and June 30, 2019
|
8.1
|
|
|
8.1
|
|
||
|
Additional paid-in capital
|
10,566.1
|
|
|
10,620.5
|
|
||
|
Accumulated deficit
|
(4,489.6
|
)
|
|
(4,541.2
|
)
|
||
|
Accumulated other comprehensive income
|
(183.4
|
)
|
|
(58.8
|
)
|
||
|
Treasury stock—at cost, shares: 65.5 and 65.0, respectively, at September 30, 2019 and June 30, 2019
|
(1,446.3
|
)
|
|
(1,441.8
|
)
|
||
|
Total Coty Inc. stockholders’ equity
|
4,455.0
|
|
|
4,586.9
|
|
||
|
Noncontrolling interests
|
9.3
|
|
|
6.5
|
|
||
|
Total equity
|
4,464.3
|
|
|
4,593.4
|
|
||
|
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
|
$
|
17,283.5
|
|
|
$
|
17,665.4
|
|
|
|
Preferred Stock
|
|
Class A
Common Stock |
|
Additional
Paid-in Capital |
|
(Accumulated Deficit)
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Treasury Stock
|
|
Total Coty Inc.
Stockholders’ Equity |
|
Noncontrolling Interests
|
|
Total Equity
|
|
Redeemable
Noncontrolling Interests |
|||||||||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||||||||||||||
|
BALANCE as previously reported—July 1, 2019
|
9.4
|
|
|
$
|
0.1
|
|
|
819.2
|
|
|
$
|
8.1
|
|
|
$
|
10,620.5
|
|
|
$
|
(4,541.2
|
)
|
|
$
|
(58.8
|
)
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
4,586.9
|
|
|
$
|
6.5
|
|
|
$
|
4,593.4
|
|
|
$
|
451.8
|
|
|
Adjustment due to the adoption of ASC 842 (See Note 2)
|
|
|
|
|
|
|
|
|
|
|
(0.7
|
)
|
|
|
|
|
|
|
|
(0.7
|
)
|
|
|
|
(0.7
|
)
|
|
|
||||||||||||||||||||
|
BALANCE as adjusted—July 1, 2019
|
9.4
|
|
|
$
|
0.1
|
|
|
819.2
|
|
|
$
|
8.1
|
|
|
$
|
10,620.5
|
|
|
$
|
(4,541.9
|
)
|
|
$
|
(58.8
|
)
|
|
65.0
|
|
|
$
|
(1,441.8
|
)
|
|
$
|
4,586.2
|
|
|
$
|
6.5
|
|
|
$
|
4,592.7
|
|
|
$
|
451.8
|
|
|
Purchase of Class A Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
|
(4.5
|
)
|
|
(4.5
|
)
|
|
|
|
(4.5
|
)
|
|
|
|||||||||||||||||||
|
Exercise of employee stock options and restricted stock units
|
|
|
|
|
0.1
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
0.6
|
|
|
|
||||||||||||||||||
|
Share-based compensation expense
|
|
|
|
|
|
|
|
|
6.2
|
|
|
|
|
|
|
|
|
|
|
6.2
|
|
|
|
|
6.2
|
|
|
|
||||||||||||||||||||
|
Dividends declared - Cash and Other ($0.125 per common share)
|
|
|
|
|
|
|
|
|
(63.5
|
)
|
|
|
|
|
|
|
|
|
|
(63.5
|
)
|
|
|
|
(63.5
|
)
|
|
|
||||||||||||||||||||
|
Dividends declared - Stock ($0.125 per common share)
|
|
|
|
|
|
|
|
|
(30.9
|
)
|
|
|
|
|
|
|
|
|
|
(30.9
|
)
|
|
|
|
(30.9
|
)
|
|
|
||||||||||||||||||||
|
Dividends settled in Shares of Class A Common Stock
|
|
|
|
|
3.2
|
|
|
|
|
|
30.9
|
|
|
|
|
|
|
|
|
|
|
30.9
|
|
|
|
|
30.9
|
|
|
|
||||||||||||||||||
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
52.3
|
|
|
|
|
|
|
|
|
52.3
|
|
|
2.8
|
|
|
55.1
|
|
|
1.2
|
|
||||||||||||||||||
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(124.6
|
)
|
|
|
|
|
|
(124.6
|
)
|
|
|
|
|
(124.6
|
)
|
|
|
|
||||||||||||||||||
|
Distribution to noncontrolling interests, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|||||||||||||||||||
|
Adjustments related to the sale of business
|
|
|
|
|
|
|
|
|
6.2
|
|
|
|
|
|
|
|
|
|
|
6.2
|
|
|
|
|
6.2
|
|
|
(360.4
|
)
|
|||||||||||||||||||
|
Adjustment of redeemable noncontrolling interests to redemption value
|
|
|
|
|
|
|
|
|
(3.9
|
)
|
|
|
|
|
|
|
|
|
|
(3.9
|
)
|
|
|
|
(3.9
|
)
|
|
3.9
|
|
|||||||||||||||||||
|
BALANCE—September 30, 2019
|
9.4
|
|
|
$
|
0.1
|
|
|
822.5
|
|
|
$
|
8.1
|
|
|
$
|
10,566.1
|
|
|
$
|
(4,489.6
|
)
|
|
$
|
(183.4
|
)
|
|
65.5
|
|
|
$
|
(1,446.3
|
)
|
|
$
|
4,455.0
|
|
|
$
|
9.3
|
|
|
$
|
4,464.3
|
|
|
$
|
94.6
|
|
|
|
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 previously 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
|
|
|
|
|
|
|
|
|
|
|
(112.6
|
)
|
|
|
|
|
|
|
|
(112.6
|
)
|
|
|
|
(112.6
|
)
|
|
|
||||||||||||||||||||
|
Adjustment due to the adoption of ASC 606
|
|
|
|
|
|
|
|
|
|
|
(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 (loss) income
|
|
|
|
|
|
|
|
|
|
|
(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 16)
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||
|
Net income (loss)
|
$
|
56.3
|
|
|
$
|
(10.1
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
|
Depreciation and amortization
|
179.2
|
|
|
185.6
|
|
||
|
Operating lease right-of-use asset amortization (See Note 3)
|
26.1
|
|
|
—
|
|
||
|
Deferred income taxes
|
(32.6
|
)
|
|
(99.8
|
)
|
||
|
Provision for bad debts
|
9.8
|
|
|
6.1
|
|
||
|
Provision for pension and other post-employment benefits
|
9.0
|
|
|
9.1
|
|
||
|
Share-based compensation
|
6.2
|
|
|
6.4
|
|
||
|
Gain on sale of business (See Note 5)
|
(84.5
|
)
|
|
—
|
|
||
|
Asset impairment charges
|
—
|
|
|
12.6
|
|
||
|
Other
|
12.4
|
|
|
11.5
|
|
||
|
Change in operating assets and liabilities, net of effects from purchase of acquired companies and sale of business:
|
|
|
|
|
|
||
|
Trade receivables
|
71.7
|
|
|
35.6
|
|
||
|
Inventories
|
(72.9
|
)
|
|
(109.5
|
)
|
||
|
Prepaid expenses and other current assets
|
(12.1
|
)
|
|
40.2
|
|
||
|
Accounts payable
|
(103.2
|
)
|
|
(83.2
|
)
|
||
|
Accrued expenses and other current liabilities
|
4.0
|
|
|
(101.3
|
)
|
||
|
Operating lease liabilities
|
(26.7
|
)
|
|
—
|
|
||
|
Income and other taxes payable
|
4.4
|
|
|
7.6
|
|
||
|
Other noncurrent assets
|
(8.2
|
)
|
|
(5.0
|
)
|
||
|
Other noncurrent liabilities
|
1.0
|
|
|
12.3
|
|
||
|
Net cash provided by (used in) operating activities
|
39.9
|
|
|
(81.9
|
)
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
|
Capital expenditures
|
(86.4
|
)
|
|
(133.6
|
)
|
||
|
Proceeds from sale of business, net of cash disposed
|
25.6
|
|
|
—
|
|
||
|
Payment for asset acquisitions
|
—
|
|
|
(40.8
|
)
|
||
|
Net cash used in investing activities
|
(60.8
|
)
|
|
(174.4
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
|
Net repayments of short-term debt, original maturity less than three months
|
(3.4
|
)
|
|
(17.8
|
)
|
||
|
Proceeds from revolving loan facilities
|
972.6
|
|
|
771.9
|
|
||
|
Repayments of revolving loan facilities
|
(776.5
|
)
|
|
(239.8
|
)
|
||
|
Repayments of term loans and other long-term debt
|
(46.1
|
)
|
|
(48.1
|
)
|
||
|
Dividend payment
|
(63.3
|
)
|
|
(93.8
|
)
|
||
|
Net proceeds from issuance of Class A Common Stock and Series A Preferred Stock
|
0.6
|
|
|
0.7
|
|
||
|
Payments for purchases of Class A Common Stock held as Treasury Stock
|
(4.5
|
)
|
|
—
|
|
||
|
Net proceeds from (payments of) foreign currency contracts
|
5.3
|
|
|
(3.7
|
)
|
||
|
Purchase of remaining mandatorily redeemable noncontrolling interest
