What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2020-08-27 compared with 2019-08-28 · 68 added, 46 removed, 76 unchanged (60% of the section changed)

6 unchanged sentences

Dividend Policy

We have paid an annual dividend since fiscal 2011, and we began paying a quarterly dividend in fiscal 2017.

Subject to legally available funds, we expect to continue to pay a quarterly cash dividend on our Class A Common Stock, but there can be no assurance that our Board of Directors (“Board”) will continue to declare dividends or that any dividends will be paid in the anticipated amounts and frequency, or at all.

We began paying annual dividend on our common stock in fiscal 2011, and we began paying a quarterly dividend in fiscal 2017.

On May 8, 2019, the Board approved a stock dividend reinvestment program giving stockholders the option to receive their full dividend in cash or to receive their dividend in 50% cash / 50% common stock.

The election was made available to stockholders beginning with the dividend declared on May 8, 2019, and stockholders will be able to make this election on a quarterly basis.

Our controlling shareholder, Cottage Holdco B.V.

(“Cottage”), a wholly-owned subsidiary of JAB Cosmetics B.V.

(“JABC”) and JAB, owns 60% of Coty and stated its intention to participate in the dividend reinvestment program until Coty reaches its leverage target of 4x.

The election was made available to stockholders beginning with the dividend declared on May 8, 2019, and stockholders were able to make this election on a quarterly basis.

As of May 11, 2020, our Board of Directors (“Board”) has suspended the payment of cash dividends (on common and preferred stock), to strengthen our cash and liquidity and in keeping with our 2018 Coty Credit Agreement, as amended.

As we focus on preserving cash, we expect to suspend the payment of dividends through April 1, 2021 or until such later date that we reach a Net debt to Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of 4x.

Any determination to pay dividends in the future will be at the discretion of our Board.

Dividends on the Convertible Series B Preferred Stock are payable in cash, by increasing the amount of accrued dividends with respect to a share of Convertible Series B Preferred Stock or any combination thereof, at the sole discretion of the Company.

Furthermore, we are required to comply with certain covenants contained within the agreements that govern our indebtedness, including our credit agreements and the indenture relating to our senior unsecured notes.

5 unchanged sentences

(a) Total return assumes reinvestment of dividends at the closing price at the end of each quarter, since June 30, 2015.

(b) The Peer Group includes L'Oréal S.A., Avon Products, Inc., Estee Lauder Companies, Inc., Revlon, Inc., Shiseido Company, Limited and Inter Parfums Inc.

(b) The Peer Group includes L'Oréal S.A., Inc., Estée Lauder Companies, Inc., Revlon, Inc., Shiseido Company, Limited and Inter Parfums Inc.

The Market Performance Graph above assumes a $100.00 investment on June 30, 2015, in Coty Inc.’s common stock, the S&P 500 Index and the Peer Group.

14 unchanged sentences

for future issuance

compensation plans (f )

compensation plans (e )

(excluding securities

1 unchanged sentence

Equity compensation plans approved by security holders

Series A and A-1 Preferred Stock (b)

Restricted Stock Units

17,898,383 $ 12.93

Series A Preferred Stock (b)

495,074 21.52

Restricted Stock Units 11,970,824 N/A

Subtotal 30,364,281 — 44,278,711

Equity compensation plans not approved by security holders

Series A Preferred Stock (b)(d)

Phantom Units (e)

Series A Preferred Stock (b)(c)

1,000,000 $ 22.39

Phantom Units (d)

Subtotal 1,349,432 0 —

Total 31,713,713 44,278,711

N/A is not applicable

(a) For information about options, see Note 24, — Share-Based Compensation Plans in the notes to our Consolidated Financial Statements.

(b) Upon vesting of the Series A and Series A-1 Preferred Stock, the recipient receives, in cash or shares, at our sole election, the fair market value of our Class A Common Stock on the vest date of the Series A or Series A-1 Preferred Stock less the sum of the fair market value of our Class A Common Stock on the original issue date of the Series A or Series A-1 Preferred Stock and a hurdle price specified in the recipient’s subscription agreement.

As such, the benefit provided under the Series A or Series A-1 Preferred Stock will always be based solely on the increase in value of our Class A Common Stock after the date of grant and the Series A or Series A-1 Preferred Stock will not have any value to the participant until the value of our Class A Common Stock exceeds the value of such shares on the date of grant plus the specified hurdle.

From fiscal 2008 until December 2012, we invited certain key executives to participate in our Executive Ownership Plan by purchasing shares of our common stock and receiving stock options to match such purchases.

The Executive Ownership Plan was replaced by the Platinum Program in December 2012.