|
(45.0
|
)
|
|
—
|
|
||
|
Distributions to noncontrolling interests, redeemable noncontrolling interests and mandatorily redeemable financial instruments
|
(2.6
|
)
|
|
(5.6
|
)
|
||
|
Payment of debt issuance costs
|
—
|
|
|
(10.0
|
)
|
||
|
All other
|
(0.4
|
)
|
|
(2.0
|
)
|
||
|
Net cash provided by financing activities
|
36.7
|
|
|
351.8
|
|
||
|
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(14.8
|
)
|
|
(4.5
|
)
|
||
|
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
1.0
|
|
|
91.0
|
|
||
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period
|
380.4
|
|
|
362.2
|
|
||
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period
|
$
|
381.4
|
|
|
$
|
453.2
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
|
|
|
|
|
|
||
|
Cash paid during the period for interest
|
$
|
57.7
|
|
|
$
|
48.9
|
|
|
Cash received during the period for settlement of interest rate swaps
|
—
|
|
|
43.2
|
|
||
|
Cash paid during the period for income taxes, net of refunds received
|
39.7
|
|
|
23.9
|
|
||
|
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
|
|
|
|
|
|
||
|
Accrued capital expenditure additions
|
$
|
67.2
|
|
|
$
|
97.0
|
|
|
Non-cash Common Stock dividend
|
30.9
|
|
|
—
|
|
||
|
Lease Cost:
|
|
||
|
Operating lease cost
|
$
|
31.7
|
|
|
Short-term lease cost
|
0.7
|
|
|
|
Variable lease cost
|
12.4
|
|
|
|
Sublease income
|
(2.2
|
)
|
|
|
Net lease cost
|
$
|
42.6
|
|
|
Other information:
|
|
||
|
Operating cash outflows from operating leases
|
$
|
31.9
|
|
|
Right-of-use assets obtained in exchange for lease obligations
|
(25.0
|
)
|
|
|
Weighted-average remaining lease term - real estate
|
7.7 years
|
|
|
|
Weighted-average discount rate - real estate leases
|
4.07
|
%
|
|
|
Fiscal Year Ending June 30,
|
|
||
|
2020, remaining
|
$
|
89.9
|
|
|
2021
|
103.6
|
|
|
|
2022
|
87.2
|
|
|
|
2023
|
72.4
|
|
|
|
2024
|
62.4
|
|
|
|
Thereafter
|
240.1
|
|
|
|
Total future lease payments
|
655.6
|
|
|
|
Less: imputed interest
|
(101.2
|
)
|
|
|
Total present value of lease liabilities
|
554.4
|
|
|
|
Current operating lease liabilities
|
96.5
|
|
|
|
Long-term operating lease liabilities
|
457.9
|
|
|
|
Total operating lease liabilities
|
$
|
554.4
|
|
|
|
|
|
Fiscal Year Ending June 30,
|
|
||
|
2020
|
$
|
122.2
|
|
|
2021
|
111.2
|
|
|
|
2022
|
91.3
|
|
|
|
2023
|
76.7
|
|
|
|
2024
|
67.8
|
|
|
|
Thereafter
|
252.3
|
|
|
|
Total
|
721.5
|
|
|
|
Less: sublease income
|
(20.1
|
)
|
|
|
Total payments
|
$
|
701.4
|
|
|
|
Three Months Ended
September 30, |
||||||
|
SEGMENT DATA
|
2019
|
|
2018
|
||||
|
Net revenues:
|
|
|
|
||||
|
Luxury
|
$
|
806.7
|
|
|
$
|
792.9
|
|
|
Consumer Beauty
|
716.5
|
|
|
828.8
|
|
||
|
Professional Beauty
|
419.6
|
|
|
409.6
|
|
||
|
Total
|
$
|
1,942.8
|
|
|
$
|
2,031.3
|
|
|
Operating income (loss):
|
|
|
|
||||
|
Luxury
|
$
|
90.3
|
|
|
$
|
48.7
|
|
|
Consumer Beauty
|
(43.3
|
)
|
|
(18.6
|
)
|
||
|
Professional Beauty
|
24.4
|
|
|
5.0
|
|
||
|
Corporate
|
54.6
|
|
|
(55.8
|
)
|
||
|
Total
|
$
|
126.0
|
|
|
$
|
(20.7
|
)
|
|
Reconciliation:
|
|
|
|
||||
|
Operating income (loss)
|
$
|
126.0
|
|
|
$
|
(20.7
|
)
|
|
Interest expense, net
|
77.4
|
|
|
64.1
|
|
||
|
Other expense, net
|
2.2
|
|
|
2.7
|
|
||
|
Income (loss) before income taxes
|
$
|
46.4
|
|
|
$
|
(87.5
|
)
|
|
|
Three Months Ended
September 30, |
||||
|
PRODUCT CATEGORY
|
2019
|
|
2018
|
||
|
Fragrance
|
42.1
|
%
|
|
40.8
|
%
|
|
Color Cosmetics
|
24.4
|
|
|
26.4
|
|
|
Hair Care
|
24.6
|
|
|
24.1
|
|
|
Skin & Body Care
|
8.9
|
|
|
8.7
|
|
|
Total Coty Inc.
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Turnaround Plan
|
$
|
8.7
|
|
|
$
|
—
|
|
|
Global Integration Activities
|
(1.7
|
)
|
|
6.5
|
|
||
|
2018 Restructuring Actions
|
(0.8
|
)
|
|
9.1
|
|
||
|
Other Restructuring
|
(0.2
|
)
|
|
(0.1
|
)
|
||
|
Total
|
$
|
6.0
|
|
|
$
|
15.5
|
|
|
|
Severance and Employee Benefits
|
|
Third-Party Contract Terminations
|
|
Fixed Asset Write-offs
|
|
Other Exit Costs
|
|
Total
|
||||||||||
|
Cumulative through September 30, 2019
|
$
|
7.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
1.4
|
|
|
$
|
8.7
|
|
|
|
Severance and Employee Benefits
|
|
Third-Party Contract Terminations
|
|
Fixed Asset Write-offs
|
|
Other Exit Costs
|
|
Total
|
||||||||||
|
Balance—July 1, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Restructuring charges
|
7.1
|
|
|
0.1
|
|
|
0.1
|
|
|
1.4
|
|
|
8.7
|
|
|||||
|
Payments
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||||
|
Non-cash utilization
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
|
ASC 842 adoption adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
(1.4
|
)
|
|||||
|
Balance—September 30, 2019
|
$
|
6.5
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6.6
|
|
|
|
Severance and Employee Benefits
|
|
Third-Party Contract Terminations
|
|
Fixed Asset Write-offs
|
|
Other Exit Costs
|
|
Total
|
||||||||||
|
Fiscal 2017
|
$
|
333.9
|
|
|
$
|
22.4
|
|
|
$
|
4.6
|
|
|
$
|
4.1
|
|
|
$
|
365.0
|
|
|
Fiscal 2018
|
67.5
|
|
|
19.3
|
|
|
14.3
|
|
|
5.4
|
|
|
106.5
|
|
|||||
|
Fiscal 2019
|
(6.0
|
)
|
|
4.5
|
|
|
27.8
|
|
|
2.2
|
|
|
28.5
|
|
|||||
|
Fiscal 2020
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|||||
|
Cumulative through September 30, 2019
|
$
|
393.7
|
|
|
$
|
46.2
|
|
|
$
|
46.7
|
|
|
$
|
11.7
|
|
|
$
|
498.3
|
|
|
|
Severance and
Employee Benefits |
|
Third-Party
Contract Terminations |
|
Fixed Asset Write-offs
|
|
Other
Exit Costs |
|
Total
Program Costs |
||||||||||
|
Balance—July 1, 2019
|
$
|
53.7
|
|
|
$
|
11.7
|
|
|
$
|
—
|
|
|
$
|
1.6
|
|
|
$
|
67.0
|
|
|
ASC 842 adoption adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
(1.5
|
)
|
|||||
|
Payments
|
(8.6
|
)
|
|
(3.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(11.8
|
)
|
|||||
|
Changes in estimates
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|||||
|
Effect of exchange rates
|
(1.7
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(1.8
|
)
|
|||||
|
Balance—September 30, 2019
|
$
|
41.7
|
|
|
$
|
8.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50.2
|
|
|
|
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
|
15.4
|
|
|
(0.1
|
)
|
|
—
|
|
|
1.5
|
|
|
16.8
|
|
|||||
|
Fiscal 2020
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|||||
|
Cumulative through September 30, 2019
|
$
|
78.1
|
|
|
$
|
0.1
|
|
|
$
|
1.3
|
|
|
$
|
4.9
|
|
|
$
|
84.4
|
|
|
|
Severance and
Employee
Benefits
|
|
Third-Party
Contract
Terminations
|
|
Other Exit Costs
|
|
Total
Program
Costs
|
||||||||
|
Balance—July 1, 2019
|
$
|
15.5
|
|
|
$
|
0.1
|
|
|
$
|
1.5
|
|
|
$
|
17.1
|
|
|
Payments
|
(2.6
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(2.7
|
)
|
||||
|
Changes in estimates
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
||||
|
ASC 842 adoption adjustment
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
(1.1
|
)
|
||||
|
Effect of exchange rates
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
||||
|
Balance—September 30, 2019
|
$
|
11.8
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
12.2
|
|
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
|
Raw materials
|
$
|
252.2
|
|
|
$
|
259.5
|
|
|
Work-in-process
|
13.0
|
|
|
20.4
|
|
||
|
Finished goods
|
885.6
|
|
|
873.4
|
|
||
|
Total inventories
|
$
|
1,150.8
|
|
|
$
|
1,153.3
|
|
|
|
Luxury
|
|
Consumer Beauty
|
|
Professional Beauty
|
|
Total
|
||||||||
|
Gross balance at June 30, 2019
|
$
|
3,325.4
|
|
|
$
|
4,844.6
|
|
|
$
|
935.7
|
|
|
$
|
9,105.7
|
|
|
Accumulated impairments
|
(403.7
|
)
|
|
(3,628.2
|
)
|
|
—
|
|
|
(4,031.9
|
)
|
||||
|
Net balance at June 30, 2019
|
$
|
2,921.7
|
|
|
$
|
1,216.4
|
|
|
$
|
935.7
|
|
|
$
|
5,073.8
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Changes during the period ended September 30, 2019:
|
|
|
|
|
|
|
|
||||||||
|
Disposition of business
|
$
|
—
|
|
|
$
|
(23.4
|
)
|
|
$
|
—
|
|
|
$
|
(23.4
|
)
|
|
Foreign currency translation
|
(67.0
|
)
|
|
(42.5
|
)
|
|
(23.6
|
)
|
|
(133.1
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Gross balance at September 30, 2019
|
$
|
3,258.4
|
|
|
$
|
4,778.7
|
|
|
$
|
912.1
|
|
|
$
|
8,949.2
|
|
|
Accumulated impairments
|
(403.7
|
)
|
|
(3,628.2
|
)
|
|
—
|
|
|
(4,031.9
|
)
|
||||
|
Net balance at September 30, 2019
|
$
|
2,854.7
|
|
|
$
|
1,150.5
|
|
|
$
|
912.1
|
|
|
$
|
4,917.3
|
|
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
|
Indefinite-lived other intangible assets
|
$
|
2,702.5
|
|
|
$
|
2,729.8
|
|
|
Finite-lived other intangible assets, net
|
4,261.3
|
|
|
4,692.5
|
|
||
|
Total Other intangible assets, net
|
$
|
6,963.8
|
|
|
$
|
7,422.3
|
|
|
|
Luxury
|
|
Consumer Beauty
|
|
Professional Beauty
|
|
Total
|
||||||||
|
Gross balance at June 30, 2019
|
$
|
405.8
|
|
|
$
|
1,693.1
|
|
|
$
|
1,257.8
|
|
|
$
|
3,356.7
|
|
|
Accumulated impairments
|
(228.4
|
)
|
|
(368.4
|
)
|
|
(30.1
|
)
|
|
(626.9
|
)
|
||||
|
Net balance at June 30, 2019
|
$
|
177.4
|
|
|
$
|
1,324.7
|
|
|
$
|
1,227.7
|
|
|
$
|
2,729.8
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Changes during the period ended September 30, 2019:
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency translation
|
$
|
(6.7
|
)
|
|
$
|
(11.3
|
)
|
|
$
|
(9.3
|
)
|
|
$
|
(27.3
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Gross balance at September 30, 2019
|
$
|
399.1
|
|
|
$
|
1,681.8
|
|
|
$
|
1,248.5
|
|
|
$
|
3,329.4
|
|
|
Accumulated impairments
|
(228.4
|
)
|
|
(368.4
|
)
|
|
(30.1
|
)
|
|
(626.9
|
)
|
||||
|
Net balance at September 30, 2019
|
$
|
170.7
|
|
|
$
|
1,313.4
|
|
|
$
|
1,218.4
|
|
|
$
|
2,702.5
|
|
|
|
Cost
|
|
Accumulated Amortization
|
|
Accumulated Impairment
|
|
Net
|
||||||||
|
June 30, 2019
|
|
|
|
|
|
|
|
||||||||
|
License agreements
|
$
|
3,245.3
|
|
|
$
|
(874.5
|
)
|
|
$
|
(19.6
|
)
|
|
$
|
2,351.2
|
|
|
Customer relationships
|
1,951.6
|
|
|
(642.0
|
)
|
|
(5.5
|
)
|
|
1,304.1
|
|
||||
|
Trademarks
|
1,039.5
|
|
|
(229.4
|
)
|
|
(0.5
|
)
|
|
809.6
|
|
||||
|
Product formulations and technology
|
354.1
|
|
|
(126.5
|
)
|
|
—
|
|
|
227.6
|
|
||||
|
Total
|
$
|
6,590.5
|
|
|
$
|
(1,872.4
|
)
|
|
$
|
(25.6
|
)
|
|
$
|
4,692.5
|
|
|
September 30, 2019
|
|
|
|
|
|
|
|
||||||||
|
License agreements
|
$
|
3,147.0
|
|
|
$
|
(893.3
|
)
|
|
$
|
(19.6
|
)
|
|
$
|
2,234.1
|
|
|
Customer relationships
|
1,720.4
|
|
|
(590.0
|
)
|
|
(5.5
|
)
|
|
1,124.9
|
|
||||
|
Trademarks
|
911.7
|
|
|
(222.7
|
)
|
|
(0.5
|
)
|
|
688.5
|
|
||||
|
Product formulations and technology
|
343.9
|
|
|
(130.1
|
)
|
|
—
|
|
|
213.8
|
|
||||
|
Total
|
$
|
6,123.0
|
|
|
$
|
(1,836.1
|
)
|
|
$
|
(25.6
|
)
|
|
$
|
4,261.3
|
|
|
|
September 30, 2019
|
|
June 30,
2019 |
||||
|
Short-term debt
|
$
|
0.7
|
|
|
$
|
4.2
|
|
|
2018 Coty Credit Agreement
|
|
|
|
||||
|
2018 Coty Revolving Credit Facility due April 2023
|
966.2
|
|
|
792.1
|
|
||
|
2018 Coty Term A Facility due April 2023
|
3,023.6
|
|
|
3,147.0
|
|
||
|
2018 Coty Term B Facility due April 2025
|
2,300.3
|
|
|
2,342.3
|
|
||
|
Senior Unsecured Notes
|
|
|
|
||||
|
2026 Dollar Notes due April 2026
|
550.0
|
|
|
550.0
|
|
||
|
2023 Euro Notes due April 2023
|
601.4
|
|
|
625.0
|
|
||
|
2026 Euro Notes due April 2026
|
273.4
|
|
|
284.1
|
|
||
|
Other long-term debt and capital lease obligations
|
0.9
|
|
|
1.1
|
|
||
|
Total debt
|
7,716.5
|
|
|
7,745.8
|
|
||
|
Less: Short-term debt and current portion of long-term debt
|
(185.4
|
)
|
|
(193.8
|
)
|
||
|
Total Long-term debt
|
7,531.1
|
|
|
7,552.0
|
|
||
|
Less: Unamortized debt issuance costs
|
(67.2
|
)
|
|
(71.3
|
)
|
||
|
Less: Discount on Long-term debt
|
(10.4
|
)
|
|
(10.8
|
)
|
||
|
Total Long-term debt, net
|
$
|
7,453.5
|
|
|
$
|
7,469.9
|
|
|
•
|
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%
|
|
|
September 30, 2019
|
|
June 30, 2019
|
||||||||||||
|
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
||||||||
|
2018 Coty Credit Agreement
|
$
|
6,290.1
|
|
|
$
|
5,987.2
|
|
|
$
|
6,281.4
|
|
|
$
|
6,058.9
|
|
|
Senior Unsecured Notes
|
1,424.8
|
|
|
1,417.8
|
|
|
1,459.1
|
|
|
1,439.6
|
|
||||
|
Fiscal Year Ending June 30,
|
|
|
|
2020, remaining
|
138.4
|
|
|
2021
|
184.6
|
|
|
2022
|
184.6
|
|
|
2023
|
4,171.0
|
|
|
2024
|
23.3
|
|
|
Thereafter
|
3,013.0
|
|
|
Total
|
7,714.9
|
|
|
Quarterly Test Period Ending
|
Total Net Leverage Ratio (a)
|
|
September 30, 2019 through December 31, 2021
|
5.25 to 1.00
|
|
March 31, 2022
|
5.00 to 1.00
|
|
June 30, 2022
|
4.75 to 1.00
|
|
September 30, 2022
|
4.50 to 1.00
|
|
December 31, 2022
|
4.25 to 1.00
|
|
March 31, 2023 through June 30, 2023
|
4.00 to 1.00
|
|
|
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Interest expense
|
$
|
75.5
|
|
|
$
|
72.4
|
|
|
Foreign exchange gains, net of derivative contracts
|
3.8
|
|
|
(3.6
|
)
|
||
|
Interest income
|
(1.9
|
)
|
|
(4.7
|
)
|
||
|
Total interest expense, net
|
$
|
77.4
|
|
|
$
|
64.1
|
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
Other Post-
Employment Benefits
|
|
|
||||||||||||||||||||||||||
|
|
U.S.
|
|
International
|
|
|
Total
|
|||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
|
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9.5
|
|
|
$
|
8.2
|
|
|
$
|
0.5
|
|
|
$
|
0.3
|
|
|
$
|
10.0
|
|
|
$
|
8.5
|
|
|
Interest cost
|
0.1
|
|
|
0.2
|
|
|
2.3
|
|
|
3.3
|
|
|
0.4
|
|
|
0.5
|
|
|
2.8
|
|
|
4.0
|
|
||||||||
|
Expected return on plan assets
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
(2.1
|
)
|
||||||||
|
Amortization of prior service cost (credit)
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
0.1
|
|
|
(1.6
|
)
|
|
(1.5
|
)
|
|
(1.8
|
)
|
|
(1.4
|
)
|
||||||||
|
Amortization of net (gain) loss
|
0.1
|
|
|
(0.2
|
)
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
||||||||
|
Net periodic benefit cost (credit)
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
9.5
|
|
|
$
|
9.8
|
|
|
$
|
(0.7
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
9.0
|
|
|
$
|
9.1
|
|
|
Gain (Loss) Recognized in OCI
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Foreign exchange forward contracts
|
$
|
0.4
|
|
|
$
|
—
|
|
|
Interest rate swap contracts
|
(0.5
|
)
|
|
5.1
|
|
||
|
Cross-currency swap contracts
|
3.9
|
|
|
—
|
|
||
|
Net investment hedge
|
157.3
|
|
|
4.3
|
|
||
|
Location and Amount of Gain (Loss) Recognized in Income on Cash Flow Hedging Relationships
|
Three Months Ended September 30,
|
||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||
|
|
Cost of sales
|
|
Interest expense, net
|
|
Cost of sales
|
|
Interest expense, net
|
||||||||
|
Foreign exchange forward contracts:
|
|
|
|
|
|
|
|
||||||||
|
Amount of gain (loss) reclassified from AOCI into income
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest rate swap contracts:
|
|
|
|
|
|
|
|
||||||||
|
Amount of gain (loss) reclassified from AOCI into income
|
—
|
|
|
0.9
|
|
|
—
|
|
|
3.8
|
|
||||
|
Condensed Consolidated Statements of Operations
Classification of Gain (Loss) Recognized in Operations |
Three Months Ended
September 30, |
|||||||
|
|
|
2019
|
|
2018
|
||||
|
Foreign exchange contracts
|
Selling, general and administrative expenses
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
Foreign exchange contracts
|
Interest expense, net
|
4.7
|
|
|
4.0
|
|
||
|
Foreign exchange contracts
|
Other expense, net
|
(0.1
|
)
|
|
1.3
|
|
||
|
Declaration Date
|
|
Dividend Type
|
|
Dividend Per Share
|
|
Holders of Record Date
|
|
Dividend Value
|
|
Dividend Payment Date
|
|
Dividends Settled in Cash
|
|
Dividends Settled in Stock (a)
|
|
Dividends Payable (b)
|
||||||||||
|
Fiscal 2020
|
||||||||||||||||||||||||||
|
August 28, 2019
|
|
Quarterly
|
|
$
|
0.125
|
|
|
September 9, 2019
|
|
$
|
0.125
|
|
|
September 30, 2019
|
|
$
|
63.3
|
|
|
$
|
30.9
|
|
|
$
|
1.1
|
|
|
|
|
|
(a)
|
The September 30, 2019 stock dividend payment of $30.9 resulted in the issuance of 3.2 million shares of Class A Common Stock.
|
|
(b)
|
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. Dividends payable are recorded as Accrued expense and other current liabilities and Other noncurrent liabilities in the Condensed Consolidated Balance Sheet.
|
|
|
|
|
Foreign Currency Translation Adjustments
|
|
|
|
|
||||||||||||
|
|
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, 2019
|
$
|
(13.3
|
)
|
|
$
|
214.8
|
|
|
$
|
(257.4
|
)
|
|
$
|
(2.9
|
)
|
|
$
|
(58.8
|
)
|
|
Other comprehensive (loss) income before reclassifications
|
(0.5
|
)
|
|
161.2
|
|
|
(283.8
|
)
|
|
—
|
|
|
(123.1
|
)
|
|||||
|
Net amounts reclassified from AOCI/(L)
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
(1.5
|
)
|
|||||
|
Net current-period other comprehensive (loss) income
|
(1.2
|
)
|
|
161.2
|
|
|
(283.8
|
)
|
|
(0.8
|
)
|
|
(124.6
|
)
|
|||||
|
Balance—September 30, 2019
|
$
|
(14.5
|
)
|
|
$
|
376.0
|
|
|
$
|
(541.2
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(183.4
|
)
|
|
|
|
|
|
|
|
Foreign Currency Translation Adjustments
|
|
|
|
|
||||||||||||
|
|
Gain on Cash Flow Hedges
|
|
Gain on Net Investment Hedge
|
|
Other Foreign Currency Translation Adjustments
|
|
Pension and Other Post-Employment Benefit Plans
|
|
Total
|
||||||||||
|
Balance—July 1, 2018
|
$
|
31.7
|
|
|
$
|
115.0
|
|
|
$
|
(44.3
|
)
|
|
$
|
56.4
|
|
|
$
|
158.8
|
|
|
Other comprehensive income (loss) before reclassifications
|
3.9
|
|
|
4.3
|
|
|
(53.4
|
)
|
|
0.1
|
|
|
(45.1
|
)
|
|||||
|
Net amounts reclassified from AOCI/(L)
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|||||
|
Net current-period other comprehensive income (loss)
|
1.0
|
|
|
4.3
|
|
|
(53.4
|
)
|
|
0.1
|
|
|
(48.0
|
)
|
|||||
|
Balance—September 30, 2018
|
$
|
32.7
|
|
|
$
|
119.3
|
|
|
$
|
(97.7
|
)
|
|
$
|
56.5
|
|
|
$
|
110.8
|
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Equity plan expense
|
$
|
6.2
|
|
|
$
|
6.4
|
|
|
Fringe expense
|
0.1
|
|
|
—
|
|
||
|
Total share-based compensation expense
|
$
|
6.3
|
|
|
$
|
6.4
|
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions, except per share data)
|
||||||
|
Net income (loss) attributable to Coty Inc.
|
$
|
52.3
|
|
|
$
|
(12.1
|
)
|
|
Weighted-average common shares outstanding—Basic
|
754.2
|
|
|
750.8
|
|
||
|
Effect of dilutive stock options and Series A/A-1 Preferred Stock (a)
|
1.1
|
|
|
—
|
|
||
|
Effect of restricted stock and RSUs (b)
|
3.6
|
|
|
—
|
|
||
|
Weighted-average common shares outstanding—Diluted
|
758.9
|
|
|
750.8
|
|
||
|
Net income (loss) attributable to Coty Inc. per common share:
|
|
|
|
||||
|
Basic
|
$
|
0.07
|
|
|
$
|
(0.02
|
)
|
|
Diluted
|
0.07
|
|
|
(0.02
|
)
|
||
|
|
|
|
(a)
|
For the three months ended September 30, 2019, outstanding stock options and Series A/A-1 Preferred Stock with purchase or conversion rights to purchase 24.3 million shares of Common Stock were excluded from the computation of diluted EPS as their inclusion would be anti-dilutive. For the three months ended September 30, 2018, outstanding stock options and Series A/A-1 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.
|
|
(b)
|
For the three months ended September 30, 2019, there were 0.6 million anti-dilutive RSUs excluded from the computation of diluted EPS as their inclusion would be anti-dilutive. For the three months ended September 30, 2018, RSUs were excluded in the computation of diluted loss per share due to the net loss incurred during the period.
|
|
•
|
our ability to successfully implement our multi-year Turnaround Plan, including our management headquarters relocation, management realignment and segment reporting changes, and to develop and achieve our global business strategies, compete effectively in the beauty industry and achieve the benefits contemplated by our strategic initiatives within the expected time frame or at all;
|
|
•
|
the result of the Strategic Review and whether such Strategic Review will result in any transactions and the amount and use of proceeds from any such transactions;
|
|
•
|
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 and the anticipated costs and discounting associated with such relaunches and rebrands, and consumer receptiveness to our current and future marketing philosophy 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, and the fair value of acquired assets and liabilities associated with acquisitions;
|
|
•
|
the impact of any future impairments;
|
|
•
|
managerial, transformational, operational, regulatory, legal and financial risks, including diversion of management attention to and management of cash flows, expenses and costs associated with the Turnaround Plan, the Strategic
|
|
•
|
future acquisitions, new licenses and joint ventures and the integration thereof 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), avoid liabilities and realize 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) and 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, including any change in our stock dividend reinvestment program (the “Stock Dividend Reinvestment Program”) and policy;
|
|
•
|
any unanticipated problems, liabilities or integration or other challenges associated with a past or future 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, and 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, 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., the European Union and Asia and in other regions where we operate;
|
|
•
|
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, including litigation relating to the tender offer by Cottage Holdco B.V. (the “Cottage Tender Offer”);
|
|
•
|
our ability to manage seasonal factors and other variability and to anticipate future business trends and needs;
|
|
•
|
disruptions in operations, sales and in other areas, including due to disruptions in our supply chain, restructurings and other business alignment activities, the move of our headquarters to Amsterdam, implementation of the Strategic Review, 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;
|
|
•
|
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;
|
|
•
|
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, 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”) and the California Consumer Privacy Act) or to protect against theft of customer, employee and corporate sensitive information;
|
|
•
|
our ability to attract and retain key personnel and the impact of senior management transitions and organizational structure changes, including the co-location of key business leaders and functions in Amsterdam;
|
|
•
|
the distribution and sale by third parties of counterfeit and/or gray market versions of our products;
|
|
•
|
the impact of the Cottage Tender Offer and of our Turnaround Plan, and the Strategic Review and any related transactions, on our relationships with key customers and suppliers and certain material contracts;
|
|
•
|
our relationship with Cottage Holdco B.V., as our majority stockholder, and its affiliates, and any related conflicts of interest or litigation;
|
|
•
|
future sales of a significant number of shares by our majority stockholder or contractually by certain commercial banks on behalf of our majority stockholder, as may be required to satisfy obligations under such majority stockholder's credit agreement, or the perception that such sales could occur; and
|
|
•
|
other factors described elsewhere in this document and in documents that we file with the SEC from time to time.
|
|
•
|
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 supplements 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 supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
|
|
•
|
Gain on sale of business: We have excluded the impact of the Gain on sale of business as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of divestitures. Our management believes that the adjustment of these items supplements 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 supplements 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.;
|
|
•
|
Other expense: We have excluded the impact of costs incurred for legal and advisory services rendered in connection with the evaluation of the tender offer initiated by certain of our shareholders. Our management believes these costs do not reflect our underlying ongoing business, and the adjustment of such costs helps investors and others compare and analyze performance from period to period. We have also excluded the impact of pension curtailment (gains) and losses and pension settlements as such events are triggered by our restructuring and other business realignment activities and the amount of such charges vary significantly based on the size and timing of the programs.
|
|
•
|
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 is 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 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 2020
|
|
Divestiture: Younique - the divestiture of the interest in Foundation, which holds the net assets for Younique (Consumer Beauty segment)
|
|
September fiscal 2020 and 2019 financial contribution excluded. Closing date of divestiture was September 16, 2019. This effectively excludes the incremental 14 days of net revenue contribution from Younique in the prior year.
|
|
(i)
|
Negative share trends in the mass beauty category as a result of shelf-space losses in North America primarily for CoverGirl, Rimmel, and Clairol; and
|
|
(ii)
|
Declines in sales volume from strategic initiatives to reduce distribution through lower priced channels in Latin America and the Middle East primarily impacting the Consumer Beauty division.
|
|
(i)
|
negative share trends in the mass beauty category as a result of shelf-space losses in North America primarily for CoverGirl, Rimmel, and Clairol;
|
|
(ii)
|
declines in sales volume from strategic initiatives to reduce distribution through lower priced channels in Latin America and the Middle East primarily impacting adidas, the retail hair line of Wella hair products, Bourjois and brands across the mass fragrance category;
|
|
(iii)
|
lower net revenues in the comparable periods from Younique due to a decline in presenter sponsorship; and
|
|
(iv)
|
the negative impact of foreign currency exchange translation.
|
|
|
Three Months Ended
September 30, |
|
|
|||||||
|
(in millions)
|
2019
|
|
2018
|
|
Change %
|
|||||
|
NET REVENUES
|
|
|
|
|
|
|||||
|
North America
|
$
|
586.6
|
|
|
$
|
644.9
|
|
|
(9
|
%)
|
|
Europe
|
869.6
|
|
|
872.2
|
|
|
—
|
%
|
||
|
ALMEA
|
486.6
|
|
|
514.2
|
|
|
(5
|
%)
|
||
|
Total
|
$
|
1,942.8
|
|
|
$
|
2,031.3
|
|
|
(4
|
%)
|
|
(i)
|
a favorable mix impact associated with the increased proportion of net revenue contribution from higher-margin Luxury and Professional Beauty products in the three months ended September 30, 2019 as compared to the three months ended September 30, 2018;
|
|
(ii)
|
declines in sales volume from strategic initiatives to reduce distribution through lower priced channels in Latin America and the Middle East primarily impacting adidas, the retail hair line of Wella hair products, Bourjois and brands across the mass fragrance category;
|
|
(iii)
|
decreased manufacturing costs within the Luxury segment reflecting optimization of our manufacturing footprint and the resolution of the prior year supply chain disruptions, and;
|
|
(iv)
|
decreased excess and obsolescence expense on inventory in the Corporate segment for artwork transition activities on acquired inventory in connection with the acquisition of the P&G Beauty Business.
|
|
(i)
|
40 basis points related to lower administrative costs due to compensation expense savings as a result of previous restructuring programs; and
|
|
(ii)
|
40 basis points related to positive transactional impact from our exposure to foreign currency exchange fluctuations.
|
|
|
Three Months Ended
September 30, |
|
|
(bps rounded to nearest tenth)
|
2019/2018
|
|
|
Gain on sale of business
|
430
|
|
|
Cost of sales
|
180
|
|
|
Asset impairment charges
|
60
|
|
|
Restructuring
|
50
|
|
|
Amortization
|
20
|
|
|
Selling, general and administrative expenses
|
10
|
|
|
Total basis point increase
|
750
|
|
|
|
Three Months Ended
September 30, |
|
|
|||||||
|
(in millions)
|
2019
|
|
2018
|
|
Change %
|
|||||
|
Operating income (loss)
|
|
|
|
|
|
|||||
|
Luxury
|
$
|
90.3
|
|
|
$
|
48.7
|
|
|
85
|
%
|
|
Consumer Beauty
|
(43.3
|
)
|
|
(18.6
|
)
|
|
<(100%)
|
|
||
|
Professional Beauty
|
24.4
|
|
|
5.0
|
|
|
>100%
|
|
||
|
Corporate
|
54.6
|
|
|
(55.8
|
)
|
|
>100%
|
|
||
|
Total
|
126.0
|
|
|
(20.7
|
)
|
|
>100%
|
|
||
|
|
Three Months Ended September 30, 2019
|
||||||||||
|
(in millions)
|
Reported
(GAAP) |
|
Adjustments (a)
|
|
Adjusted
(Non-GAAP) |
||||||
|
Operating income (loss)
|
|
|
|
|
|
||||||
|
Luxury
|
$
|
90.3
|
|
|
$
|
(38.0
|
)
|
|
$
|
128.3
|
|
|
Consumer Beauty
|
(43.3
|
)
|
|
(29.1
|
)
|
|
(14.2
|
)
|
|||
|
Professional Beauty
|
24.4
|
|
|
(17.2
|
)
|
|
41.6
|
|
|||
|
Corporate
|
54.6
|
|
|
55.6
|
|
|
(1.0
|
)
|
|||
|
Total
|
126.0
|
|
|
(28.7
|
)
|
|
154.7
|
|
|||
|
|
Three Months Ended September 30, 2018
|
||||||||||
|
(in millions)
|
Reported
(GAAP) |
|
Adjustments (a)
|
|
Adjusted
(Non-GAAP) |
||||||
|
Operating (loss) income
|
|
|
|
|
|
||||||
|
Luxury
|
$
|
48.7
|
|
|
$
|
(52.9
|
)
|
|
$
|
101.6
|
|
|
Consumer Beauty
|
(18.6
|
)
|
|
(33.4
|
)
|
|
14.8
|
|
|||
|
Professional Beauty
|
5.0
|
|
|
(18.8
|
)
|
|
23.8
|
|
|||
|
Corporate
|
(55.8
|
)
|
|
(56.4
|
)
|
|
0.6
|
|
|||
|
Total
|
(20.7
|
)
|
|
(161.5
|
)
|
|
140.8
|
|
|||
|
|
|
|
(a)
|
See a reconciliation of reported operating income to adjusted operating income and a description of the adjustments under “Adjusted Operating 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.
|
|
|
Three Months Ended
September 30, |
|
|
|||||||
|
(in millions)
|
2019
|
|
2018
|
|
Change %
|
|||||
|
Reported operating income (loss)
|
$
|
126.0
|
|
|
$
|
(20.7
|
)
|
|
>100%
|
|
|
% of net revenues
|
6.5
|
%
|
|
(1.0
|
%)
|
|
|
|||
|
Amortization expense
|
84.3
|
|
|
92.5
|
|
|
(9
|
%)
|
||
|
Restructuring and other business realignment costs
|
28.9
|
|
|
56.4
|
|
|
(49
|
%)
|
||
|
Gain on sale of business
|
(84.5
|
)
|
|
—
|
|
|
N/A
|
|
||
|
Asset impairment charges
|
—
|
|
|
12.6
|
|
|
(100
|
%)
|
||
|
Total adjustments to reported operating income
|
28.7
|
|
|
161.5
|
|
|
(82
|
%)
|
||
|
Adjusted operating income (loss)
|
$
|
154.7
|
|
|
$
|
140.8
|
|
|
10
|
%
|
|
% of net revenues
|
8.0
|
%
|
|
6.9
|
%
|
|
|
|||
|
•
|
We incurred restructuring costs of $6.0 primarily related to the Turnaround Plan, included in the Condensed Consolidated Statements of Operations; and
|
|
•
|
We incurred business structure realignment costs of $22.9 primarily related to the Turnaround Plan, included in Selling, general and administrative expenses in the Condensed Consolidated Statement of Operations.
|
|
•
|
We incurred restructuring costs of $15.5 primarily related to the Global Integration Activities and 2018 Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
|
|
•
|
We incurred business structure realignment costs of $40.9 primarily related to our Global Integration Activities and certain other programs. This amount includes $35.7 reported in selling, general and administrative expenses and $5.2 reported in cost of sales in the Condensed Consolidated Statements of Operations.
|
|
|
Three Months Ended
September 30, 2019 |
|
Three Months Ended
September 30, 2018 |
||||||||||||||||||
|
(in millions)
|
Income Before Income Taxes
|
|
(Benefit) Provision for Income Taxes
|
|
Effective Tax Rate
|
|
(Loss) Income Before Income Taxes
|
|
(Benefit) Provision for Income Taxes
|
|
Effective Tax Rate
|
||||||||||
|
Reported income (loss) before income taxes
|
$
|
46.4
|
|
|
$
|
(9.9
|
)
|
|
(21.3
|
%)
|
|
$
|
(87.5
|
)
|
|
$
|
(77.4
|
)
|
|
88.5
|
%
|
|
Gain on sale of business adjustment (a) (b)
|
(84.5
|
)
|
|
4.8
|
|
|
|
|
|
|
|
|
|
||||||||
|
Other adjustments to reported operating income (a) (b)
|
113.2
|
|
|
22.7
|
|
|
|
|
161.5
|
|
|
65.1
|
|
|
|
||||||
|
Adjusted income before income taxes
|
$
|
75.1
|
|
|
$
|
17.6
|
|
|
23.4
|
%
|
|
$
|
74.0
|
|
|
$
|
(12.3
|
)
|
|
(16.6
|
%)
|
|
|
|
|
(a)
|
See a description of adjustments under “adjusted 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
September 30, |
|
|
|||||||
|
(in millions)
|
2019
|
|
2018
|
|
Change %
|
|||||
|
Reported net income (loss) attributable to Coty Inc.
|
$
|
52.3
|
|
|
$
|
(12.1
|
)
|
|
>100%
|
|
|
% of net revenues
|
2.7
|
%
|
|
(0.6
|
%)
|
|
|
|||
|
Adjustments to reported operating income (a)
|
28.7
|
|
|
161.5
|
|
|
(82
|
%)
|
||
|
Adjustments to noncontrolling interests (b)
|
(3.0
|
)
|
|
(3.8
|
)
|
|
21
|
%
|
||
|
Change in tax provision due to adjustments to reported net income attributable to Coty Inc.
|
(27.5
|
)
|
|
(65.1
|
)
|
|
58
|
%
|
||
|
Adjusted net income attributable to Coty Inc.
|
$
|
50.5
|
|
|
$
|
80.5
|
|
|
(37
|
%)
|
|
% of net revenues
|
2.6
|
%
|
|
4.0
|
%
|
|
|
|
||
|
Per Share Data
|
|
|
|
|
|
|||||
|
Adjusted weighted-average common shares
|
|
|
|
|
|
|||||
|
Basic
|
754.2
|
|
|
750.8
|
|
|
|
|||
|
Diluted
|
758.9
|
|
|
752.7
|
|
|
|
|||
|
Adjusted net income attributable to Coty Inc. per common share
|
|
|
|
|
|
|||||
|
Basic
|
$
|
0.07
|
|
|
$
|
0.11
|
|
|
|
|
|
Diluted
|
0.07
|
|
|
0.11
|
|
|
|
|||
|
|
|
|
(a)
|
See a description of adjustments under “Adjusted Operating Income for Coty Inc.”
|
|
(b)
|
The amounts represent the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interest based on the relevant noncontrolling interest percentage in the Consolidated Statements of Operations.
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
Condensed Consolidated Statements of Cash Flows Data:
(in millions)
|
|
|
|
||||
|
Net cash provided by (used in) operating activities
|
$
|
39.9
|
|
|
$
|
(81.9
|
)
|
|
Net cash used in investing activities
|
(60.8
|
)
|
|
(174.4
|
)
|
||
|
Net cash provided by financing activities
|
36.7
|
|
|
351.8
|
|
||
|
•
|
Revenue Recognition;
|
|
•
|
Goodwill, Other Intangible Assets and Long-Lived Assets;
|
|
•
|
Business Combinations;
|
|
•
|
Inventory; and
|
|
•
|
Income Taxes.
|
|
Exhibit Number
|
|
Description
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
101.INS
|
|
Inline XBRL Instance Document.
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Labels Linkbase Document.
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
104
|
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
|
|
†
|
Exhibit is a management contract or compensatory plan or arrangement.
|
|
|
|
COTY INC.
|
|
|
|
|
|
|
|
Date: November 6, 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)
|
|
A.
|
The Company and the Executive have entered into an employment agreement with effect as of January 14, 2019 (the Employment Agreement), and a Confidentiality, Non-Competition and Non-Solicitation Agreement with effect as of January 14, 2019 (the Restrictive Covenant Agreement), a copy of which is attached as Annex 1 hereto.
|
|
B.
|
On September 9, 2019, the Executive gave notice of termination to the Company under Section 4 of the Employment Agreement and Section 11 of the Restrictive Covenant Agreement.
|
|
C.
|
The Company and the Executive wish to settle amicably all aspects of the employment relationship and the termination thereof, subject to the terms and conditions set forth herein.
|
|
1.
|
Termination
|
|
2.
|
Release from Obligation to Work
|
|
3.
|
Commencement of New Work
|
|
4.
|
Entitlement to Vacation and Overtime
|
|
5.
|
Lump Sum Payment
|
|
6.
|
Payment Terms
|
|
7.
|
Annual Performance Plan and Equity & Long Term Incentive Plan
|
|
8.
|
Confidentiality and Restrictive Covenants
|
|
9.
|
Non-disparagement
|
|
10.
|
Return of Property
|
|
11.
|
Relocation Expenses; Tax Assistance; Attorneys’ Fees
|
|
12.
|
Repurchase of Common Stock
|
|
13.
|
Assistance
|
|
14.
|
Certificate
|
|
15.
|
Personal data
|
|
16.
|
Release
|
|
17.
|
Insurance
|
|
18.
|
Written Form
|
|
19.
|
Severability Clause
|
|
20.
|
Governing Law | Jurisdiction
|
|
Place | date: Geneva, September 9, 2019
For the Company
|
|
|
/s/ Herminie Monmignaut Simonetta
|
/s/ Radi Nabulsi
|
|
Name: Herminie Monmignaut Simonetta
Title: SVP General Counsel PB & Europe
|
Name: Radi Nabulsi
Title: VP Legal PB
|
|
Place | date: Amsterdam, September 6, 2019
The Executive
|
|
|
/s/ Luc Volatier
|
|
|
Mr. Luc Volatier
|
|
|
(1)
|
Coty Services UK Limited, incorporated and registered in England and Wales with company number 00325646 whose registered office is at Eureka Park, Ashford, Kent, TN25 4AQ (the "Company")
|
|
(2)
|
Greerson McMullen of 16 Margaretta Terrace, London SW3 5NU (the "Employee")
|
|
(A)
|
The Employee has been employed by the Company since 24 October 2016, as Chief Legal Officer, General Counsel & Secretary Officer under a contract dated 11 October 2016 (the "Employment Agreement") and he has resigned his employment for good reason as of 30 June 2020 (the "Termination Date") in connection with a workplace relocation request, subject to the terms of this agreement. The Company has an existing policy to compensate employees who do not relocate in connection with a workplace relocation. The Employee has been rated 'Very Strong' for FY2019, with a three percent merit increase.
|
|
(B)
|
The Employee and the Company entered into an agreement relating to the termination of the Employee’s employment, which the parties now wish to replace in its entirety with the terms of this agreement.
|
|
(C)
|
The Company enters into this agreement for itself and as agent and trustee for the Company, its subsidiaries or holding companies from time to time and any subsidiary of any holding company from time to time, as subsidiary and holding company are defined in section 1159 of the Companies Act 2006 (each, a "Group Company"), and it is authorised to do so. It is the parties' intention that each Group Company should be able to enforce any rights it has under this agreement, subject to and in accordance with the Contracts (Rights of Third Parties) Act 1999.
|
|
1.
|
INTERPRETATION
|
|
1.2
|
A reference to a particular law is a reference to it as it is in force for the time being taking account of any amendment, extension, or re-enactment and includes any subordinate legislation for the time being in force made under it.
|
|
1.3
|
The Schedules shall form part of this agreement and shall have effect as if set out in full in the body of this agreement. Any reference to this agreement includes the Schedules.
|
|
1.5
|
Capitalised terms not defined in this Agreement shall have the meanings given to them in the Employment Agreement.
|
|
2.
|
TERMINATION AND PAYMENTS
|
|
2.1
|
The Employee's employment with the Company and each Group Company will terminate on the Termination Date, unless terminated before the Termination Date for Cause (provided that upon and from the date hereof, subsection (a) of the definition of Cause shall not be applicable) in accordance with the Employment Agreement. The termination of employment is due to the resignation of the Employee for good reason in connection with a workplace relocation request, and notice to terminate the Employment Agreement is hereby given by the Employee as at the date of this agreement. In consideration of the payments and benefits to be provided to the Employee pursuant to this agreement, the Employee and the Company hereby agree to the terms and conditions of this agreement.
|
|
2.2
|
Until and including 31 December 2019 (the "Garden Leave Date" and the separation from
|
|
(a)
|
the Employee may continue to develop his professional relationships with law firms and other consultants provided that the Employee does not hold himself out as representing the Company or any Group Company or fail to correct any misunderstanding of his status by any third party caused by the Employee or which becomes apparent to the Employee; and
|
|
(b)
|
notwithstanding any other provisions of the Employment Agreement, the RCA (as defined at clause 4.1) or this agreement, and (for the avoidance of doubt) without forfeiting any remuneration or benefits pursuant to the Employment Agreement or this agreement, the Employee shall be at liberty to obtain alternative employment from this date so long as he remains available to consult by phone on the transition of matters as reasonably required by the Company and provided the Employee complies with section 7(a) of the RCA. If the Employee obtains alternative employment, the Company will, without the Employee forfeiting any salary, compensation or other benefit hereunder, bring forward the date on which the Employee's employment terminates to such other employment date, in which case such earlier date will be the "Termination Date" for the purposes of this Agreement (and the Employee’s salary for the balance of such garden leave period shall be paid within 30 days of such Termination Date).
|
|
2.3
|
Until 30 June 2020 the Employee will be entitled to receive his normal salary and benefits (as at the date hereof) and will be entitled to receive:
|
|
(a)
|
a bonus for 2019 under the Coty Annual Performance Plan for the fiscal year ending 30 June 2019, of £73,800 payable not later than 30 October 2019; and
|
|
(b)
|
a bonus for 2020 under the Coty Annual Performance Plan for the fiscal year ending 30 June 2020 in an amount equal to the greater of actual achievement and the Employee's Target Award (at a factor of 1), being 60 per cent. of the Employee's then applicable Salary, payable during the 15 day period ending on 30 October 2020.
|
|
2.4
|
It is a condition of the payment and benefits to be provided to the Employee pursuant to this agreement that the Employee will execute a further waiver and release of claims with the same terms and conditions as are set forth in Clause 3 as at the Termination Date (the "Further Release") and that the Adviser will sign and deliver to the Company a further letter in the form attached as Schedule 2 to this agreement (the "Further Certificate").
|
|
2.5
|
Subject to and conditional on: (i) the Employee's compliance in all material respects with the terms of this agreement; (ii) receipt by the Company of this agreement validly executed by the Employee; (iii) receipt by the Company of a letter in the form attached as Schedule 2 to this agreement signed by the Adviser; (iv) receipt by the Company of the Further Release and the Further Certificate; and (v) the Employee not having been terminated for Cause (excluding subsection (a) thereof) before the Termination Date:
|
|
(a)
|
the Company will pay to the Employee the amount of £1,615,440 (the "Termination Payment") by way of compensation for termination of the Employee's employment. The Termination Payment will be paid in two instalments, with the first instalment of £30,000 being paid within 28 days of the Termination Date (and without deduction of income tax and national insurance contributions) and the second instalment of
|
|
(b)
|
the Company will pay to the Employee the amount of £390,350 (the "Contractual Payment") inclusive of: (i) the Employee's entitlement to payment under clause 14.2.2 of the Employment Agreement; (ii) a payment in respect of car allowance and employer pension contributions for the period of 24 months beginning on 1 July 2020; (iii) a payment in respect of the Employee's accrued but untaken holiday as at the Termination Date; and (iv) the Employee's three percent merit increase as of October 1, 2019, in each case less all applicable tax deductions and National Insurance contributions required by law in the ordinary course. The Contractual Payment will be paid within 28 days of 1 July 2020;
|
|
(c)
|
the Company shall pay up to £50,000 plus VAT in relation to the provision of outplacement counselling by Manchester Square Partners (or equivalent) to the Employee so long as such costs are incurred not later than 31 December 2021 and, on production of an invoice payable by the Company, the Company shall promptly pay such invoice in 2019;
|
|
(d)
|
the Company shall pay up to £20,000 plus VAT in 2019 in relation to the provision of legal advice regarding the terms of this Agreement to the Employee's solicitors on production of invoices addressed to the Employee but marked payable by the Company and the Company shall promptly pay any such invoice;
|
|
(e)
|
the Employee will continue to benefit from the International transfer policy as in effect on the Date of the Employment Agreement (treating the UK as the home country) and in respect of the costs of relocation to the U.S. (or alternate location that does not cost the Company any additional amount) so long as such eligible relocation expenses are incurred not later than 31 December 2021 and to be paid directly to the provider(s) of the relevant relocation costs on production on an invoice payable by the Company not later than 31 December 2021;
|
|
(f)
|
the Company shall procure the continuation of the Employee's participation in the health and life insurance benefits as are in effect for him as of the date of this agreement and a tax assistance benefit consistent with the benefit provided by the Company in prior years (the cost thereof not to exceed $200,000 per year), in the case of the health and life insurance benefits from the date hereof until 30 June 2022, and in the case of the tax assistance benefit, from the date hereof until the end of 2023 covering the period until 31 December 2022, subject to the following terms: in relation to any such health benefit provided in the U.S., the Employee's coverage will continue for such period - to the extent the Employee is required to pay the applicable premiums, the Employee will be reimbursed for the cost of such premiums on the last day of each of the 18 months immediately after 30 June 2020, followed by a lump sum payment in respect of the outstanding premiums, payable 18 months after 30 June 2020 (it being understood that the Company will use its best efforts to continue the existing arrangement whereby the Employee is not required to pay any premiums for such insurance) which in respect of any period after the Termination Date will be (i) subject to the Employee making a timely election to continue his insurance coverage under COBRA and (ii) effected by the Company making payments of required COBRA premiums directly on the employee's behalf on each monthly due date for such premium. The Employee will be liable for any applicable tax due resulting from the provision of such benefits. Notwithstanding the foregoing, in the event that this clause (f) would subject the Employee or the Company to a material tax or penalty, the parties shall cooperate to provide the Employee with these benefits in a way that does not trigger such tax, cost or penalty, if and to the maximum extent possible;
|
|
(g)
|
the restricted stock units ("RSUs") and stock options held by the Employee will be treated in accordance with the terms and conditions applicable to them (assuming a termination without Cause), it is expected that 60% of the RSUs granted to the Employee on 16 November 2016 will vest on 16 November 2019
|
|
(h)
|
the employee shall be entitled to keep (and shall own as of 2020) his work cell phone and laptop computer, provided that he has returned such equipment to the Company as of the Termination Date in order for it to be promptly wiped to ensure the removal of confidential information. The Company will use its reasonable endeavours to ensure the transfer of the Employee's work cell phone number into his own name on or around the Termination Date. The Company shall reimburse any reasonable business expenses incurred by the Employee in the ordinary course of business in accordance with past practice.
|
|
2.6
|
In circumstances where the Employee is, prior to the Termination Date, terminated for Cause the provisions of Clause 2.4 and Clause 3 shall be treated for all purposes as void and unenforceable.
|
|
3.
|
WAIVER OF CLAIMS
|
|
3.1
|
The Employee agrees that the terms of this agreement are offered by the Company without any admission of liability on the part of the Company or any Group Company or by Employee and are in full and final settlement of, and the Employee hereby releases, waives and discharges the Company and each other Group Company and their respective current and former officers, directors, employees, workers, agents, shareholders or members, each in that capacity (collectively, "Releasees") from, all and any claims, grievances, liabilities, expenses, lawsuits, proceedings, complaints or rights of action that the Employee has or may have in any jurisdiction against any Releasee arising out of, or relating directly or indirectly to, his employment with the Company (or any other Group Company) or its termination, the holding of any office with the Company or any other Group Company or its termination, whether under common law, tort, contract, statute or otherwise, regardless of whether such claims are, or could be, known to the parties or in their contemplation at the date of this agreement in any jurisdiction and regardless of whether such claims are ripe, mature or choate and including (i) the claims specified in Schedule 1 (each of which is waived by this clause), (ii) any claims under the laws of a jurisdiction other than England that are similar or comparable to any of the claims listed in Schedule 1 (including claims under Title VII of the U.S. Civil Rights Act of 1964, the U.S. Civil Rights Act of 1991, the U.S. Age Discrimination in Employment Act, the U.S. Older Workers Benefit Protection Act, the U.S. National Labor Relations Act, the U.S. Equal Pay Act of 1963, the U.S. Americans with Disabilities Act, the U.S. Rehabilitation Act of 1973, the U.S. Worker Adjustment and Retraining Notification Act, the U.S. Family Medical Leave Act of 1993, the U.S. Employee Retirement Income Security Act, the U.S. Sarbanes-Oxley Act of 2002 any and all state or local law addressing matters similar to those addressed by the foregoing U.S. federal laws), any claims for payments of any nature, including salary, bonuses, holiday pay, profit share, wages, incentive compensation, overtime pay, severance pay, commissions, bonuses and or the monetary equivalent of benefits; and (iii) any claims for the breach of any written, implied or oral contract between the Employee and any Group Company, including the Employment Agreement.
|
|
3 .2
|
The waiver in Clause 3.1 shall not apply to the following:
|
|
(a)
|
any claims by the Employee under or to enforce this agreement;
|
|
(b)
|
claims that cannot be legally waived under applicable law;
|
|
(c)
|
any claims that the Employee may have against the Company or any Group Company in respect of personal injury of which the Employee is not aware and could not reasonably be expected to be aware at the date of this agreement (save for any personal injury claims arising from discrimination in any form);
|
|
(d)
|
any claims in relation to accrued pension entitlements;
|
|
(e)
|
any rights and entitlements pursuant to the terms and conditions of the RSUs and stock options; and
|
|
(f)
|
any claims relating to directors' and officers' liability insurance coverage
|
|
3.3
|
The Employee warrants that:
|
|
(a)
|
before entering into this agreement he received independent advice from Hayley Robinson of Macfarlanes LLP (the "Adviser") as to the terms and effect of this agreement and, in particular, on its effect on his ability to pursue any complaint before an employment tribunal or other court and, before receiving the advice, the Employee disclosed to the Adviser all facts and circumstances that may give rise to a claim by the Employee against any Releasee;
|
|
(b)
|
the Adviser has confirmed to the Employee that the Adviser is a solicitor holding a current practising certificate and that there is in force a policy of insurance covering the risk of a claim by the Employee in respect of any loss arising in consequence of the Adviser's advice;
|
|
(c)
|
the Adviser shall sign and deliver to the Company a letter in the form attached as Schedule 2 to this agreement; and
|
|
(d)
|
the only claims that the Employee has or may have against any of the Releasees (whether at the time of entering into this agreement or in the future) relating to his employment with the Company or any other Group Company or its termination are specified in Clause 3.1 and the Employee is not aware of any facts or circumstances that may give rise to any claim against any Group Company or its officers, employees or workers other than those claims specified in Clause 3.1.
|
|
3.4
|
The Employee acknowledges that the conditions relating to settlement agreements under section 147(3) of the Equality Act 2010, section 288(2B) of the Trade Union and Labour Relations (Consolidation) Act 1992, section 203(3) of the Employment Rights Act 1996, regulation 35(3) of the Working Time Regulations 1998, section 49(4) of the National Minimum Wage Act 1998, regulation 41(4) of the Transnational Information and Consultation etc. Regulations 1999, regulation 9 of the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000, regulation 10 of the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, regulation 40(4) of the Information and Consultation of Employees Regulations 2004, paragraph 13 of the Schedule to the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006, regulation 62 of the Companies (Cross Border Mergers) Regulations 2007 and section 58 of the Pensions Act 2008 have been satisfied.
|
|
3.5
|
The waiver in Clause 3.1 shall have effect irrespective of whether or not, at the date of this agreement, the Employee is or could be aware of such claims or have such claims in his express contemplation (including such claims of which the Employee becomes aware after the date of this agreement in whole or in part as a result of new legislation or the development of common law or equity). As of the date hereof, the Company is not aware of any claims against, or material breach of obligations by, the Employee.
|
|
3.6
|
The Employee agrees that, except for the payments and benefits provided for in this agreement he shall not be eligible for any further payment from any Group Company relating to his employment or its termination
|
|
3.7
|
The Employee acknowledges that he has been given the right to take up to twenty-one (21) days to consider this agreement, and to the extent the Employee signs this agreement prior to such twenty-first (21st), the Employee knowingly and voluntarily waives his right to consider this agreement for the remainder of such period.
|
|
3.8
|
The Employee has the right to revoke this agreement within seven (7) days following the date it is executed by the Employee. Any revocation of this agreement must be in writing and received by the Company by the close of business on the seventh day following Employee's
|
|
4.
|
RESTRICTIVE COVENANTS, CONFIDENTIALITY AND REFERENCE
|
|
4.1
|
The Employee acknowledges that the terms of the Confidentiality, Non-Competition and Non-Solicitation Agreement attached as Annex I to the Employment Agreement (the "RCA") will continue to apply after the Termination Date, including in respect of restrictive covenants and confidentiality, save that the Employee will be released from his obligations under sections 7 and 9 of the RCA with effect from I July 2020 and subsections 1l(b) (i) shall be deemed deleted from the RCA as of the date hereof and provided that the Company shall, acting reasonably, consider in good faith any request for consent sought by the Employee pursuant to section 7(a) of the RCA.
|
|
4.2
|
The Employee agrees to keep the existence and terms of this agreement and, the circumstances concerning the termination of the Employee's employment confidential, except where the Company has already made it public, such disclosure is to HM Revenue & Customs, the Internal Revenue Service ("IRS"), any regulatory or law enforcement body or supervisory authority or otherwise as required by law (and nothing in this agreement limits the Employee's ability to communicate with or participate in any investigation or proceeding, including by providing documents or other information, without notice to the Company, regarding possible violations of securities laws that may be conducted by such regulatory or law enforcement body or supervisory authority), or (where necessary or appropriate) to:
|
|
(a)
|
the Employee's spouse, civil partner or partner, immediate family or legal or professional advisers, provided that they agree to keep the information confidential or anyone to whom the Company has disclosed the terms of this agreement after the date hereof; or
|
|
(b)
|
the Employee's insurer for the purposes of processing a claim for loss of employment.
|
|
4.3
|
The Company may also disclose the existence and terms of this agreement to any Group Company's officers, directors, employees or legal or professional advisers, provided that they are bound to keep the information confidential.
|
|
4.4
|
The Employee shall not make, or cause to be made, any adverse, derogatory, defaming, slanderous or harmful comment or statement about any of the Releasees. The Employee shall not do anything which shall, or may, bring the Company, or any Group Company, its or their current or former directors, shareholders or employees into disrepute and the Company shall instruct in writing the members of the executive committee and the board of directors of Coty, Inc. to not make any adverse, derogatory, defaming, slanderous or harmful comment or statement about the Employee.
|
|
4.5
|
Nothing in this Clause 4 or in the RCA shall prevent the Employee from:
|
|
(a)
|
making a protected disclosure under section 43A of the Employment Rights Act 1996 or equivalent US law;
|
|
(b)
|
making a disclosure to a regulator regarding any misconduct, wrongdoing or serious breach of regulatory requirements, or reporting a criminal offence to any law enforcement agency;
|
|
(c)
|
co-operating with any law enforcement agency regarding a criminal investigation or prosecution; or
|
|
(d)
|
enforcing his rights under this agreement or providing sworn testimony.
|
|
4.6
|
Nothing in this Clause 4 shall prevent the Company from making such disclosure as it is required to make by law and/or the rules of any regulatory or supervisory authority or to operate in its ordinary course of business.
|
|
4.7
|
The Company will provide, at the Employee's request, a reference in respect of the Employee
|
|
5.
|
MISCELLANEOUS
|
|
5.1
|
Taxation. The parties believe that the first £30,000 of the Termination Payment will be tax free, as a termination award under the threshold within the meaning of sections 402A(l) and 403 of the Income Tax (Earnings and Pensions) Act 2003. The Employee shall indemnify the Company on a continuing basis in respect of any income tax or National Insurance contributions (save for employers' National Insurance contributions) due in respect of the payments any benefits payable or provided under this Agreement (and any related interest, penalties, costs and expenses) save for income tax or national insurance contributions which the Company deducts at source in accordance with this agreement and for any interest, penalties, costs and expenses arising from the Company's willful default. The Company shall give the Employee reasonable notice of any demand for tax which may lead to liabilities on the Employee under this indemnity and shall provide the Employee with reasonable access to any documentation the Employee may reasonably require to dispute such a claim (provided that nothing in this clause shall prevent the Company from complying with its legal obligations with regard to HM Revenue and Customs, the IRS or other competent body).
|
|
5.2
|
Entire Agreement. Each party, on behalf of itself and, in the case of the Company, as agent for any Group Companies acknowledges and agrees with the other party (the Company acting on behalf of itself and as agent for each Group Company) that: (a) this agreement, the RCA and the provisions of the Employment Agreement which survive termination of employment constitute the entire agreement between the parties and any Group Company and supersede and extinguish all agreements, promises, assurances, warranties, representations and understandings between them whether written or oral, relating to its subject matter; (b) in entering into this agreement it does not rely on, and shall have no remedies in respect of, any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this agreement; and (c) it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based on any statement in this agreement.
|
|
5.3
|
Variation. No variation of this agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives).
|
|
5.4
|
Third Party Rights. Except as expressly provided elsewhere in this agreement, no person other than the Employee and any Group Company shall have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement. This does not affect any right or remedy of a third party which exists, or is available, apart from that Act.
|
|
5.5
|
Governing Law; Jurisdiction. This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales. Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims).
|
|
5.6
|
Subject To Contract And Without Prejudice. This agreement shall be deemed to be without prejudice and subject to contract until such time as it is signed by both parties and dated, when it shall be treated as an open document evidencing a binding agreement.
|
|
5.7
|
Counterparts. This agreement may be executed and delivered in any number of counterparts, each of which, when executed, shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement.
|
|
5.8
|
No Admission. The terms of this agreement are offered without any admission of liability on the part of any Releasee or by Employee.
|
|
5.9
|
Ambiguities. Attorneys for all parties have participated in the negotiation of this agreement and, thus, it is understood and agreed by the Company and the Employee that the general rule that ambiguities are to be construed against the drafter shall not apply to this agreement.
|
|
Coty Inc.
Subsidiary List
as of September 30, 2019
|
|
|
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
|
|
Revolver Distribution PTY Ltd.
|
Australia
|
|
Coty Beauty Austria GmbH
|
Austria
|
|
HFC Prestige Products N.V.
|
Belgium
|
|
Coty Brasil Comércio Ltda
|
Brazil
|
|
Lancaster do Brasil Cosmeticos Ltda.
|
Brazil
|
|
Savoy Indústria de Cosméticos S.A.
|
Brazil
|
|
StarAsia Distributions (Cambodia) Ltd.
|
Cambodia
|
|
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
|
|
GHD Scandinavia ApS
|
Denmark
|
|
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 Products GmbH
|
Germany
|
|
HFC Prestige Service Germany GmbH
|
Germany
|
|
Sebastian Europe GmbH
|
Germany
|
|
Wella Grundstuecks- und Vermoegensverwalturngs GmbH & Co. KG
|
Germany
|
|
Zadafo Verwaltungsgesellschaft mbH
|
Germany
|
|
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
|
|
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 Limited
|
Ireland
|
|
HFC Prestige Manufacturing Ireland Ltd.
|
Ireland
|
|
Coty Italia S.R.L.
|
Italy
|
|
GHD Italia 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
|
|
HFC Cosmetics S. de R.L. de C.V.
|
Mexico
|
|
HFC Prestige International S. de R.L. de C.V.
|
Mexico
|
|
Coty Lancaster S.A.M.
|
Monaco
|
|
Coty 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
|
|
Coty International B.V.
|
Netherlands
|
|
Coty International Holding B.V.
|
Netherlands
|
|
Coty Management B.V.
|
Netherlands
|
|
HFC Prestige International Netherlands Holding B.V.
|
Netherlands
|
|
Lancaster B.V.
|
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
|
|
Coty Beauty Portugal S.A.
|
Portugal
|
|
HFC Prestige International Puerto Rico LLC
|
Puerto Rico
|
|
Coty Cosmetics Romania SRL
|
Romania
|
|
Bourjois Paris 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 International Sweden AB
|
Sweden
|
|
Coty International S.a.r.l.
|
Switzerland
|
|
HFC Prestige International Holding Switzerland Sàrl
|
Switzerland
|
|
HFC Prestige International Operations Switzerland Sàrl
|
Switzerland
|
|
Coty Beauty Swiss Sàrl
|
Switzerland
|
|
So Be Cosmetics S.A.
|
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
|
|
Coty UK&I Ltd
|
United Kingdom
|
|
Del Laboratories (U.K.) Limited
|
United Kingdom
|
|
ghd BondCo plc
|
United Kingdom
|
|
GHD Group Holdings Limited
|
United Kingdom
|
|
GHD Group Limited
|
United Kingdom
|
|
GHD Holdings 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
|
|
Jemella Group Limited
|
United Kingdom
|
|
Jemella Limited
|
United Kingdom
|
|
Lancaster Group, Ltd.
|
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
|
|
Rimmel International Ltd.
|
United Kingdom
|
|
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
|
|
Galleria Co.
|
United States - DE
|
|
Graham Webb International, Inc.
|
United States - DE
|
|
HFC Prestige International U.S. LLC
|
United States - DE
|
|
Launch Beauty LLC
|
United States - DE
|
|
O P I Products, Inc.
|
United States - DE
|
|
Rimmel Inc.
|
United States - DE
|
|
The Wella Corporation
|
United States - DE
|
|
Noxell Corporation
|
United States - MD
|
|
Coty Beauty Vietnam Company Limited
|
Viet Nam
|
|
|
/s/Pierre Laubies
|
|
|
|
Pierre Laubies
|
|
|
|
Chief Executive Officer
|
|
|
|
/s/Pierre-André Terisse
|
|
|
|
Pierre-André Terisse
|
|
|
|
Chief Financial Officer
|
|
|
Date: November 6, 2019
|
/s/Pierre Laubies
|
|
|
|
Pierre Laubies
|
|
|
|
Chief Executive Officer
|
|
|
Date: November 6, 2019
|
/s/Pierre-André Terisse
|
|
|
|
Pierre-André Terisse
|
|
|
|
Chief Financial Officer
|
|