All matching stock options have five-year cliff vesting tied to continued employment with us and continued ownership of the restricted shares that the matching stock options match.

(d) On March 27, 2017, the Board approved an award of 1,000,000 shares of Series A Preferred Stock, par value $0.01 per share, to Lambertus J.H.

(b) Upon vesting of the Series A Preferred Stock, the recipient receives, in cash or shares, at our sole election, the fair market value of our Class A Common Stock on the vest date of the Series A Preferred Stock less the sum of the fair market value of our Class A Common Stock on the original issue date of the Series A Preferred Stock and a hurdle price specified in the recipient’s subscription agreement.

As such, the benefit provided under the Series A Preferred Stock will always be based solely on the increase in value of our Class A Common Stock after the date of grant and the Series A Preferred Stock will not have any value to the participant until the value of our Class A Common Stock exceeds the value of such shares on the date of grant plus the specified hurdle.

(c) On March 27, 2017, the Board approved an award of 1,000,000 shares of Series A Preferred Stock, par value $0.01 per share, to Lambertus J.H.

Becht in his capacity as a non-employee director to compensate him for services performed in connection with closing the P&G Beauty Business transaction, aiding with the transition of the new chief executive officer into his role and integrating the P&G Beauty Business.

(e) On December 1, 2014, the Board granted Lambertus J.H.

(d) On December 1, 2014, the Board granted Lambertus J.H.

Becht an award of 49,432 phantom units (the “December Grant”).

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Becht elected to receive payment in respect of the December Grant and the July Grant in shares of Class A Common Stock.

(f) Reflects number of securities remaining available for future issuance under equity compensation plans, excluding share reserves related to terminated equity plans.

(e) Reflects number of securities remaining available for future issuance under equity compensation plans, excluding share reserves related to terminated equity plans.

Issuer Purchases of Equity Securities

No shares of Class A Common Stock were repurchased during the fiscal quarter ended June 30, 2019 .

453,488 shares of Class A Common Stock were repurchased during the fiscal year ende d June 30, 2020.

Selected Financial Data.

(in millions, except per share data)

Year Ended June 30,

Consolidated Statements of Operations Data:

(in millions, except per share data) Year Ended June 30,

2017 (e)(h)(i)

2016 (f)(h)(i)

Condensed Consolidated Statements of Operations Data:

Net revenues $ 4,717.8 $ 6,287.9 $ 6,841.8 $ 7,650.3 $ 4,349.1

Gross profit 2,726.6 3,789.4 4,123.6 4,622.0 2,603.1

Restructuring costs 130.2 34.2 134.9 374.8 86.9

Acquisition-related costs

Acquisition- and divestiture-related costs 157.3 — 64.2 355.4 174.0

Asset impairment charges 434.0 3,729.0 — — 5.5

1 unchanged sentence

Interest expense, net 242.7 225.2 200.6 218.6 81.9

Loss on early extinguishment of debt

Other expense, net

(Loss) income before income taxes

(Loss) income before income taxes from continuing operations (1,467.6) (3,945.4) (394.5) (658.0) 138.8

(Benefit) provision for income taxes (377.7) (54.8) (32.2) (259.5) (40.4)

Net (loss) income from continuing operations (1,089.9) (3,890.6) (362.3) (398.5) 179.2

Net income from discontinued operations 87.2 121.0 234.5 — —

Net (loss) income (1,002.7) (3,769.6) (127.8) (398.5) 179.2

Net income attributable to noncontrolling interests

Net income attributable to redeemable noncontrolling interests

Net (loss) income attributable to Coty Inc.

for common stockholders $ (1,006.7) $ (3,784.2) $ (168.8) $ (422.2) $ 156.9

Amounts attributable to Coty Inc.:

(Loss) income from continuing operations attributable to Coty Inc.

common stockholders (1,100.4) (3,905.2) (403.3) (398.5) 179.2

Net (loss) income attributable to Coty Inc.

common stockholders $ (1,013.2) $ (3,784.2) $ (168.8) $ (398.5) $ 179.2

Per Share Data:

Weighted-average common shares

Dividends declared per common share

Net (loss) income attributable to Coty Inc.

per common share:

(in millions)

Year Ended June 30,

Basic earnings (loss) from continuing operations $ (1.45) $ (5.20) $ (0.54)

Basic earnings (loss) for Coty Inc.

$ (1.33) $ (5.04) $ (0.23) $ (0.66) $ 0.45

Diluted earnings (loss) from continuing operations $ (1.45) $ (5.20) $ (0.54)

Diluted earnings (loss for Coty Inc.

$ (1.33) $ (5.04) $ (0.23) $ (0.66) $ 0.44

Weighted-average common shares

Basic 759.1 751.2 749.7 642.8 345.5

Diluted 759.1 751.2 749.7 642.8 354.2

Dividends declared per common share $ 0.38 $ 0.50 $ 0.50 $ 0.65 $ 0.25

(in millions) Year Ended June 30,

Consolidated Cash Flows Data:

Net cash provided by operating activities

Net cash (used in) provided by operating activities $ (50.9) $ 639.6 $ 413.7 $ 757.5 $ 501.4

Net cash (used in) investing activities (833.4) (454.0) (687.6) (1,163.6) (1,059.2)

Net cash (used in) provided by financing activities 877.3 (160.3) 69.3 595.2 592.6

(in millions)

As of June 30,

Consolidated Balance Sheet Data:

(in millions) As of June 30,

Consolidated Balance Sheets Data:

Cash and cash equivalents $ 308.3 $ 340.4 $ 331.6 $ 535.4 $ 372.4

Total assets (e)

Total assets (g)(j)

16,728.8 17,710.0 22,630.2 22,548.2 7,035.6

Total debt, net of discount 8,147.3 7,735.0 7,610.5 7,205.0 4,162.8

1 unchanged sentence

stockholders’ equity 3,004.6 4,586.9 8,849.7 9,314.7 360.2

In fiscal 2019, we adopted, on a modified retrospective basis as of July 1, 2018, authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for ASC 606, Revenue from Contracts with Customers and ASU No.

(a) Included in fiscal 2020 are the financial impacts of the divestiture of Younique LLC on September 16, 2019, and the King Kylie transaction on January 6, 2020.

(b) In fiscal 2020, we adopted ASU 2016-02 , Leases (Topic 842) which requires lease assets and liabilities to be recorded on the balance sheet.

(c) In fiscal 2019, we adopted, on a modified retrospective basis as of July 1, 2018, authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for ASC 606, Revenue from Contracts with Customers and ASU No.

2016-16, Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other Than Inventory .

Included in fiscal 2018 are the financial impacts of the acquisition of the Burberry Beauty Business as of October 2, 2017.

Included in fiscal 2017 are the financial impacts of the acquisitions of the P&G Beauty Business as of October 1, 2016, ghd as of November 21, 2016 and Younique as of February 1, 2017.

Included in fiscal 2016 and 2015 are the financial impacts of the Hypermarcas Brands as of February 1, 2016 and the Bourjois acquisition as of April 1, 2015.

In fiscal 2017, we adopted authoritative guidance issued by the FASB requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts.

(d) Included in fiscal 2018 are the financial impacts of the acquisition of the Burberry Beauty Business as of October 2, 2017.

(e) Included in fiscal 2017 are the financial impacts of the acquisitions of the P&G Beauty Business as of October 1, 2016, ghd as of November 21, 2016 and Younique as of February 1, 2017.

(f) Included in fiscal 2016 are the financial impacts of the Hypermarcas Brands as of February 1, 2016.

(g) In fiscal 2017, we adopted authoritative guidance issued by the FASB requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts.

Prior to the adoption of this guidance, debt issuance costs were presented within total assets in the Consolidated Balance Sheets.

Total assets for all periods presented in the table above have been conformed to the current balance sheet presentation.

In fiscal 2019, we adopted authoritative guidance issued by the FASB requiring employers to report the service cost component of net periodic benefit cost in the same line item or items as other compensation costs arising from services rendered by the underlying employees during the period.

(h) In fiscal 2019, we adopted authoritative guidance issued by the FASB requiring employers to report the service cost component of net periodic benefit cost in the same line item or items as other compensation costs arising from services rendered by the underlying employees during the period.

The other components of net periodic benefit cost are required to be reported separately and outside of operating income.

1 unchanged sentence

The impacts of the adoption of this standard were retrospectively applied to fiscal years 2018 and 2017 presented in the table above.

(i) For fiscal years 2017 and 2016, the results were not recast to show discontinued operations.

The P&G Beauty Business acquisition and the ghd acquisition were made during fiscal year 2017 and were mainly included in the Professional Beauty segment, which contributed net revenues of $1,395.5 and $250.0 for fiscal 2017 and 2016, respectively.

Due to the purchase accounting adjustments for the acquisition for the P&G business, the Company concluded through a cost/benefit analysis that it was impractical to recast the discontinued operations impact for these two fiscal years due to the complexities of the recast.

(j) Due to the acquisition and purchase accounting adjustments for the acquisition of the P&G business, the Company concluded through a cost/benefit analysis that it was impractical to recast the assets held for sale impact for the fiscal years 2018, 2017, and 2016, due to the complexities of the recast.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity