What changed in this filing

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Item 9A. Controls and Procedures

2020-08-27 compared with 2019-08-28 · 1294 added, 1013 removed, 1437 unchanged (62% of the section changed)

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Our management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2020.

Based on the evaluation of our

disclosure controls and procedures as of June 30, 2019 , our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2020, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

We have included our Management Report over Internal Control over Financial Reporting in “Item 15.

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(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 3, 2016).

Contribution Agreement, dated as of January 10, 2017, by and among Coty Inc., Coty US Holdings Inc., Foundation, LLC, Younique, LLC, UEV Holdings, LLC, Aspen Cove Holdings, Inc., each of the other unit holders of Younique, LLC, and Derek Maxfield (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 1, 2017).

Purchase Agreement, dated as of November 18, 2019, by and among King Kylie Holdings, LLC, KMJ 2018 Irrevocable Trust, Kylie Jenner Inc., King Kylie, LLC, Coty Inc.

and solely for the purpose of Section 6.7 and Section 6.13, KKJ 2018 Irrevocable Trust (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 5, 2020).

Sale and Purchase Agreement, dated June 1, 2020, by and among Coty Inc., Coty International Holding, B.V.

and Rainbow UK Bidco Limited (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on June 2, 2020).

Separation Agreement, dated June 1, 2020, by and among Coty Inc., Coty International Holding, B.V., Waves UK Divestco Limited and Rainbow UK Bidco Limited (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 2, 2020).

Amended and Restated Certificate of Incorporation of Coty Inc.

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(incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 3, 2016).

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Coty Inc.

(incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 25, 2020).

Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 to Amendment No.

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Certificate of Designations of Preferred Stock, Series A-1, dated February 4, 2019 (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q filed on February 8, 2019).

Certificate of Designations of Preferred Stock, Series B, dated May 26, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 26, 2020).

Indenture, dated as of April 5, 2018, among Coty Inc., the guarantors named therein, Deutsche Bank Trust Company Americas, as Trustee, Registrar and U.S.

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Incremental Assumption Agreement and Refinancing Amendment to Credit Agreement, dated as of October 28, 2016, among Coty Inc., Coty B.V., the other loan parties party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 28, 2016).

Incremental Facility Activation Notice, dated as of October 28, 2016, among Coty Inc., each incremental term A lender and JPMorgan Chase Bank, N.A.

as administrative agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 28, 2016).

Amended and Restated Credit Agreement, dated as of April 5, 2018, by and among Coty Inc., Coty B.V., the other borrowers party thereto from time to time, the lenders and other parties from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 10, 2018).

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1, dated June 27, 2019, to the Amended and Restated Credit Agreement, dated April 5, 2018, by and among Coty Inc., Coty B.V., the other borrowers party thereto from time to time, the lenders and other parties from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 1, 2019).

Registration Rights Agreement, dated April 1, 2015, between Coty Inc.

and Mousseluxe S.a.r.l.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 1, 2015).

Amendment No.

2, dated April 29, 2020, to the Amended and Restated Credit Agreement, dated April 5, 2018, by and among Coty Inc., Coty B.V., the other borrowers party thereto from time to time, the lenders and other parties from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed on April 30, 2020).

Transition Services Agreement, effective as of October 1, 2016, by and between The Procter & Gamble Company and Galleria Co.

(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 3, 2016).

Incremental Facility Activation Notice, dated as of October 28, 2016, among Coty Inc., each incremental term A lender and JPMorgan Chase Bank, N.A.

as administrative agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 28, 2016).

Employment Agreement, dated June 20, 2016, between Coty Services UK Limited and Patrice de Talhouët (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on From 8-K filed on June 24, 2016).†

Employment Agreement, dated January 2014, between Coty Geneva S.A.

Versoix and Mario Reis (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed on August 28, 2014).†

Employment Agreement, dated July 20, 2016, by and between Camillo Pane and Coty Services UK Limited, as amended October 24, 2016 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 28, 2016).†

Open-Ended Employment Agreement, dated August 24, 2015, between Coty S.A.S.

and Sebastien Froidefond (incorporated by reference to Exhibit 10.58 to the Company’s Current Report on Form 8-K filed on November 5, 2015).†

Side Letter, dated as of March 31, 2017, between Coty Services UK Limited and Sébastien Froidefond (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed on May 10, 2017).†

Investment Agreement, dated May 11, 2020, by and between Coty Inc.

and KKR Rainbow Aggregator L.P.

(incorporated by reference to Exhibit 10.1 to the Company’s 8-K filed on May 12, 2020).

Amendment No.

1 to the Investment Agreement, dated June 1, 2020, by and among Coty Inc.

and KKR Rainbow Aggregator L.P.(incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on June 1, 2020).

Registration Rights Agreement, dated as of May 26, 2020, by and among Coty Inc.

and KKR Rainbow Aggregator L.P.

(incorporated by reference to Exhibit 10.1 to the Company’s 8-K filed on May 26, 2020).

Employment Agreement, dated December 10, 2019, between Coty Management B.V.

and Pierre-Andre Terisse (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Employment Agreement, dated January 27, 2020, between Coty Management B.V.

and Kristin Blazewicz (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Employment Agreement, dated June 3, 2020, between Coty Management B.V.

and Gordon Von Bretten.†

Offer Letter, dated as of April 1, 2016, between Ayesha Zafar and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 11, 2016).†

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and Edgar Huber (incorporated by reference to Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q filed on February 4, 2016).†

Employment Agreement, dated as of October 11, 2016, between Coty Services UK Limited and Greerson McMullen (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed on February 9, 2017).†

Employment Agreement, dated as of January 16, 2017, between Coty Inc.

and Laurent Kleitman (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K filed on August 23, 2017).†

Offer Letter, dated June 20, 2019, between Coty Inc.

and Edgar Huber (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Side Letter, dated March 17, 2020, between Coty Inc.

and Edgar Huber (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Employment Agreement, dated October 12, 2016 between HFC Prestige International Operations Switzerland sarl and Anne Jaeckin, and the addendum thereo dated May 18, 2020.†

Employment Agreement, dated October 31, 2019, between Coty Management B.V.

and Richard Jones (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on February 5, 2020).†

Amended Employment Agreement, dated June 20, 2019, between Coty SAS and Simona Cattaneo (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Employment Agreement, dated February 27, 2020, between Coty Management B.V.

and Fiona Hughes (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Employment Agreement, dated November 12, 2018, between Coty Services UK Limited and Pierre Laubies (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K on November 14, 2018).†

Employment Agreement Letter, dated January 9, 2020, between Coty Management B.V.

and Pierre Laubies (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Settlement Agreement, dated February 27, 2020, between Coty Management B.V.

and Pierre Laubies (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Side Letter to Settlement Agreement, dated May 5, 2020, between Coty Management B.V.

and Pierre Laubies (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020).†

Series A-1 Preferred Stock Repurchase Agreement, dated as of February 27, 2020, between Coty Inc., Pierre Laubies and Elmfort Invest B.V.

(incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2020)†

Amendment and Settlement Agreement, dated May 31, 2020, between Coty Management B.V.

and Pierre Denis.†

Settlement Agreement, dated May 30, 2020, between Coty Management B.V.

and Giovanni Pieraccione.†

Separation Agreement, dated May 29, 2020, between Coty Inc.

and Daniel Ramos Day.†

Separation Agreement, dated as of February 1, 2019, between Coty Inc.

and Laurent Kleitman (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2019).†

Employment Agreement, dated as of February 12, 2018, between Coty Services U.K.

Limited and Esra Erkal-Paler (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K filed on August 21, 2018).†

Offer Letter, dated as of September 4, 2017, between Daniel Ramos and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 9, 2017).†

Employment Agreement, dated February 1, 2019, between Coty SAS and Pierre-André Terisse.(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2019).†

Offer Letter, dated as of January 7, 2019, between Gianni Pieraccioni and Coty Inc.

(incorporated by reference to Exhibit (e)(10) to the Company’s Solicitation/Recommendation Statement on Schedule 14D-9 filed on February 27, 2019).†

Offer Letter, dated January 10, 2019, between Coty Services UK Limited and Luc Volatier (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2019).†

Separation Agreement, dated 5 November, 2019, between Coty Services UK Limited and Greerson McMullen (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 6, 2019).†

S eparation and Termination Agreement, dated as of September 9, 2019, by and between HFC Prestige International Operations Switzerland Sarl and Luc Volatier (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 6, 2019).

Form of Indemnification Agreement between the registrant and its directors and officers (incorporated by reference to Exhibit 10.24 to Amendment No.

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Amended and Restated Annual Performance Plan, as of February 1, 2017 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 10, 2017).†

Adoption of Amendments to Pre-2008 Stock Options Granted Under the Coty Inc.

2007 Stock Plan for Directors Or the Coty Inc.

Stock Plan for Non-Employee Directors (applicable to awards outstanding on September 14, 2010) (incorporated by reference to Exhibit 10.40 to Amendment No.

4 to the Company’s Registration Statement on Form S-1 (File No.

333-182420) filed on April 24, 2013).†

Form of Restricted Stock Unit Award under Coty Inc.

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Form of Subscription Agreement for Series A Preferred Stock (incorporated by reference to Exhibit 10.55 to the Company’s Annual Report on Form 10-K filed on August 17, 2015).†

Subscription Agreement, dated as of November 23, 2016, between Coty Inc.

and Camillo Pane (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed on February 9, 2017).†

Subscription Agreement, dated as of February 16, 2017, between Coty Inc.

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Equity and Long-Term Incentive Plan, as amended and restated on October 28, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 8, 2018).†

Side Letter, dated as of November 29, 2017, between Coty Services UK Limited and Camillo Pane (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on February 8, 2018).†

Side Letter, dated November 29, 2017, between Coty Services UK Limited and Patrice de Talhouët (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on February 8, 2018).†

Form of Subscription Agreement for Series A-1 Preferred Stock†

Form of Subscription Agreement for Series A-1 Preferred Stock (incorporated by reference to Exhibit 45 to the Company’s Annual Report on Form 10-K filed on August 28, 20 19 ).†

Terms and Conditions of 2019 Incentive Stock Options under Coty Inc.

Equity and Long-Term Incentive plan (incorporated by reference to Exhibit 46 to the Company’s Annual Report on Form 10-K filed on August 28, 20 19 ).†

Form of Restricted Stock Award Agreement under the Amended and Restated Coty Inc.

Equity and Long Term-Incentive Plan†

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Certification of Chief Financial Officer, pursuant to 18 U.S.

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Labels Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

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).

* Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

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Pierre-André Terisse

Chief Financial Officer

Chief Operating Officer and Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Greerson G.

McMullen, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kristin Blazewicz, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

/s/Pierre Laubies

Chief Executive Officer and Director

Signature Title Date

/s/Peter Harf Chief Executive Officer and Chairman of the Board of Directors

(Principal Executive Officer)

August 27, 2020

(Pierre Laubies)

/s/Pierre-André Terisse

Chief Financial Officer

(Principal Financial Officer)

August 28, 2019

/s/Pierre-André Terisse Chief Operating Officer/Chief Financial Officer

(Principal Financial Officer) August 27, 2020

(Pierre-André Terisse)

/s/Ayesha Zafar

Senior Vice President, Group Controller

(Principal Accounting Officer)

August 28, 2019

/s/Ayesha Zafar Senior Vice President, Group Controller

(Principal Accounting Officer) August 27, 2020

(Ayesha Zafar)

/s/Peter Harf

Chairman of the Board of Directors

August 28, 2019

/s/Sabine Chalmers

August 28, 2019

/s/Beatrice Ballini Director August 27, 2020

(Beatrice Ballini)

/s/Sabine Chalmers Director August 27, 2020

(Sabine Chalmers)

/s/Joachim Faber

August 28, 2019

(Joachim Faber)

/s/Olivier Goudet

August 28, 2019

/s/Joachim Creus Director August 27, 2020

(Joachim Creus)

/s/Nancy Ford Director August 27, 2020

/s/Olivier Goudet Director August 27, 2020

(Olivier Goudet)

/s/Anna-Lena Kamenetzky

August 28, 2019

(Anna-Lena Kamenetzky)

/s/Paul Michaels

August 28, 2019

/s/Johannes Huth Vice Chairman of the Board of Directors August 27, 2020

(Johannes Huth)

/s/Paul Michaels Director August 27, 2020

(Paul Michaels)

/s/Erhard Schoewel

August 28, 2019

/s/Erhard Schoewel Director August 27, 2020

(Erhard Schoewel)

/s/Robert Singer

August 28, 2019

/s/Robert Singer Director August 27, 2020

(Robert Singer)

/s/Isabelle Parize Director August 27, 2020

(Isabelle Parize)

/s/Justine Tan Director August 27, 2020

(Justine Tan)

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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The Company's internal control over financial reporting as of June 30, 2020 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report which appears herein.

/s/Pierre Laubies

/s/Pierre-André Terisse

Pierre Laubies

Pierre-André Terisse

Chief Executive Officer and Director

Chief Financial Officer

/s/ Peter Harf /s/ Pierre-André Terisse

Peter Harf Pierre-André Terisse

Chairman and Chief Executive Officer Chief Operating Officer/Chief Financial Officer

August 27, 2020

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We have audited the accompanying consolidated balance sheets of Coty Inc.

and subsidiaries (the "Company") as of June 30, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), equity, and redeemable noncontrolling interests, and cash flows, for each of the three years in the period ended June 30, 2019, and the related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of June 30, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows, for each of the three years in the period ended June 30, 2020, and the related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill and Other Indefinite-lived Intangible Assets - Impairment of Consumer Beauty Reporting Unit Goodwill and certain Trademarks - Refer to Notes 2 and 11 to the financial statements

Goodwill and Other Indefinite-lived Intangible Assets – Goodwill for the Americas Reporting Unit and Impairment of Europe, Middle East and Africa “EMEA” Reporting Unit’s Goodwill and certain Trademarks – Refer to Notes 2 and 12 to the financial statement s

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its’ carrying value.

The Company determines the fair value of its reporting units using a discounted cash flow model and the market approach.

The Company determines the fair value of its reporting units using a combination of a discounted cash flow model and the market approach, when applicable.

The determination of the fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to expected revenue growth rates, expected profit margins, and discount rates.

The determination of the fair value using the market approach requires management to make significant assumptions related to comparable market multiples for each reporting unit.

Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both.

Management assesses goodwill at least annually as of May 1 for impairment, or more frequently, if certain events or circumstances warrant.

The goodwill balance was $5,073.8 million as of June 30, 2019, of which $1,216.4 million was allocated to the Consumer Beauty reporting unit (“Consumer

During fiscal 2019, the Company recognized a $3,391.1 million goodwill impairment charge, as the fair value of Consumer Beauty was lower than its carrying value.

The goodwill balance was $3,973.9 million as of June 30, 2020, of which $1,343.5 million and $1,781.6 million was allocated to the Americas and EMEA reporting units (the “reporting units”), respectively.

During fiscal 2020, the Company recognized goodwill impairment charges of $105.0 million related to the EMEA reporting unit, as the fair value of this reporting unit was lower than its’ carrying value.

In addition, the fair value of the Americas reporting unit exceeded its’ carrying value by approximately 2.4%.

The Company has trademarks that are indefinite-lived intangible assets.

The Company’s evaluation of the trademarks for impairment involves the comparison of the fair value of each trademark to its’ carrying value.

Management estimates the fair value of these trademarks annually on its elected assessment date of May 1, 2019, based upon the income approach, using the relief from royalty methodology, which is a specific discounted cash flow method.

The determination of the fair values requires management to make significant estimates and assumptions related to the trademarks’ estimated cash flows, royalty rates and discount rates, especially those related to the CoverGirl, Max Factor, Sally Hansen, philosophy, Wella professional and ghd trademarks (“the trademarks”).

Management estimates the fair value of these trademarks annually on its elected assessment date of May 1, or more frequently if certain events occur, based upon the income approach, using the relief from royalty methodology, which is a specific discounted cash flow method.

The determination of the fair value requires management to make significant estimates and assumptions related to the trademarks’ estimated cash flows, royalty rates and discount rates, especially those related to the CoverGirl, Max Factor and Sally Hansen trademarks (the “trademarks”).

Changes in these assumptions could have a significant impact on the fair value of the trademarks, the amount of any impairment charge, or both.

As of June 30, 2019, the carrying value of the trademarks was $2,729.8 million, of which $501.0 million, $247.0 million, $161.9 million, $156.4 million, $413.0 million and $149.6 million related to the CoverGirl, Max Factor, Sally Hansen, philosophy, Wella professional and ghd trademarks, respectively.

During fiscal 2019, the Company recognized trademark impairment charges of $429.1 million (mainly related to CoverGirl, Max Factor, Sally Hansen, philosophy and Wella professional), as the fair values of the trademarks were lower than their carrying values.

In addition, the fair value of the ghd trademark exceeded its carrying value by approximately 5.4%.

Given the significant judgments made by management to estimate the fair value of Consumer Beauty’s operations and the impairment charge recorded during the year, performing auditing procedures to evaluate the reasonableness of management’s judgments regarding the business and valuation assumptions utilized in the valuation model, particularly the forecasts of future revenue growth rates and profit margins and the selection of the discount rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

In addition, given the determination of fair values of the trademarks required management to make significant estimates and assumptions relating to the estimated cash flows and the selection of the royalty and discount rates, the impairment charges recorded during the year for the CoverGirl, Max Factor, Sally Hansen, philosophy and Wella professional trademarks, and the difference between fair value and carrying value for the ghd trademark, performing audit procedures to evaluate the reasonableness of such estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

As of June 30, 2020, the carrying value of the trademarks was $995.5 million, of which $327.4 million, $169.7 million and $161.3 million related to the CoverGirl, Max Factor and Sally Hansen trademarks, respectively.

During fiscal 2020, the Company recognized trademark impairment charges of $329.0 million (mainly related to CoverGirl and Max Factor), as the fair values of the trademarks were lower than their carrying values.

In addition, the fair value of the Sally Hansen trademark exceeded its’ carrying value by approximately 0.6%.

Given the significant judgments made by management to estimate the fair values of the reporting units and the difference between the reporting units fair value and carrying value, performing auditing procedures to evaluate the reasonableness of management’s judgments regarding the business and valuation assumptions utilized in the valuation model, particularly the expected revenue growth rates and expected profit margins, and the selection of the discount rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

In addition, given the significant estimates and assumptions made by management to estimate the fair values of the trademarks, the impairment charges recorded during the year for the trademarks, and the difference between fair value and carrying value for the Sally Hansen trademark, performing audit procedures to evaluate the reasonableness of such estimates and assumptions, particularly the trademarks’ estimated cash flows, and the selection of the royalty and discount rates, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenues and profit margins for Consumer Beauty and estimated cash flows for the trademarks, the selection of the royalty rates for the trademarks, and the selection of the discount rates for Consumer Beauty and the trademarks included the following, among others:

We tested the effectiveness of controls over goodwill and indefinite-lived intangible assets, including those over the forecasts of future revenues and profit margins and the selection of the respective discount and royalty rates.

We evaluated management’s ability to accurately forecast by comparing actual results in previous years to management’s historical forecasts and by comparing the May and June 2019 forecasts with actual results for those months, for Consumer Beauty and the trademarks, respectively.

We evaluated the reasonableness of management’s forecasts of future revenues for Consumer Beauty and forecasts of estimated cash flows for the trademarks, by comparing management’s forecasts with:

Our audit procedures related to the expected revenue growth rates and expected profit margins for the reporting units, estimated cash flows for the trademarks, the selection of the royalty rates for the trademarks, and the selection of the discount rates for the reporting units and the trademarks included the following, among others:

• We tested the effectiveness of controls over goodwill, and indefinite-lived intangible assets, including those over the expected revenue growth rates and expected profit margins for the reporting units, estimated cash flows for the trademarks and the selection of the respective discount and royalty rates.

• We evaluated management’s ability to accurately forecast by comparing actual results in previous years to management’s historical forecasts and by comparing the May and June 2020 forecasts with actual results for those months, for the reporting units and the trademarks, respectively.

• We evaluated the reasonableness of management’s expected revenues growth rates and profit margins for the reporting units and estimated cash flows for the trademarks, by comparing management’s forecasts with:

◦ Historical cash flows and trends;

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◦ Forecasted information included in Company press releases, as well as analyst and industry reports of the Company and selected companies in its peer group.

We considered the impact of industry and market conditions on management’s forecasts for Consumer Beauty and the trademarks.

• We considered the impact of industry and market conditions on management’s forecasts for the reporting units and the trademarks, including consideration of the effects related to the COVID-19 Pandemic.

• We evaluated the impact of changes in management’s forecasts from the May 1, 2020 annual measurement date to June 30, 2020.

With the assistance of our fair value specialists, we evaluated the discount rates for Consumer Beauty and the trademarks, and royalty rates for the trademarks, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the respective discount rates and royalty rates selected by management.

With the assistance of our fair value specialists, we evaluated the market approach for Consumer Beauty, including evaluating the reasonableness of the selected guideline public companies and the resulting market multiples calculation, as well as benchmarking the selected multiple for Consumer Beauty against these guideline public companies.

• With the assistance of our fair value specialists, we evaluated the valuation approaches and discount rates for the reporting units and the trademarks, and royalty rates for the trademarks, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the respective discount rates and royalty rates selected by management.

/s/ Deloitte & Touche LLP

7 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Equity and Redeemable Noncontrolling Interests

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

5 unchanged sentences

(In millions, except per share data )

2020 2019 2018

Net revenues $ 4,717.8 $ 6,287.9 $ 6,841.8

Cost of sales 1,991.2 2,498.5 2,718.2

Gross profit 2,726.6 3,789.4 4,123.6

Selling, general and administrative expenses 3,120.0 3,467.9 3,807.1

1 unchanged sentence

Restructuring costs 130.2 34.2 134.9

Acquisition-related costs

Acquisition- and divestiture- related costs 157.3 — 64.2

Asset impairment charges 434.0 3,729.0 —

Loss (gain) on sale of brand assets

Operating (loss) income

(Gain) loss on divestitures and sale of brand assets ( 111.5 ) — 28.6

Operating loss ( 1,236.5 ) ( 3,688.4 ) ( 155.5 )

Interest expense, net 242.7 225.2 200.6

Loss on early extinguishment of debt — — 10.7

Other expense, net

Loss before income taxes

Benefit for income taxes

Other (income) expense, net ( 11.6 ) 31.8 27.7

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

Benefit for income taxes on continuing operations ( 377.7 ) ( 54.8 ) ( 32.2 )

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

Net income from discontinued operations 87.2 121.0 234.5

Net loss ( 1,002.7 ) ( 3,769.6 ) ( 127.8 )

Net income attributable to noncontrolling interests 4.7 2.5 2.0

Net income attributable to redeemable noncontrolling interests

Net loss attributable to Coty Inc.

Net (loss) income attributable to redeemable noncontrolling interests ( 0.7 ) 12.1 39.0

Net loss attributable to Coty Inc.

per common share:

$ ( 1,006.7 ) $ ( 3,784.2 ) $ ( 168.8 )

Amounts attributable to Coty Inc.

Net loss from continuing operations $ ( 1,093.9 ) $ ( 3,905.2 ) $ ( 403.3 )

Convertible Series B Preferred Stock dividends

Net loss from continuing operations attributable to common stockholders ( 1,100.4 ) ( 3,905.2 ) ( 403.3 )

Net income from discontinued operations 87.2 121.0 234.5

Net loss attributable to common stockholders $ ( 1,013.2 ) $ ( 3,784.2 ) $ ( 168.8 )

(Loss) Earnings per common share

(Loss) from continued operations per common share - basic $ ( 1.45 ) $ ( 5.20 ) $ ( 0.54 )

(Loss) from continued operations per common share - diluted $ ( 1.45 ) $ ( 5.20 ) $ ( 0.54 )

Earnings from discontinued operations - basic $ 0.12 $ 0.16 $ 0.31

Earnings from discontinued operations - diluted $ 0.12 $ 0.16 $ 0.31

(Loss) per common share - basic $ ( 1.33 ) $ ( 5.04 ) $ ( 0.23 )

(Loss) per common share - diluted $ ( 1.33 ) $ ( 5.04 ) $ ( 0.23 )

Weighted-average common shares outstanding:

Basic 759.1 751.2 749.7

Diluted 759.1 751.2 749.7

See notes to Consolidated Financial Statements.

2 unchanged sentences

(In millions)

2020 2019 2018

Net loss $ ( 1,002.7 ) $ ( 3,769.6 ) $ ( 127.8 )

Other comprehensive income (loss):

1 unchanged sentence

Net unrealized derivative gain (loss) on cash flow hedges, net of taxes of $ 9.1 , $ 14.0 and $( 2.2 ), respectively

( 29.7 ) ( 45.0 ) 15.2

Pension and other post-employment benefits, net of tax of $( 7.3 ), $ 17.3 and $ 1.5 , respectively

11.6 ( 59.3 ) 17.5

Total other comprehensive (loss) income, net of tax ( 397.3 ) ( 217.5 ) 148.4

1 unchanged sentence

Comprehensive income attributable to noncontrolling interests:

Net income 4.7 2.5 2.0

Foreign currency translation adjustment 0.1 0.1 0.5

1 unchanged sentence

Comprehensive income attributable to redeemable noncontrolling interests:

Net (loss) income ( 0.7 ) 12.1 39.0

Comprehensive loss attributable to Coty Inc.

$ ( 1,404.1 ) $ ( 4,001.8 ) $ ( 20.9 )

See notes to Consolidated Financial Statements.

2 unchanged sentences

(In millions, except per share data )

2020 June 30,

Current assets:

2 unchanged sentences

Trade receivables— less allowances of $ 57.3 and $ 27.5 , respectively

Inventories 678.2 860.1

Prepaid expenses and other current assets 411.6 398.2

Current assets held for sale 4,613.1 773.2

Total current assets 6,495.0 3,270.8

Property and equipment, net 1,081.6 1,332.7

Goodwill 3,973.9 4,166.8

Other intangible assets, net 4,372.1 4,531.3

Operating lease right-of-use assets (See Note 16) 371.4 —

Deferred income taxes 362.4 110.4

Other noncurrent assets 72.4 102.5

LIABILITIES AND EQUITY

Noncurrent assets held for sale — 4,195.5

TOTAL ASSETS $ 16,728.8 $ 17,710.0

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

Current liabilities:

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Short-term debt and current portion of long-term debt 188.3 193.8

Current operating lease liabilities (See Note 16) 105.0 —

Income and other taxes payable 33.8 52.9

Current liabilities held for sale 956.7 456.5

Total current liabilities 3,585.7 3,475.2

Long-term operating lease liabilities (See Note 16) 317.4 —

Long-term debt, net 7,892.1 7,469.9

2 unchanged sentences

Other noncurrent liabilities 334.5 398.0

Noncurrent liabilities held for sale — 522.7

TOTAL LIABILITIES 12,705.1 12,664.8

COMMITMENTS AND CONTINGENCIES (Note 26)

CONVERTIBLE SERIES B PREFERRED STOCK, $ 0.01 par value;

1.0 shares authorized;

0.8 and 0.8 issued and outstanding, at June 30, 2020

REDEEMABLE NONCONTROLLING INTERESTS 79.1 451.8

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Class A Common Stock, $ 0.01 par value;

1,000.0 shares authorized, 819.2 and 815.8 issued and 754.2 and 750.7 outstanding at June 30, 2019 and 2018, respectively

1,250.0 and 1,000.0 shares authorized, 830.6 and 819.2 issued and 765.1 and 754.2 outstanding at June 30, 2020 and 2019, respectively

Additional paid-in capital 10,447.4 10,620.5

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Treasury stock— at cost, shares:

65.0 at June 30, 2019 and 2018, respectively

65.5 and 65.0 at June 30, 2020 and 2019, respectively

( 1,446.3 ) ( 1,441.8 )

Total Coty Inc.

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Noncontrolling interests 224.2 6.5

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Total equity 3,228.8 4,593.4

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $ 16,728.8 $ 17,710.0

See notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF EQUITY

AND REDEEMABLE NONCONTROLLING INTERESTS

(In millions)

Preferred Stock

Comprehensive

Treasury Stock

Total Coty Inc.

Stockholders’

Noncontrolling

Income (Loss)

BALANCE—July 1, 2016

Issuance of Class A Common Stock for acquisition

Preferred Stock Class A

Common Stock Additional

Paid-in (Accumulated Accumulated

Comprehensive Treasury Stock Total Coty Inc.

Stockholders’ Noncontrolling Total Redeemable

Noncontrolling Convertible Series B

Shares Amount Shares Amount Capital Deficit) Income (Loss) Shares Amount Equity Interests Equity Interests Preferred Stock

BALANCE as previously reported—July 1, 2017 4.2 $ — 812.9 $ 8.1 $ 11,203.2 $ ( 459.2 ) $ 4.4 65.0 $ ( 1,441.8 ) $ 9,314.7 $ 3.0 $ 9,317.7 $ 551.1 $ —

Adjustment due to the adoption of ASU 2016-09

Balance as adjusted —July 1, 2017 4.2 $ — 812.9 $ 8.1 $ 11,203.2 $ ( 450.9 ) $ 4.4 65.0 $ ( 1,441.8 ) $ 9,323.0 $ 3.0 $ 9,326.0 $ 551.1 $ —

Issuance of Preferred Stock 1.0 — — —

Conversion of Class B to Class A Common Stock

Purchase of Class A Common Stock

Cancellation of Preferred Stock ( 0.2 ) — — —

Exercise of employee stock options and restricted stock units and related tax benefits 2.9 — 22.6 22.6 22.6

Shares withheld for employee taxes ( 3.6 ) ( 3.6 ) ( 3.6 )

Share-based compensation expense 31.5 31.5 31.5

Dividends ($ 0.500 per common share)

Net (loss) income

Other comprehensive income (loss)

( 377.6 ) ( 377.6 ) ( 377.6 )

Net income (loss) ( 168.8 ) ( 168.8 ) 2.0 ( 166.8 ) 39.0

Other comprehensive income 147.9 147.9 0.5 148.4

Adjustment due to the adoption of ASU 2018-02

( 6.5 ) 6.5 — —

Distribution to noncontrolling interests, net — — ( 54.3 )

Redeemable noncontrolling interest due to business combination (See Note 3)

Reclassification of noncontrolling interest to mandatory redeemable financial interest

Dilution of redeemable noncontrolling interest due to additional contribution 17.0 17.0 17.0 ( 17.0 )

Additional redeemable noncontrolling interests due to employee grants ( 7.4 ) ( 7.4 ) ( 7.4 ) 7.4

Proceeds from redeemable noncontrolling interests — — 0.2

Adjustment of redeemable noncontrolling interests to redemption value ( 134.9 ) ( 134.9 ) ( 134.9 ) 134.9

Adjustment to repurchase of redeemable noncontrolling interests

BALANCE—June 30, 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 $ —

2 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY

AND REDEEMABLE NONCONTROLLING INTERESTS

(In millions)

Preferred Stock

Comprehensive

Treasury Stock

Total Coty Inc.

Stockholders’

Noncontrolling

Preferred Stock Class A

Common Stock Additional

Paid-in (Accumulated Accumulated

Comprehensive Treasury Stock Total Coty Inc.

Stockholders’ Noncontrolling Total Redeemable

Noncontrolling Convertible Series B

Shares Amount Shares Amount Capital Deficit) Income Shares Amount Equity Interests Equity Interests Preferred Stock

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 2016-09

Revised Adjustment due to the adoption of ASU No.

( 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 $ —

1 unchanged sentence

Cancellation of Preferred Stock ( 3.5 ) — — —

Exercise of employee stock options and restricted stock units and related tax benefits

Exercise of employee stock options and restricted stock units 1.0 — 5.2 5.2 5.2

Shares withheld for employee taxes ( 1.4 ) ( 1.4 ) ( 1.4 )

Share-based compensation expense 16.9 16.9 16.9

Dividends ($0.500 per common share)

Dividends declared - Cash and Other ($ 0.500 per common share)

( 347.5 ) ( 347.5 ) ( 347.5 )

Dividends settled in Shares of Class A Common Stock 2.4 — 30.6 30.6 30.6

Dividends declared - Stock ($ 0.125 per Common Share)

( 30.6 ) ( 30.6 ) ( 30.6 )

Net income (loss) ( 3,784.2 ) ( 3,784.2 ) 2.5 ( 3,781.7 ) 12.1

Other comprehensive income

Adjustment due to the adoption of ASU 2018-02

Other comprehensive loss ( 217.6 ) ( 217.6 ) 0.1 ( 217.5 )

Distribution to noncontrolling interests, net — ( 1.6 ) ( 1.6 ) ( 26.8 )

Dilution of redeemable noncontrolling interest due to additional contribution (See Note 20)

Additional redeemable noncontrolling interests due to employee grants (See Note 21)

Proceeds from redeemable noncontrolling interests

Additional redeemable noncontrolling interests due to employee grants and other adjustments ( 0.6 ) ( 0.6 ) ( 0.6 ) 1.6

Adjustment of redeemable noncontrolling interests to redemption value 196.4 196.4 196.4 ( 196.4 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY

AND REDEEMABLE NONCONTROLLING INTERESTS

(In millions)

Preferred Stock

Comprehensive

Treasury Stock

Total Coty Inc.

Stockholders’

Noncontrolling

Income (Loss)

Preferred Stock Class A

Common Stock Additional

Paid-in (Accumulated Accumulated

Comprehensive Treasury Stock Total Coty Inc.

Stockholders’ Noncontrolling Total Redeemable

Noncontrolling Convertible Series B

Shares Amount Shares Amount Capital Deficit) (Loss) Income Shares Amount Equity Interests Equity Interests Preferred Stock

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 $ —

Revised Adjustment due to the adoption of ASU No.

2016-16 (See Note 2)

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 $ —

1 unchanged sentence

Cancellation of Preferred Stock ( 7.9 ) ( 0.1 ) ( 0.6 ) ( 0.7 ) ( 0.7 )

Purchase of Class A Common Stock 0.5 ( 4.5 ) ( 4.5 ) ( 4.5 )

Issuance of Restricted Stock 2.0 — — —

Exercise of employee stock options and restricted stock units 1.4 — 2.7 2.7 2.7

Shares withheld for employee taxes

Share-based compensation expense 31.8 31.8 31.8

Dividends declared - Cash and Other ($ 0.375 ) per common share

( 196.3 ) ( 196.3 ) ( 196.3 )

Shares withheld for employee taxes ( 5.3 ) ( 5.3 ) ( 5.3 )

Dividends declared - Stock ( 88.9 ) ( 88.9 ) ( 88.9 )

Dividends settled in Shares of Class A Common Stock 8.0 0.2 88.9 89.1 89.1

Dividends declared - Stock ($0.125 per Common Share)

Dividends accrued - Convertible Series B Preferred Stock ( 6.5 ) ( 6.5 ) ( 6.5 ) 6.5

Net income (loss) ( 1,006.7 ) ( 1,006.7 ) 4.7 ( 1,002.0 ) ( 0.7 )

1 unchanged sentence

Distribution to noncontrolling interests, net — — ( 16.7 )

Additional redeemable noncontrolling interests due to employee grants and other adjustments

Adjustments related to the sale of business 6.2 6.2 6.2 ( 360.4 )

Noncontrolling interest due to transaction (See Note 4) — 212.9 212.9

Adjustment of redeemable noncontrolling interests to redemption value ( 5.1 ) ( 5.1 ) ( 5.1 ) 5.1

4 unchanged sentences

(In millions)

2020 2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net loss to net cash provided by operating activities:

Net loss $ ( 1,002.7 ) $ ( 3,769.6 ) $ ( 127.8 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization 716.5 736.0 737.0

Non-cash lease expense 104.5 — —

Asset impairment charges 434.0 3,851.9 —

3 unchanged sentences

Share-based compensation 29.8 14.8 30.6

Loss on assets under restructuring programs

Loss (gain) on sale of brand assets

(Gain) loss on divestiture and sale of brand assets ( 111.5 ) — 28.6

Loss on impairment of long-lived assets 24.6 27.8 15.6

Loss on early extinguishment of debt — — 10.7

Foreign exchange effects 30.5 ( 4.2 ) ( 16.8 )

Other 39.6 47.3 ( 0.1 )

Change in operating assets and liabilities, net of effects from purchase of acquired companies:

Trade receivables 424.5 344.9 ( 79.6 )

Inventories 124.4 ( 21.9 ) ( 60.0 )

Prepaid expenses and other current assets 25.9 11.5 ( 107.6 )

1 unchanged sentence

Accrued expenses and other current liabilities ( 36.3 ) ( 378.1 ) ( 22.5 )

Operating lease liabilities ( 106.6 ) — —

Income and other taxes payable ( 46.1 ) 66.4 ( 83.2 )

1 unchanged sentence

Other noncurrent liabilities ( 57.9 ) ( 49.8 ) ( 7.5 )

Net cash provided by operating activities

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

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 267.4 ) ( 426.6 ) ( 446.4 )

Payments for business combinations, net of cash acquired

Payment for business combinations and asset acquisitions, net of cash acquired ( 592.2 ) ( 40.8 ) ( 278.0 )

Proceeds from sale of business, net of cash disposed 25.6 — —

Proceeds from sale of long term assets, including assets under restructuring programs 0.6 13.4 36.8

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term debt, original maturity more than three months

Repayments of short-term debt, original maturity more than three months

Net proceeds from (repayments of) short-term debt, original maturity less than three months

Net (repayments of) proceeds from short-term debt, original maturity less than three months ( 4.3 ) ( 21.3 ) 21.0

Proceeds from revolving loan facilities 4,681.3 2,183.3 3,185.5

5 unchanged sentences

Payments for purchases of Class A Common Stock held as Treasury Stock ( 4.5 ) — —

Net (payments) proceeds for foreign currency contracts

Proceeds from issuance of Convertible Series B Preferred Stock

Net proceeds (payments) for foreign currency contracts 0.2 ( 0.4 ) 12.4

Distributions to mandatorily redeemable financial interests, redeemable noncontrolling interests and noncontrolling interests ( 24.5 ) ( 38.1 ) ( 66.4 )

Purchase of additional mandatorily redeemable financial interests, redeemable noncontrolling interests and noncontrolling interests

Purchase of remaining mandatorily redeemable financial interest ( 45.0 ) — —

Payment of debt issuance costs ( 14.2 ) ( 17.4 ) ( 55.1 )

Net cash (used in) provided by financing activities

All other ( 11.2 ) ( 7.2 ) ( 6.3 )

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

EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 21.4 ) ( 7.1 ) ( 3.9 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 28.4 ) 18.2 ( 208.5 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period 380.4 362.2 570.7

2 unchanged sentences

Cash paid during the year for interest $ 280.6 $ 290.7 $ 242.8

Cash received during the period for settlement of interest rate swaps (See Note 19)

Cash received during the period for settlement of interest rate swaps — 43.2 —

Cash paid during the year for income taxes, net of refunds received 123.2 110.3 124.6

1 unchanged sentence

Accrued capital expenditure additions $ 76.7 $ 109.2 $ 158.8

Non-cash stock issued for business combination

Non-cash debt assumed for business combination

Non-cash acquisition of additional redeemable noncontrolling interests

Non-cash reclassification from noncontrolling interest to mandatorily redeemable financial interest

Non-cash contingent consideration for business combination (See Note 3)

Non-cash contingent consideration for business combination — — 8.3

Non-cash Common Stock dividend 88.9 30.6 —

Non-cash Preferred Stock dividend 6.5 — —

Accrued fees related to the issuance of Convertible Series B Preferred Stock 15.2 — —

See notes to Consolidated Financial Statements.

12 unchanged sentences

Product innovations, new product launches and the size and timing of orders from the Company’s customers may also result in variability.

The Company also generally experiences an increase in sales during its fourth fiscal quarter in its Professional Beauty segment as a result of higher demand prior to the summer holiday season.

During the three months ended March 31, 2020, the Company’s chief operating decision maker (“CODM”) changed the reporting structure used to allocate resources amongst its regional commercial business units, and accordingly, the Company recast its segment results.

See Note 5—Segment Reporting for information on the Company’s segments.

On June 1, 2020, the Company entered into a definitive agreement with KKR, regarding a strategic transaction for the sale of Coty’s Professional and retail hair business, including the Wella, Clairol, OPI and ghd brands, together, the “Wella Business”, valuing the businesses at $ 4,300.0 on a cash- and debt-free basis.

KKR will own 60 % of this separately managed entity and Coty will own the remaining 40 %.

As a result of the above mentioned agreement, the Company’s financial statements present the Wella Business to be sold as discontinued operations and the related assets and liabilities as held for sale.

Additionally, the Company recast its segment results due to the discontinued operations presentation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

The Company also consolidates majority-owned entities in the United States of America, United Arab Emirates, Kingdom of Saudi Arabia, Malaysia, Indonesia, Philippines, Singapore, Hong Kong, China, South Korea, Thailand and Taiwan where the Company has the ability to exercise controlling influence.

Prior year amounts have been reclassified to conform with current year presentation for amounts related to segment reporting (see Note 5);

assets and liabilities held for sale;

and discontinued operations (see Note 3).

The Company also consolidates majority-owned entities in the United States of America, United Arab Emirates, Kingdom of Saudi Arabia, and South Korea where the Company has the ability to exercise controlling influence.

Ownership interests of noncontrolling parties are presented as mandatorily redeemable financial interests, noncontrolling interests or redeemable noncontrolling interests, as applicable.

1 unchanged sentence

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported.

Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, the market value of inventory, the fair value of acquired assets and liabilities associated with acquisitions, pension benefit costs, the assessment of goodwill, other intangible assets and long-lived assets for impairment, income taxes, and the valuation of redeemable noncontrolling interests.

Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, the market value of inventory, the fair value of acquired assets and liabilities associated with acquisitions, the assessment of goodwill, other intangible assets and long-lived assets for impairment, and income taxes.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate.

3 unchanged sentences

Cash equivalents include all highly liquid investments with original maturities of three months or less at the time of purchase.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Restricted Cash

4 unchanged sentences

Restricted cash is included as a component of Cash, cash equivalents, and restricted cash in the Consolidated Statement of Cash Flows.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Trade Receivables

12 unchanged sentences

Expenditures for maintenance and repairs are expensed as incurred.

Property and equipment that is disposed of through sale, trade-in, donation, or scrapping is written off, and any gain or loss on the transaction, net of costs to dispose, is recorded in Gain (loss) on sale of assets.

Depreciation and amortization are computed principally using the straight-line method over the following estimated useful lives:

Estimated Useful Lives

Marketing furniture and fixtures

Machinery and equipment

Computer equipment and software

Property and equipment under capital leases and leasehold improvements

Lesser of lease term or economic life

Description Estimated Useful Lives

Buildings 20 - 40 years

Marketing furniture and fixtures 3 - 5 years

Machinery and equipment 2 - 15 years

Computer equipment and software 2 - 5 years

Property and equipment under finance leases and leasehold improvements Lesser of lease term or economic life

Intangible assets with finite lives are amortized principally using the straight-line method over the following estimated useful lives:

Estimated Useful Lives

License agreements

Customer relationships

Product formulations and technology

Description Estimated Useful Lives

License agreements 2 - 34 years

Customer relationships 2 - 28 years

Trademarks 2 - 30 years

Product formulations and technology 2 - 28 years

Long-lived assets, including tangible and intangible assets with finite lives, are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

2 unchanged sentences

The Company estimates fair value based on the best information available, including discounted cash flows and/or the use of third-party valuations.

Goodwill and Other Indefinite-lived Intangible Assets

Goodwill is calculated as the excess of the cost of purchased businesses over the fair value of their underlying net assets.

Goodwill is allocated and evaluated at the reporting unit level, which are the Company’s operating segments.

The Company identifies its operating segments by assessing whether the components of the Company’s reportable segments constitute businesses for which discrete financial information is available and management of each operating segment regularly reviews the operating results of those components.

The Company has identified three reporting units.

Luxury, Consumer Beauty and

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

Professional Beauty are considered operating segments and each a reporting unit.

Goodwill and Other Indefinite-lived Intangible Assets

Goodwill is calculated as the excess of the cost of purchased businesses over the fair value of their underlying net assets.

Goodwill is allocated and evaluated at the reporting unit level, which are the Company’s operating segments.

The Company allocates goodwill to one or more reporting units that are expected to benefit from synergies of the business combination.

5 unchanged sentences

The Company makes certain judgments and assumptions in allocating assets and liabilities to determine carrying values for its reporting units.

To determine fair value of the reporting unit, the Company uses a combination of the income and market approaches.

To determine fair value of the reporting unit, the Company uses a combination of the income and market approaches, when applicable.

Under the income approach, fair value is determined using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflects the relative risk of the cash flows.

Under the market approach, information from comparable publicly traded companies with similar operating and investment characteristics as the reporting units is utilized to create valuation multiples that are applied to the operating performance of the reporting units being tested, to value the reporting unit.

Under the market approach, when applicable, information from comparable publicly traded companies with similar operating and investment characteristics as the reporting units is utilized to create valuation multiples that are applied to the operating performance of the reporting units being tested, to value the reporting unit.

The impairment loss recognized would be the difference between a reporting unit’s carrying value and fair value in an amount not to exceed the carrying value of the reporting unit’s goodwill.

4 unchanged sentences

An impairment loss is recognized when the estimated fair value of the intangible asset is less than its carrying value.

In February 2016, the FASB issued ASU 2016-02 , Leases (Topic 842), which requires lease assets and liabilities to be recorded on the balance sheet.

The Company adopted this ASU and its related amendments as of July 1, 2019 using the modified retrospective method.

Under this approach, prior periods were not restated.

Rather, lease balances and other disclosures for prior periods were provided in the notes to the financial statements as previously reported, and the cumulative effect of initially applying the guidance was recognized in the Consolidated Balance Sheets.

The adoption resulted in a cumulative-effect adjustment to retained earnings of approximately $ 0.7 .

The new leasing standard includes several optional practical expedients available that entities may elect to apply upon transition.

These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allows a lessee to carry forward its population of existing leases, the classification of each lease, as well as the treatment of initial direct costs as of the period of adoption.

In addition, the Company elected the practical expedient related to lease and non-lease components, as an accounting policy election for all asset classes, which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component.

Lastly, the Company did not elect the practical expedient related to hindsight analysis which allows a lessee to use hindsight in determining the lease term and in assessing impairment of the entity’s right-of-use (“ROU”) assets.

The Company has made a policy election to not recognize ROU assets and lease liabilities that arise from leases with an initial term of twelve months or less on the Consolidated Balance Sheets.

However, the Company will recognize these lease payments in the Consolidated Statements of Operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred.

The Company has chosen to apply this accounting policy across all classes of underlying assets.

Additionally, upon adoption, the Company utilized a discount rate to determine the present value of the lease payments based on information available as of July 1, 2019.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

On July 1, 2019, the Company recognized a lease liability of $ 617.8 and a corresponding ROU asset of $ 551.3 , including the reclassification of approximately $ 66.4 of unamortized lease incentives and lease loss liabilities, upon the adoption of this standard, with minimal impact on the Consolidated Statements of Operations.

Deferred Financing Fees

The Company capitalizes costs related to the issuance of debt instruments, as applicable.

The Company capitalizes costs related to the issuanc e of debt instruments, as applicable.

Such costs are amortized over the contractual term of the related debt instrument in Interest expense, net using the straight-line method, which approximates the effective interest method, in the Consolidated Statements of Operations.

7 unchanged sentences

Results for reporting periods beginning after July 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, Revenue Recognition.

See section below regarding Recently Adopted Accounting Pronouncements for more information on the impact of the adoption of this standard.

For periods after July 1, 2018, revenue is recognized at a point in time and/or over time when control of the promised goods or services is transferred to the Company’s customers, which usually occurs upon delivery.

Revenue is recognized in an amount that reflects the consideration we expect to be entitled to in exchange for transferring those goods or services.

At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct.

At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct.

To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

11 unchanged sentences

Trade spending activities recorded as a reduction to gross revenue after customer discounts and allowances represented 11 %, 9 %, and 10 % in fiscal 2020, 2019 and 2018, respectively.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The Company accounts for certain customer store fixtures as other assets.

9 unchanged sentences

Selling, general and administrative expenses include advertising and promotional costs and research and development costs.

Also included in Selling, general and administrative expenses are share-based compensation, certain warehousing fees, non-manufacturing overhead, personnel and related expenses, rent on operating leases, and professional fees.

Also included in Selling, general and administrative expenses are share-based compensation, certain warehousing fees, manufacturing fixed costs, personnel and related expenses, rent on operating leases, and professional fees.

Advertising and promotional costs are expensed as incurred and totaled $ 1,343.7 , $ 1,595.5 and $ 1,836.5 in fiscal 2020, 2019 and 2018, respectively.

4 unchanged sentences

Share-based compensation expense is measured and fixed at the grant date, based on the estimated fair value of the award and is recognized on a straight-line basis, net of estimated forfeitures, over the employee’s requisite service period.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The fair value of stock options is determined using the Black-Scholes valuation model using the assumptions discussed in Note 24—Share-Based Compensation Plans.

12 unchanged sentences

If there are no treasury stock gains in Additional paid-in-capital, the losses upon re-issuance of treasury stock are recorded as a reduction of Retained earnings in the Company’s Consolidated Balance Sheets.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The Company is subject to income taxes in the U.S.

20 unchanged sentences

As such, the Company has elected to treat the tax on GILTI as a tax expense in the year it is incurred rather than recognizing deferred taxes.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Restructuring Costs

4 unchanged sentences

Additional elements of severance and termination benefits associated with non-recurring benefits are recognized ratably over each employee’s required future service period.

Costs to terminate a contract before the end of its term are recognized and measured at their fair value when the Company gives written notice to the counterparty.

For lease terminations, a liability based on the remaining lease rentals, reduced by estimated sublease rentals is measured at the cease-use date.

All other costs are recognized as incurred.

Costs for real estate consolidation are recognized based on the type of cost, and the expected future use of the facility.

For locations where the Company does not expect to sub-lease the property, the amortization of any right-of-use asset is accelerated from the decision date to the cease use date.

For locations where the Company expects to sub-lease the properties subsequent to its vacating the property, the right-of-use asset is reviewed for potential impairment at the earlier of the cease use date or the date a sub-lease is signed.

To determine the amount of impairment, the fair value of the right-of-use asset is determined based on the present value of the estimated net cash flows related to the property.

Contractual costs outside of the right-of-use asset are recognized based on the net present value of expected future cash outflows for which the Company will not receive any benefit.

Such amounts are reliant on estimates of future sub-lease income to be received and future contractual costs to be incurred.

Other business realignment costs represent the incremental cost directly related to the restructuring activities which can include accelerated depreciation, professional or consulting fees and other internal costs including compensation related costs for dedicated internal resources.

Other business realignment costs are generally recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations.

Charges for accelerated depreciation are recognized on long-lived assets that will be taken out of service before the end of their normal service, in which case depreciation estimates are revised to reflect the use of the asset over its shortened useful life.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Charges for accelerated depreciation are recognized on long-lived assets that will be taken out of service before the end of their normal service life, in which case depreciation estimates are revised to reflect the use of the asset over its shortened useful life.

All other costs are recognized as incurred.

18 unchanged sentences

Level 3 - Valuation based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and supported by little or no observable market activity.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The Company has not elected the fair value measurement option for any financial instruments or other assets not required to be measured at fair value on a recurring basis.

8 unchanged sentences

Translation gains or losses are reported as cumulative adjustments in Accumulated other comprehensive income (loss) (“AOCI/(L)”).

Net gains (losses) of $ 7.6 , $ 8.5 and $( 12.8 ) in fiscal 2019 , 2018 and 2017 , respectively, resulting from financing foreign exchange currency transactions are included in Interest expense, net in the Consolidated Statements of Operations.

Net (losses) of nil , nil and $( 1.7 ) in fiscal 2019 , 2018 and 2017 , respectively, resulting from acquisition-related foreign exchange currency transactions are included in Other expense, net in the Consolidated Statements of Operations.

Recently Adopted Accounting Pronouncements

On July 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers , and all related amendments (the “New Revenue Standard”) using the modified retrospective method applied to those contracts which were not completed as of July 1, 2018.

The Company recorded a net increase to its accumulated deficit as of July 1, 2018 (as presented below) due to the cumulative impact of adopting the New Revenue Standard, with the impact primarily related to the timing of accrual for certain customer incentives and markdowns at the time of sell-in and reclassification of certain marketing fixtures expense as a reduction of gross revenue.

The cumulative effects of the revenue accounting changes on the Company's Consolidated Balance Sheet as of July 1, 2018 were as follows:

June 30, 2018

Property and equipment, net

Deferred income taxes

Other noncurrent assets

LIABILITIES AND EQUITY

Current liabilities:

Accrued expenses and other current liabilities

Deferred income taxes

Accumulated deficit

The following table summarizes the impacts of adopting the New Revenue Standard on the Consolidated Statements of Operations for fiscal 2019:

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

As reported (New Revenue Standard)

Current period adjustments

As adjusted (previous revenue standard)

Selling, general and administrative expenses

Net (loss) income

Net (loss) income attributable to Coty Inc.

per common share:

In October 2016, the FASB issued ASU No.

2016-16, Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs.

The Company adopted the standard in the first quarter of fiscal 2019 using the modified retrospective transition method and recognized tax expense, as an adjustment to the July 1, 2018 accumulated deficit balance of $ 7.6 and $ 120.8 that were previously deferred in Prepaid expenses and other current assets and Other noncurrent assets, respectively.

The recognition of this tax expense was partially offset by a previously unrecognized deferred tax asset of $ 15.8 , resulting in a cumulative-effect adjustment of $ 112.6 as an increase to the July 1, 2018 accumulated deficit balance.

In January 2017, the FASB issued ASU No.

2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business, which provides an updated model for determining if acquired assets and liabilities constitute a business.

In a business combination, the acquired assets and liabilities are recognized at fair value and goodwill could be recognized.

In an asset acquisition, the assets are allocated value based on relative fair value and no goodwill is recognized.

The ASU narrows the definition of a business.

The Company adopted the standard in the first quarter of fiscal 2019 on a prospective basis.

The adoption of this guidance did not have an impact on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles — Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test.

The Company early adopted the ASU during the first quarter of fiscal 2019.

As of July 1, 2018, the adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued ASU No.

2017-07, Compensation — Retirement Benefits (Topic 715):

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU No.

2017-07”), which requires 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.

In addition, only the service cost component would be eligible for capitalization in assets.

The new guidance also allows a practical expedient that permits employers to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements.

The Company adopted this standard during the first quarter of fiscal 2019 and retrospectively applied it to each prior period presented.

In doing so, as a practical expedient, the Company used the prior comparative period Employee Benefit Plans footnote (see Note 18 ).

The following table presents our results under our historical method of accounting and as adjusted to reflect our adoption of ASU No.

Net (losses)/gains of $( 14.8 ), $ 7.6 and $ 8.5 in fiscal 2020, 2019 and 2018, respectively, resulting from financing foreign exchange currency transactions are included in Interest expense, net in the Consolidated Statements of Operations.

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

Year Ended June 30,

As Previously Reported

Effect of Adoption of ASU No.

As Previously Reported

Effect of Adoption of ASU No.

Cost of sales

Selling, general and administrative expenses

Restructuring costs

Operating income

Other expense, net

In May 2017, the FASB issued ASU No.

2017-09, Compensation — Stock Compensation (Topic 718):

Scope of Modification Accounting, which narrows the scope of changes in grant terms that would require modification accounting.

The Company adopted this standard during the first quarter of fiscal 2019 on a prospective basis.

The adoption of this standard did not have an effect on the Company’s Consolidated Financial Statements.

In June 2018, the FASB issued ASU No.

2018-07, Compensation — Stock Compensation (Topic 718):

Scope of Nonemployee Share-Based Payment Activities, which expanded the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

The Company adopted this standard during the fourth quarter of fiscal 2019 on a modified retrospective basis.

The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

Recently Adopted Accounting Pronouncements

In August 2017, the FASB issued ASU No.

2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40) , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities , which provided guidance for improvements to accounting for hedging activities under ASC 815.

The amendments better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results.

The Company adopted the standard in the first quarter of fiscal 2020 on a prospective basis.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

In October 2018, the FASB issued ASU No.

2018-16, Derivatives and Hedging (Topic 815):

Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes , which permitted the use of the OIS rate based on SOFR as a benchmark interest rate for hedge accounting purposes.

The Company adopted the standard concurrently with the adoption of ASU No.

2017-12 in the first quarter of fiscal 2020 on a prospective basis.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lease assets and liabilities to be recorded on the balance sheet.

On July 1, 2019, we adopted Topic 842 , as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding ROU assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.

We adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods.

The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged.

For information regarding the impact of Topic 842 adoption, see Significant Accounting Policies - Leases above and Note 16 - Leases.

See Note 16 for further information related to Leases.

Recently Issued and Not Yet Adopted Accounting Pronouncements

Accounting Standard Update(s)

Effective Period

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

Fiscal 2021 with early adoption permitted.

Accounting Standard Update(s) Topic Effective Period Summary

2018-13 Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement Fiscal 2021 with early adoption permitted.

The FASB issued authoritative guidance that modifies the disclosure requirements by removing, modifying and adding disclosures related to fair value measurements.

The Company is evaluating the impact this guidance will have on the Company’s Consolidated Financial Statements and related disclosures.

Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans

Fiscal 2021 with early adoption permitted.

Adoption of this guidance will impact disclosures only and will not have an impact on the Company’s financial position or results of operations.

2018-14 Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans Fiscal 2021 with early adoption permitted.

The FASB issued authoritative guidance that modifies the disclosure requirements by removing, modifying and clarifying disclosures related to defined benefit plans.

The Company is evaluating the impact this guidance will have on the Company’s Consolidated Financial Statements and related disclosures.

Adoption of this guidance will impact disclosures only and will not have an impact on the Company’s financial position or results of operations.

2018-19 Measurement of Credit Losses on Financial Instruments

2 unchanged sentences

This approach to estimating credit losses applies to most financial assets measured at amortized cost and certain other instruments, including but not limited to, trade and other receivables.

The adoption of this standard will not have a material impact on the Company’s financial position or results of operations.

2019-12 Income Taxes Fiscal 2022 In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU No.

2019-12”), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improves the consistency in the application of GAAP for areas of Topic 740 by clarifying and amending existing guidance.

The amendment will be effective for the Company in fiscal 2022 with early adoption permitted.

The Company is evaluating the impact this guidance will have on the Company’s Consolidated Financial Statements and related disclosures.

In February 2016, the FASB issued ASU No.

2016-02, Leases, which requires lessees to recognize assets and liabilities for most leases.

Under the new standard, a lessee should recognize in the Consolidated Balance Sheets a liability to make future lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term.

The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current U.S.

GAAP standards.

Additional ASUs have since been issued which provide amended and additional guidance for the implementation of ASU No.

All related guidance has been codified into, and is now known as, ASC 842, Leases.

The new leasing guidance will be effective for the Company in fiscal 2020 with early adoption permitted.

The Company has provisionally determined the following:

The Company will adopt the standard using the modified retrospective approach whereby it will recognize a transition adjustment at the effective date of ASC 842, July 1, 2019, rather than at the beginning of the earliest comparative period presented.

Prior period information will not be restated.

In addition, the Company will apply the package of practical expedients permitted under the transition guidance within the new standard, which allows a lessee to carryforward their population of existing leases, the classification of each lease, as well as the treatment of initial direct costs as of the period of adoption.

The Company has identified the population of leases to which the guidance applies and has implemented changes in its systems, procedures and controls relating to how lease information is obtained, processed and analyzed.

Based on its preliminary assessment, the Company expects that the adoption of this standard will result in a material increase in the lease-related assets and liabilities on its balance sheet, but expects minimal impact to its statement of operations and cash flows.

BUSINESS COMBINATIONS

P&G Beauty Business Acquisition

On October 1, 2016, the Company acquired the P&G Beauty Business in order to further strengthen the Company’s position in the global beauty industry.

The purchase price was $ 11,570.4 and consisted of $ 9,628.6 of total equity consideration and $ 1,941.8 of assumed debt.

The Company issued 409.7 million shares of common stock to the former holders of Galleria Co.

(“Galleria”) (which held the assets of the P&G Beauty Business) common stock, together with cash in lieu of fractional shares.

is considered to be the acquiring company for accounting purposes.

DISCONTINUED OPERATIONS

On June 1, 2020, the Company entered into a definitive agreement with KKR Bidco, regarding a strategic transaction for the sale of Coty’s Professional and Retail Hair business, including the Wella, Clairol, OPI and ghd brands (together, the “Wella Business”), valuing the businesses at $ 4,300.0 on a cash- and debt-free basis.

KKR will own 60 % of this separately managed business and Coty will own the remaining 40 %.

The transaction is expected to close during the first half of fiscal 2021.

On June 1, 2020, the Company and KKR Bidco also entered into a Separation Agreement, which sets forth the terms and conditions on which the Wella Business will be separated from the Company.

In accordance with applicable accounting guidance for the disposal of long-lived assets, the results of the Wella transaction are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented.

Additionally, the Wella Business assets and liabilities which will be included in the sale are presented as assets and liabilities held for sale in the Consolidated Balance Sheets.

The Professional business historically comprised the Professional Beauty reportable segment and the Retail Hair business was historically included in the Americas, EMEA and Asia Pacific reportable segments.

The following table has selected financial information included in Net income from discontinued operations for the Wella Business.

Year Ended June 30,

2020 2019 2018

Net revenues $ 2,020.1 $ 2,360.6 $ 2,556.1

Cost of sales 689.7 808.0 889.7

Gross profit 1,330.4 1,552.6 1,666.4

Selling, general and administrative expenses 1,009.2 1,096.0 1,211.0

Amortization expense 95.5 106.8 108.5

Restructuring costs 7.5 10.0 38.3

Asset impairment charges — 122.9 —

Operating income 218.2 216.9 308.6

Interest expense, net (a)

49.7 50.6 64.4

Other (income) expense, net ( 0.9 ) ( 1.0 ) 2.2

Income from discontinued operations before income taxes 169.4 167.3 242.0

Income tax on discontinued operations 82.2 46.3 7.5

Net income from discontinued operations $ 87.2 $ 121.0 $ 234.5

(a) Interest expense was allocated to the discontinued operations due to a requirement in our Credit Agreement that cash generated from the divestiture of any businesses during the next nine months will be utilized to reduce our debt, other than a maximum of $ 500.0 that will be used to fund operations.

The following is selected financial information included in cash flows from discontinued operations for the Wella Business held for sale:

Year Ended June 30,

2020 2019 2018

NON-CASH OPERATING ITEMS

Depreciation and amortization $ 131.8 $ 157.5 $ 161.5

Goodwill and intangible asset impairment charges — 123.0 —

CASH FLOW FROM INVESTING ACTIVITIES

Capital Expenditures $ 24.7 $ 44.1 $ 68.8

The major components of assets and liabilities of the Wella Business held for sale are provided below.

The assets and liabilities held for sale will evolve up to the closing date for normal operational changes as well as contractual adjustments

including the finalization of local implementation agreements impacting the separation of the Wella Business in various countries.

Year Ended June 30,

Trade receivables $ 168.0 $ 302.3

Inventories 269.2 293.2

Prepaid expenses and other current assets 134.9 177.7

Property and equipment, net 241.3 268.0 (b)

Goodwill 874.8 907.1 (b)

Other intangible assets, net 2,770.4 2,891.0 (b)

Operating lease right of use asset 73.4 — (b)

Deferred income taxes 25.5 82.3 (b)

Other noncurrent assets 55.6 47.1 (b)

Total current assets held for sale 4,613.1 773.2

Total noncurrent assets held for sale — 4,195.5

TOTAL ASSETS HELD FOR SALE $ 4,613.1 $ 4,968.7

Accounts payable $ 128.3 $ 149.2

Accrued expenses and other current liabilities 236.4 295.3

Current operating lease liabilities 17.2 —

Income and other taxes payable 15.8 12.0

Long-term operating lease liabilities 65.9 —

Noncurrent deferred tax liabilities 324.8 347.6 (b)

Pension and other post-employment benefits 140.8 145.8 (b)

Other noncurrent liabilities 27.5 29.3 (b)

Total current liabilities held for sale 956.7 456.5

Total noncurrent liabilities held for sale — 522.7

TOTAL LIABILITIES HELD FOR SALE $ 956.7 $ 979.2

(a) The Company expects that the transaction will close in the first half of fiscal 2021.

As such, for the period ended June 30, 2020, all assets and liabilities held for sale are reported as current assets and liabilities held for sale on the Consolidated Balance Sheets.

(b) Amounts as of June 30, 2019, are reflected as part of the noncurrent assets and liabilities held for sale.

BUSINESS COMBINATIONS, ASSET ACQUISITIONS AND DIVESTITURES

King Kylie Transaction

On November 18, 2019, the Company entered into a purchase agreement (the “Purchase Agreement”) with King Kylie, LLC ("King Kylie"), a Delaware limited liability company, and the other parties listed as signatories to the Purchase Agreement (the “Seller Group Parties”), to build and further expand King Kylie’s brands globally.

Pursuant to the Purchase Agreement, on January 6, 2020, the Company acquired 51 % of the equity interests in King Kylie from the applicable Seller Group Parties for a base purchase price of $ 600.0 in cash.

In addition, as contemplated by the Purchase Agreement, the Company entered into a Collaboration Agreement, pursuant to which, in exchange for a marketing fee and a license fee, it received the right and license to manufacture, advertise, promote, distribute and sell certain products of King Kylie and use certain intellectual property owned by or licensed to King Kylie in connection with the development, manufacture, labelling, packaging, advertising, display, distribution and sale of such products.

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

The Company has finalized the valuation of assets acquired and liabilities assumed for the P&G Beauty Business acquisition.

The Company recognized certain measurement period adjustments as disclosed below during the quarter ended September 30, 2017.

The measurement period for the P&G Beauty Business acquisition closed at the end of the first quarter of fiscal 2018.

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

fair value as

The Company estimated the preliminary fair value of acquired assets, liabilities and noncontrolling interest as of the date of acquisition based on information currently available.

The preliminary fair values are substantially complete, with the exception of primarily accrued expenses and goodwill.

As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period.

The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized.

The following table summarizes the estimated allocation of the purchase price to the net assets as of the January 6, 2020 acquisition date:

Estimated fair value (a)

adjustments (b)

Final fair value

Estimated fair

adjusted Estimated useful life (in years)

Cash and cash equivalents $ 7.8 $ — $ 7.8

Receivables 2.2 ( 1.2 ) 1.0

Inventories 2.5 — 2.5

Property, plant and equipment 3.6 — 3.6

Trademarks — indefinite

Trademarks — finite

Collaboration agreement 369.0 — 369.0 20

License agreement 280.0 — 280.0 20

Customer relationships 27.0 — 27.0 1.5

License agreements

Product formulations

Other net working capital

Net other assets

Unfavorable contract liabilities

Pension liabilities

Deferred tax liability, net

Goodwill 127.4 1.2 128.6 Indefinite

Net other liabilities ( 6.6 ) — ( 6.6 )

Total value $ 812.9 $ — $ 812.9

Noncontrolling interest 212.9 212.9

Total purchase price $ 600.0 $ 600.0

(a) As previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

The business combination was completed in fiscal 2017.

(b) The Company recorded measurement period adjustments in the first quarter of fiscal 2018.

The measurement period adjustments related to Customer relationships, License agreements and Product formulations, collectively, of $ 20.8 , were a result of changes in assumptions that were used at the date of acquisition for valuation purposes including allocation of costs and synergies.

The measurement period adjustments related to Property, plant and equipment and Net other assets of ($ 16.9 ) and ($ 33.7 ) , respectively, primarily related to obtaining new facts and circumstances about acquired assets and liabilities that existed at the acquisition date.

The increase to Deferred tax liability, net was primarily a result of the change of the jurisdictional allocation of the tangible and intangible assets.

All measurement period adjustments were offset against Goodwill.

Goodwill is primarily attributable to the anticipated company-specific synergies and economies of scale expected from the operations of the combined company.

The synergies include certain cost savings, operating efficiencies, and leverage of the acquired brand recognition to be achieved as a result of the P&G Beauty Business acquisition.

(a) As previously reported in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020.

(b) The Company recorded measurement period adjustments in the fourth quarter of fiscal 2020 to certain working capital accounts as a result of obtaining new facts and circumstances that existed at the acquisition date.

Goodwill is not expected to be deductible for tax purposes.

Goodwill of $ 1,889.8 , $ 3,188.1 and $ 486.0 is allocated to the Luxury, Consumer Beauty and Professional Beauty segments, respectively.

The allocation of goodwill to segments was based on the relative fair values of expected future cash flows.

ghd Acquisition

On November 21, 2016, the Company completed the acquisition of 100 % of the equity interest of Lion/Gloria Topco Limited which held the net assets of ghd (“ghd”) which stands for “Good Hair Day,” a premium brand in high-end hair styling appliances.

The ghd acquisition further strengthens the Company’s professional hair category and is included in the Professional Beauty segment’s results after the acquisition date.

The total cash consideration paid net of acquired cash and cash equivalents was £ 430.2 million , the equivalent of $ 531.5 , at the time of closing.

The Company has finalized the valuation of assets acquired and liabilities assumed for the ghd acquisition.

The Company recognized certain measurement period adjustments as disclosed below during the six months ended December 31, 2017.

The measurement period for the ghd acquisition closed on November 21, 2017.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

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

fair value as

adjustments (b)

Final fair value

Cash and cash equivalents

Property, plant and equipment

Indefinite-lived other intangible assets

Customer relationships

Other net working capital

Net other assets

Deferred tax liability, net

Total purchase price

(a) As previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

The business combination was completed in fiscal 2017.

(b) The Company recorded measurement period adjustments in the first half of fiscal 2018.

The measurement period adjustments related to decreases to Technology, Indefinite-lived other intangible assets and Customer relationships of $ 17.2 , $ 14.8 and $ 2.3 , respectively, and a decrease to the deferred tax liability of $ 5.9 were a result of changes in assumptions that were used at the date of acquisition for valuation purposes.

The measurement period adjustments related to Other net working capital of $ 4.7 were a result of obtaining new facts and circumstances about acquired accrued expenses that existed as of the acquisition date.

All measurement period adjustments were offset against Goodwill.

Goodwill is no t expected to be deductible for tax purposes.

The goodwill is attributable to expected synergies resulting from integrating ghd’s products into the Company’s existing sales channels.

Goodwill of $ 49.0 , $ 42.0 , and $ 108.0 is allocated to the Luxury, Consumer Beauty and Professional Beauty segments, respectively.

The allocation of goodwill to the segments was due to the reduction in corporate and regional overhead allocated to these segments due to the addition of the ghd acquisition.

Younique Acquisition

On February 1, 2017, the Company completed its acquisition of 60 % of the membership interest in Foundation, LLC (“Foundation”), which held the net assets of Younique, LLC, a Utah limited liability company (“Younique”), for cash consideration of $ 600.0 , net of acquired cash and assumed debt, and an additional payment of $ 7.5 for working capital adjustments paid in fiscal 2018.

The existing Younique membership holders contributed their 100 % membership interest in Younique to Foundation in exchange for a 40 % membership interest in Foundation and $ 607.5 of cash consideration.

Younique strengthens the Consumer Beauty segment’s product offerings.

The Company accounts for the noncontrolling interest portion of the acquisition as a redeemable noncontrolling interest.

The Company has finalized the valuation of assets acquired and liabilities assumed for the Younique acquisition.

The Company recognized certain measurement period adjustments as disclosed below during the nine months ended March 31, 2018.

The measurement period for the Younique acquisition closed on February 1, 2018.

The goodwill is attributable to expected synergies resulting from integrating King Kylie’s products into the Company’s existing manufacturing and sales channels.

The fair value of the noncontrolling interest was estimated using the income approach applied to the projected cash flows of King Kylie.

As King Kylie is a private company, the fair value measurement was based on significant inputs that are not observable in the market and thus, represent a Level 3 measurement.

For the fiscal year ended June 30, 2020, net revenues and net loss of King Kylie included in the Company’s Consolidated Statements of Operations were $ 52.0 and $ 11.7 , respectively.

Net income for the fiscal year ended June 30, 2020 was impacted by the amortization of certain asset values based on the estimated fair values of the acquired assets as determined during the initial purchase accounting, such as the amortization of finite-lived intangibles.

This amortization impacted the net income for the fiscal year ended June 30, 2020 by $ 24.4 .

Burberry Beauty Business Acquisition

On October 2, 2017, the Company acquired the exclusive global license rights and other related assets for the Burberry Limited (“Burberry”) prestige fragrances, cosmetics and skincare business (the “Burberry Beauty Business”).

The Burberry Beauty Business acquisition further strengthens the Company’s position in the global prestige beauty industry.

Total purchase consideration, after post-closing adjustments, was £ 191.7 , the equivalent of $ 256.3 , at the time of closing.

Included in the purchase price was cash consideration of £ 183.3 , the equivalent of $ 245.1 , at the time of closing, in addition to £ 8.4 , the equivalent of $ 11.2 , of estimated contingent consideration, at the time of closing.

From the date of acquisition through the end of fiscal 2020, the Company made all contingent payments and has no further contractual obligation to make future payments.

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($ in millions, except per share data)

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

fair value as

adjustments (b)

Final fair value

Cash and cash equivalents

Property, plant and equipment

Trademark — finite

Product formulations

Customer relationships

Other net working capital

Short-term and long-term debt

Total equity value

Redeemable noncontrolling interest

Net cash and debt acquired

Total purchase price

(a) As previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

The business combination was completed in fiscal 2017.

(b) The Company recorded measurement period adjustments in the nine months ended March 31, 2018 to account for an increase in the estimated other net working capital of $ 0.3 as of the February 1, 2017 acquisition date.

This adjustment is offset against Goodwill.

Goodwill is expected to be deductible for tax purposes.

The goodwill is attributable to expected synergies resulting from certain manufacturing and supply chain cost savings.

Goodwill of $ 95.0 , $ 420.0 and $ 60.0 is allocated to the Luxury, Consumer Beauty and Professional Beauty segments, respectively.

The allocation of goodwill to the segments was due to the reduction in corporate and regional overhead allocated to these segments due to the addition of the Younique acquisition.

Burberry Beauty Business Acquisition

On October 2, 2017, the Company acquired the exclusive global license rights and other related assets for the Burberry Limited (“Burberry”) luxury fragrances, cosmetics and skincare business (the “Burberry Beauty Business”).

The Burberry Beauty Business acquisition further strengthens the Company’s position in the global luxury beauty industry.

Total purchase consideration, after post-closing adjustments, was £ 191.7 million , the equivalent of $ 256.3 , at the time of closing.

Included in the purchase price was cash consideration of £ 183.3 million , the equivalent of $ 245.1 , at the time of closing, in addition to £ 8.4 million , the equivalent of $ 11.2 , of estimated contingent consideration, at the time of closing.

The aggregate future contingent consideration payments will range from zero to £ 16.7 million and will be payable on a quarterly basis to Burberry as certain items of inventory transferred to the Company at the acquisition date are subsequently used or sold.

The amount of the contingent consideration recorded was estimated as of the acquisition date and is subject to change based on the related inventory usage.

The fair value of the contingent consideration was determined by estimating the future inventory usage and corresponding payments over a four -year period, with the contingent payments being made in each of the respective years.

The estimate of the portion of contingent consideration payable within twelve months from the June 30, 2019 balance sheet date is recorded in Accrued expenses and other current liabilities and the remainder is recorded in Other noncurrent liabilities in the Consolidated Balance Sheet.

From the date of acquisition through the end of fiscal 2019 , the Company made £ 4.8 million in contingent payments.

The Company has finalized the valuation of assets acquired and liabilities assumed for the Burberry Beauty Business acquisition.

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The measurement period for the Burberry Beauty Business acquisition closed on October 1, 2018.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The following table summarizes the estimated allocation of the purchase price to the net assets of the Burberry Beauty Business as of the October 2, 2017 acquisition date:

2 unchanged sentences

Estimated fair

adjusted Estimated

Inventories $ 47.9 $ — $ 47.9

Property, plant and equipment 5.8 — 5.8 1 - 3

License and distribution rights 177.8 6.7 184.5 3 - 15

Goodwill 34.9 ( 9.4 ) 25.5 Indefinite

Net other liabilities ( 10.1 ) 2.7 ( 7.4 )

7 unchanged sentences

The goodwill is attributable to expected synergies resulting from integrating the Burberry Beauty Business products into the Company’s existing sales channels.

Goodwill of $ 12.9 , $ 6.8 , and $ 5.8 is allocated to the Luxury, Consumer Beauty and Professional Beauty segments, respectively.

Goodwill of $ 6.2 , $ 9.2 , and $ 3.9 is allocated to the Americas, EMEA, and Asia Pacific segments, respectively.

Goodwill includes amounts related to discontinued operations of $ 6.2 .

The allocation of goodwill to the segments were due to the reduction in corporate and regional overhead allocated to these segments due to the addition of the Burberry Beauty Business acquisition.

Unaudited Pro Forma Information

The unaudited pro forma financial information in the table below summarizes the combined results of the Company and the P&G Beauty Business and Younique (the “Pro Forma Acquisitions”).

The information in the table below is presented to reflect the pro forma results as if the combination of the P&G Beauty Business and Younique occurred on July 1, 2015.

The fiscal year ended June 30, 2017 includes pro forma adjustments for the Pro Forma Acquisitions.

The pro forma adjustments include incremental amortization of intangible assets and depreciation adjustment of property, plant and equipment, based on the values of each asset as well as costs related to financing the Pro Forma Acquisitions.

The unaudited pro forma information also includes non-recurring acquisition-related costs as well as amortization of the inventory step-up.

Pro forma adjustments were tax-effected at the Company’s statutory rates.

For the pro forma basic and diluted earnings per share calculation, 409.7 million shares issued in connection with the P&G Beauty Business acquisition were considered as if issued on July 1, 2015.

The pro forma information is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the acquisitions of the P&G Beauty Business and Younique had taken place on July 1, 2015 or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings.

The pro forma information for the fiscal year ended 2017 is as follows:

Year Ended June 30, 2017 (a)

Pro forma Net revenues

Pro forma Net (loss) income

Pro forma Net (loss) income attributable to Coty Inc.

per common share

(a) For the twelve months ended June 30, 2017, the pro forma information excluded $ 476.3 of non-recurring acquisition-related costs and $ 89.6 of amortization of inventory step up, respectively.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The business combinations mentioned above were not significant to our operating results individually or in aggregate, and thus pro forma results are not presented.

Business Divestitures

On August 27, 2019, the Company entered into a Contribution and Redemption Agreement to transfer all of its membership interest in Foundation, which held the net assets of Younique, to an existing noncontrolling interest holder.

On September 16, 2019 (the “Closing Date”), the Company completed the sale of all of its membership interest in Foundation.

Consideration received at the Closing Date consisted of $ 50.0 cash and a secured promissory note with a face value of $ 27.9 .

During the fiscal year June 30, 2020, the Company recorded a final pre-tax gain of $ 111.5 resulting from the sale.

The final pre-tax gain is included in (Gain) loss on divestitures and sale of brand assets in the Consolidated Statements of Operations for the fiscal year ended June 30, 2020.

Younique’s operations are included within Other and its results of operations through the Closing Date are included in the Consolidated Statements of Operations for the fiscal year ended June 30, 2020.

SEGMENT REPORTING

The Company’s organizational structure is category focused, putting the consumer first, by specifically targeting how and where they shop and what and why they purchase.

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

Operating and reportable segments (referred to as “segments”) reflect the way the Company is managed and for which separate financial information is available and evaluated regularly by the Company’s CODM in deciding how to allocate resources and assess performance.

The Company has designated its Chief Executive Officer as the CODM.

The Company has determined that its three divisions are its operating segments and reportable segments.

Each division has full end-to-end responsibility to optimize consumers’ beauty experience in the relevant categories and channels.

The operating and reportable segments are:

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

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

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

On July 1, 2019, the Company announced its turnaround plan, which includes planned changes to the reporting structure to the CODM.

As part of these reporting structure changes, management expects to move from the current organizational structure into regional commercial business units in Europe, Middle East & Africa (“EMEA”), Americas and Asia Pacific for the combined Luxury and Consumer Beauty businesses.

Such regional business units will be supported by central Luxury and Consumer Beauty marketing teams.

Professional Beauty is expected to remain a distinct business unit.

The Company anticipates that its operating and reporting segments would change upon completion of such reporting structure changes and the related changes in the financial information provided to the CODM, which is expected to occur in the third quarter of fiscal 2020.

Certain revenues and shared costs and the results of corporate initiatives are being managed outside of the three segments by Corporate.

The items within Corporate relate to corporate-based responsibilities and decisions and are not used by the CODM to measure the underlying performance of the segments.

Corporate primarily includes restructuring costs, costs related to acquisition activities and certain other expense items not attributable to ongoing operating activities of the segments.

With the exception of goodwill and acquired intangible assets, the Company does not identify or monitor assets by segment.

The Company does not present assets by reportable segment since various assets are shared between reportable segments.

The allocation of goodwill and acquired intangible assets by segment is presented in Note 11 — Goodwill and Other Intangible Assets, net .

During the three months ended March 31, 2020, the Company's CODM changed the reporting structure used to allocate resources from the previous category focused organizational structure that included three operating and reportable segments:

Luxury, Consumer Beauty and Professional Beauty, to a structure based on regional commercial business units.

Due to discontinued operations presentation, the Company’s three remaining segments for its continuing operations are:

Americas, EMEA, and Asia Pacific, excluding the discontinued retail hair operations in each segment.

The change in

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

profitability of each of the remaining segments is due to the reallocation of certain shared costs, which were previously allocated to the Professional Beauty division and the discontinued retail hair operations, to the remaining segments comprising continuing operations.

Americas, EMEA, and Asia Pacific include the businesses focused on prestige fragrances, prestige skin care, prestige cosmetics, mass color cosmetics, mass fragrance, mass skin care and body care, and are supported by central marketing teams.

Certain income and shared costs and the results of corporate initiatives are managed by Corporate.

Corporate primarily includes restructuring and realignment costs, costs related to acquisition and divestiture activities and impairments of long lived assets, goodwill and intangibles that are not attributable to ongoing operating activities of the segments.

The results of Younique, LLC ("Younique") are included in "Other." See Note 4—Business Combinations, Asset Acquisitions and Divestitures for information on Younique and the divestiture, which was completed on September 16, 2019.

Corporate costs are not used by the CODM to measure the underlying performance of the segments.

With the exception of goodwill, the Company does not identify or monitor assets by segment.

The Company does not present assets by reportable segment since various assets are shared between reportable segments.

The allocation of goodwill by segment is presented in Note 12—Goodwill and Other Intangible Assets, net.

Year Ended June 30,

SEGMENT DATA 2020 2019 2018

Net revenues:

Consumer Beauty

Professional Beauty

Americas $ 1,771.0 $ 2,248.9 $ 2,399.3

EMEA 2,308.6 2,909.7 3,250.7

Asia Pacific 582.7 771.1 758.7

Other 55.5 358.2 433.1

Total $ 4,717.8 $ 6,287.9 $ 6,841.8

Depreciation and amortization:

Consumer Beauty

Professional Beauty

Operating (loss) income:

Consumer Beauty

Professional Beauty

Americas $ 227.4 $ 188.4 $ 192.6

EMEA 276.0 272.0 271.0

Asia Pacific 69.5 63.3 56.3

Other 11.8 54.8 55.5

Total $ 584.7 $ 578.5 $ 575.4

Operating (loss) income from continuing operations

Americas $ ( 164.8 ) $ ( 1,474.5 ) $ 45.6

EMEA ( 248.4 ) ( 1,344.1 ) 131.4

Asia Pacific ( 74.0 ) ( 253.1 ) 52.7

Other ( 10.9 ) ( 18.6 ) 70.1

Corporate ( 738.4 ) ( 598.1 ) ( 455.3 )

Total $ ( 1,236.5 ) $ ( 3,688.4 ) $ ( 155.5 )

Reconciliation:

Operating (loss) income

Operating (loss) income from continuing operations $ ( 1,236.5 ) $ ( 3,688.4 ) $ ( 155.5 )

Interest expense, net 242.7 225.2 200.6

Loss on early extinguishment of debt — — 10.7

Other expense, net

Loss before income taxes

The Company has determined its geographical structure to be North America (Canada and the United States), Europe and ALMEA (Asia, Latin America, the Middle East, Africa and Australia).

Year Ended June 30,

GEOGRAPHIC DATA

Net revenues:

North America

Year Ended June 30,

Other (income) expense, net ( 11.6 ) 31.8 27.7

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

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

As of June 30,

Long-lived assets:

$ 3,340.5 $ 2,897.7

Switzerland 3,690.9 4,379.4

Brazil 494.0 712.4

All other 1,902.2 2,041.3

Total $ 9,427.6 $ 10,030.8

For Net revenues, a major country is defined as a group of subsidiaries in a country with combined revenues greater than 10% of consolidated net revenues or as otherwise deemed significant.

1 unchanged sentence

The United States had net revenues of $ 1,159.3 , $ 1,470.5 and $ 1,595.4 in fiscal 2020, 2019 and 2018, respectively.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

For Long-lived assets, a major country is defined as a group of subsidiaries within a country with combined long-lived assets greater than 10% of consolidated long-lived assets or as otherwise deemed significant.

1 unchanged sentence

No customer or group of affiliated customers accounted for more than 10% of the Company’s Net revenues in fiscal 2020, 2019 and 2018 or are otherwise deemed significant.

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

Presented below are the net revenues associated with Company’s product categories as a percentage of total net revenues for continuing operations:

Year Ended June 30,

PRODUCT CATEGORY 2020 2019 2018

Fragrances 55.5 % 54.4 % 50.6 %

Color Cosmetics 31.1 % 32.2 % 35.3 %

Skin & Body Care 13.0 % 13.0 % 13.8 %

ACQUISITION-RELATED COSTS

Hair Care 0.4 % 0.4 % 0.3 %

Total 100.0 % 100.0 % 100.0 %

ACQUISITION- AND DIVESTITURE-RELATED COSTS

Acquisition-related costs, which are expensed as incurred, represent non-restructuring costs directly related to acquiring and integrating an entity, for both completed and contemplated acquisitions and can include finder’s fees, legal, accounting, valuation, other professional or consulting fees, and other internal costs which can include compensation related expenses for dedicated internal resources.

The Company recognized acquisition-related costs of $ 0.0 , $ 64.2 and $ 355.4 for the fiscal years ended 2019 , 2018 and 2017 , respectively, which have been recorded in Acquisition-related costs in the Consolidated Statements of Operations.

Acquisition-related costs incurred during the fiscal years ended 2018 and 2017 were primarily related to the P&G Beauty Business acquisition.

The Company recognized acquisition-related costs of $ 19.7 , nil and $ 64.2 for the fiscal years ended 2020, 2019 and 2018, respectively, which have been recorded in Acquisition- and divestiture-related costs in the Consolidated Statements of Operations.

Acquisition-related costs incurred during the fiscal year ended 2020 were primarily related to the King Kylie Transaction and the pending transaction with Kim Kardashian West.

Acquisition- related costs incurred during the fiscal year ended 2018 were primarily related to the P&G Beauty Business acquisition.

Divestiture-related costs, which are expensed as incurred, represent non-restructuring costs directly related to divesting and selling an entity, for both completed and contemplated divestitures.

These costs can include legal, accounting, information technology, other professional or consulting fees and other internal costs.

Internal costs can include compensation related expenses for dedicated internal resources.

Additionally, for divestitures, we include write-offs of assets that are no longer recoverable and contract related costs due to the divestiture.

The Company recognized divestiture-related costs of $ 137.6 , nil and nil for the fiscal 2020, 2019 and 2018, respectively.

Divestiture-related costs incurred during the fiscal 2020 were primarily related to the definitive agreement with KKR regarding the strategic transaction for the sale of the Wella Business.

See Note 1—Description of Business for information on the strategic transaction.

These costs have been recorded in Acquisition and divestiture-related costs in the Consolidated Statements of Operations .

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

RESTRUCTURING COSTS

1 unchanged sentence

Year Ended June 30,

2020 2019 2018

Turnaround Plan $ 165.2 $ — $ —

Global Integration Activities

( 23.9 ) 28.5 106.5

2018 Restructuring Actions

( 3.0 ) 16.8 68.4

Other Restructuring ( 0.6 ) ( 1.1 ) ( 1.7 )

Turnaround Plan

On July 1, 2019, the Company announced a four-year plan to drive substantial improvement in Consumer Beauty while further optimizing Luxury and Professional Beauty (the “Turnaround Plan”).

The Company expects to incur additional restructuring charges of approximately $ 35.0 related to employee termination benefits, contract terminations, and other related exits costs pertaining to the previously approved actions.

The Company intends to utilize accruals established related to previously announced programs, as discussed below.

Global Integration Activities

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

Of the expected costs, the Company has incurred cumulative restructuring charges of $ 500.0 related to approved initiatives through the fiscal year ended June 30, 2019 , which have been recorded in Corporate.

Total 137.7 44.2 173.2

Expense reclassified to discontinued operations ( 7.5 ) ( 10.0 ) ( 38.3 )

Total Restructuring Expense $ 130.2 $ 34.2 $ 134.9

Turnaround/Transformation Plan

In connection with the four-year plan announced on July 1, 2019 to drive substantial improvement in and optimization in the Company's businesses (the “Turnaround Plan”), the Company has and expects to continue to incur restructuring and related costs.

On May 11, 2020, the Company announced an expansion of the Turnaround Plan to further reduce fixed costs, (the “Transformation Plan”).

Over the next 3 fiscal years, the Company expects to incur approximately $ 170.0 of additional restructuring charges pertaining to the approved actions, primarily related to employee termination benefits, contract terminations and other exit-related costs.

Of the expected costs, the Company has incurred cumulative restructuring charges of $ 165.2 related to approved initiatives through June 30, 2020, which have been recorded in Corporate.

The following table presents aggregate restructuring charges for the program:

Severance and Employee Benefits Fixed Asset Write-offs Other Exit Costs Total

Fiscal 2020 $ 159.8 $ ( 1.1 ) $ 6.5 $ 165.2

The related liability balance and activity of restructuring costs for the Turnaround Plan are presented below:

Severance and

Benefits Fixed Asset Write-offs Other

Balance—July 1, 2019 $ — $ — $ — $ —

Restructuring charges 181.4 ( 1.1 ) 6.5 186.8

Payments ( 28.4 ) — ( 4.3 ) ( 32.7 )

Changes in estimates ( 21.6 ) — — ( 21.6 )

Non-cash utilization — 1.1 — 1.1

ASC 842 adoption adjustment — — ( 1.5 ) ( 1.5 )

Effect of exchange rates 1.7 — — 1.7

Balance—June 30, 2020 133.1 — 0.7 133.8

Liability reclassified to held for sale ( 1.2 ) — — ( 1.2 )

Balance—June 30, 2020 $ 131.9 $ — $ 0.7 $ 132.6

The Company currently estimates that the total remaining accrual of $ 132.6 will result in cash expenditures of approximately $ 110.1 , $ 22.1 and $ 0.4 in fiscal 2021, 2022 and thereafter, respectively.

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

Severance and Employee Benefits

Fixed Asset Write-offs

Other Exit Costs (a)

Global Integration Activities

Of the expected costs, the Company has incurred cumulative restructuring charges of $ 476.1 related to approved initiatives through the fiscal year ended June 30, 2020, which have been recorded in Corporate.

The following table presents aggregate restructuring charges for the program:

Severance and Employee Benefits Third-Party

Terminations Fixed Asset Write-offs Other Exit Costs Total (a)

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 ( 18.3 ) ( 5.5 ) — ( 0.1 ) ( 23.9 )

Cumulative through June 30, 2020 $ 377.1 $ 40.7 $ 46.7 $ 11.6 $ 476.1

(a) The fiscal 2017 balance reflects the impact of the ASU 2017-07 adoption which resulted in the reclassification of $ 0.8 of pension settlement and curtailment credits incurred in connection with Global Integration Activities, from Restructuring costs to Other expense, net.

Refer to Note 2 — Summary of Significant Accounting Policies for further information on the adoption of ASU 2017-07.

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

Severance and

Fixed Asset Write-offs

Benefits Third-Party

Terminations Other

Balance—July 1, 2019 $ 53.7 $ 11.7 $ 1.6 $ 67.0

Restructuring charges

ASC 842 adoption adjustment — — ( 1.5 ) ( 1.5 )

Payments ( 25.2 ) ( 3.4 ) — ( 28.6 )

Change in estimates ( 18.3 ) ( 5.5 ) ( 0.1 ) ( 23.9 )

Non-cash impact

Effect of exchange rates ( 0.3 ) — — ( 0.3 )

Balance—June 30, 2020 9.9 2.8 — 12.7

Liability reclassified as held for sale ( 0.8 ) ( 1.5 ) — ( 2.3 )

Balance—June 30, 2020 $ 9.1 $ 1.3 $ — $ 10.4

The Company currently estimates that the total remaining accrual of $ 10.4 will result in cash expenditures of approximately $ 7.7 , $ 0.5 and $ 2.2 in fiscal 2021, 2022 and thereafter, respectively.

1 unchanged sentence

During fiscal 2018, the Company began evaluating initiatives to reduce fixed costs and enable further investment in the business (“the 2018 Restructuring Actions”).

Of the expected costs, the Company incurred cumulative restructuring charges of $ 85.2 related to approved initiatives through the fiscal year ended June 30, 2019, primarily related to role eliminations in Europe and North America, which have been recorded in Corporate.

The following table presents aggregate restructuring charges for the program:

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

Severance and Employee Benefits

Fixed Asset Write-offs

Other Exit Costs

Of the expected costs, the Company incurred cumulative restructuring charges of $ 82.2 related to approved initiatives through the fiscal year ended June 30, 2020, primarily related to role eliminations in Europe and North America, which have been recorded in Corporate.

The following table presents aggregate restructuring charges for the program:

Severance and Employee Benefits Third-Party

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 ( 3.0 ) — — — ( 3.0 )

Cumulative through June 30, 2020 $ 75.9 $ 0.1 $ 1.3 $ 4.9 $ 82.2

1 unchanged sentence

Severance and

Benefits Third-Party

Terminations Other

Balance—July 1, 2019 $ 15.5 $ 0.1 $ 1.5 $ 17.1

Restructuring charges

ASC 842 adoption adjustment — ( 1.2 ) ( 1.2 )

Payments ( 9.3 ) ( 0.1 ) ( 0.1 ) ( 9.5 )

Changes in estimates ( 3.0 ) — — ( 3.0 )

1 unchanged sentence

Balance—June 30, 2020 2.6 — 0.2 2.8

The Company currently estimates that the total remaining accrual of $ 17.1 will result in cash expenditures of approximately $ 16.0 , $ 0.7 and $ 0.4 in fiscal 2020 , 2021 and thereafter, respectively.

Liability reclassified as held for sale ( 1.4 ) — — ( 1.4 )

Balance—June 30, 2020 $ 1.2 $ — $ 0.2 $ 1.4

The Company currently estimates that the total remaining accrual of $ 1.4 will result in cash expenditures of approximately $ 0.6 and $ 0.8 in fiscal 2021 and 2022, respectively.

There are no more anticipated expenditures for these activities.

Other Restructuring

In connection with the acquisition of the Burberry Beauty Business, the Company recorded (income) expenses of $( 0.1 ) and $ 3.9 of restructuring costs relating to third party contract terminations during the fiscal years ended June 30, 2019 and June 30, 2018 , respectively, which have been recorded in Corporate.

The related liability balances were $ 0.7 and $ 3.9 at June 30, 2019 and June 30, 2018 , respectively.

The Company currently estimates that the total accrual of $ 0.7 will result in cash expenditures in fiscal 2020.

The Company executed a number of other restructuring activities in prior years, which are substantially completed.

The Company recognized (income) expenses of $( 0.8 ) , $( 6.5 ) and $ 9.8 (a) in fiscal 2019 , 2018 and 2017 , respectively, which have been recorded in Corporate.

The Company recognized (income) expenses of $( 0.6 ), $( 1.1 ) and $( 1.7 ) in fiscal 2020, 2019 and 2018, respectively, which have been recorded in Corporate.

The related liability balances were $ 2.7 and $ 9.0 at June 30, 2020 and June 30, 2019, respectively.

The Company currently estimates that the remaining accrual of $ 5.4 will result in cash expenditures of $ 3.2 and $ 2.2 in fiscal 2020 and 2021 , respectively.

In connection with the acquisition of the P&G Beauty Business, the Company assumed restructuring liabilities of approximately $ 21.7 at October 1, 2016.

The Company recognized (income) expenses, net of $( 0.2 ) , $ 0.9 and nil during the fiscal years ended 2019, 2018 and 2017, respectively, which have been recorded in Corporate.

The Company currently estimates that the remaining accrual of $ 2.9 at June 30, 2019 will result in cash expenditures of $ 2.4 , $ 0.3 and $ 0.2 in fiscal 2020 , 2021 and thereafter, respectively.

The fiscal 2017 balance reflects the impact of the ASU 2017-07 adoption which resulted in the reclassification of a $ 1.8 pension curtailment credit related to the Bourjois acquisition restructuring program, from Restructuring costs to Other expense, net.

Refer to Note 2 — Summary of Significant Accounting Policies for further information on the adoption of ASU 2017-07.

TRADE RECEIVABLES—FACTORING

The Company factors a portion of its trade receivables with unrelated third-party factoring companies on both a recourse and non-recourse basis.

Trade receivables factored throughout the fiscal year on a worldwide basis amounted to $ 547.9 and $ 300.1 in fiscal 2019 and 2018 , respectively.

The Company maximizes its use of the factoring facility, by factoring additional invoices to replace invoices paid early.

The net amount utilized under the factoring facilities was $ 123.1 and $ 118.3 as of June 30, 2020 and 2019, respectively.

The aggregate amount of trade receivable invoices on a worldwide basis amounted to $ 839.8 and $ 547.9 in fiscal 2020 and 2019, respectively.

Remaining balances due from factors amounted to $ 6.2 and $ 8.6 as of June 30, 2020 and 2019, respectively, and are included in Trade receivables, net in the Consolidated Balance Sheets.

Factoring fees paid under these arrangements were $ 1.8 , $ 2.4 and $ 0.6 in fiscal 2020, 2019 and 2018, respectively, which were recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

New 2019 Factoring Arrangement

Cash received from the selling of receivables under the Receivables Purchase Agreement are presented as a change in trade receivables within the operating activities section of the Consolidated Statements of Cash Flows.

Receivables Purchase Agreement

On March 19, 2019, the Company entered into an Uncommitted Receivables Purchase Agreement (the “Receivables Purchase Agreement”) with a financial institution, with an aggregate facility limit of $ 150.0 .

1 unchanged sentence

Pursuant to Receivables Purchase Agreement, the Company acts as collections agent for the financial institution and is responsible for the collection, and remittance to the financial institution, of all customer payments related to trade receivables factored under this arrangement.

For certain customer receivables factored, the Company will retain a recourse obligation of up to 10 percent of the respective invoice’s net invoice value, payable to the financial institution if the customer’s payment is not received by the contractual due date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The Company accounts for trade receivable transfers under the Receivables Purchase Agreement as sales and derecognizes the sold receivables from the Consolidated Balance Sheets.

2 unchanged sentences

European Receivables Purchase Agreement

In September, 2019, the Company entered into a factoring agreement with a financial institution, which allows for the transfer of receivables from certain of our European subsidiaries, in exchange for cash (the “European Receivables Purchase Agreement”).

The total outstanding amount permitted among such subsidiaries is € 93.0 .

Factoring of such receivables under the European Receivables Purchase Agreement is executed on a non-recourse basis.

Inventories as of June 30, 2020 and 2019 are presented below:

2020 June 30,

Raw materials $ 148.6 $ 206.3

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Prepaid expenses and other current assets as of June 30, 2020 and 2019 are presented below:

Value added tax, sales and other non-income tax assets

2020 June 30,

Expected income tax refunds, credits and prepaid income taxes $ 134.4 $ 97.2

Prepaid marketing, copyright and agency fees 91.1 98.5

Value added tax, sales and other non-income tax assets 83.1 114.8

Non-trade receivables 53.4 13.2

Prepaid rent, leases and insurance

Interest rate swap assets

Prepaid rent, leases, maintenance and insurance 15.6 16.3

Other 34.0 58.2

Total prepaid expenses and other current assets $ 411.6 $ 398.2

PROPERTY AND EQUIPMENT, NET

Property and equipment, net as of June 30, 2019 and 2018 are presented below:

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1 unchanged sentence

($ in millions, except per share data)

PROPERTY AND EQUIPMENT, NET

Property and equipment, net as of June 30, 2020 and 2019 are presented below:

2020 June 30,

Land, buildings and leasehold improvements $ 475.0 $ 530.2

6 unchanged sentences

Property and equipment, net $ 1,081.6 $ 1,332.7

Depreciation and amortization expense of property and equipment totaled $ 382.5 , $ 384.2 and $ 280.0 in fiscal 2019 , 2018 and 2017 , respectively, and is recorded in Cost of sales and Selling, general and administrative expenses in the Consolidated Statements of Operations.

During fiscal 2019 and 2018 , the Company recorded asset impairment charges of $ 27.8 and $ 15.6 , respectively, primarily related to the planned disposal of certain manufacturing facilities, and the write-off of machinery and equipment in excess of the Company’s needs due to the Global Integration Activities (refer to Note 6 — Restructuring Costs for further information about Global Integration Activities).

The impairment charges are included in Restructuring costs in the Consolidated Statements of Operations.

Depreciation expense of property and equipment totaled $ 351.7 , $ 331.8 and $ 331.1 in fiscal 2020, 2019 and 2018, respectively.

Depreciation expense is recorded in Cost of sales and Selling, general and administrative expenses in the Consolidated Statements of Operations.

During fiscal 2020, 2019 and 2018 the Company recorded asset impairment charges of $ 16.8 , $ 27.8 and $ 15.6 respectively.

The fiscal 2020 impairment charge is recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations and primarily relate to the abandonment of a retail store and software no longer in use.

The fiscal 2019 and 2018 impairment charges are included in Restructuring costs in the Consolidated Statements of Operations and primarily relate to the disposal of certain manufacturing facilities, and the write-off of machinery and equipment in excess of the Company’s needs.

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

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The Company tests goodwill and indefinite-lived other intangible assets for impairment at least annually as of May 1, or more frequently, if certain events or circumstances warrant.

There were no impairments of goodwill at the Company’s reporting units or of indefinite-lived other intangible assets in fiscal 2018 and 2017.

There were no impairments of goodwill at the Company’s reporting units or of indefinite-lived other intangible assets in fiscal 2018.

During fiscal 2019, the Company recorded total goodwill impairments of $ 3,307.5 and total impairments on indefinite-lived other intangible assets of $ 389.8 .

Additionally, the Company recorded impairments of $ 19.7 on finite-lived other intangible assets during fiscal 2019 .

During fiscal 2020, the Company recorded total goodwill impairments of $ 105.0 and total impairments on indefinite-lived other intangible assets of $ 329.0 .

The asset impairment charges were a result of the following impairment tests:

In the course of evaluating the results for the second quarter of fiscal 2019, the Company noted the cash flows associated with its Consumer Beauty reporting unit were adversely impacted by negative category trends and market share losses in the color cosmetics, hair color and mass fragrance categories mainly impacting the CoverGirl, Rimmel, Max Factor, Bourjois and Clairol trademarks;

additional shelf-spaces losses for CoverGirl, Clairol, and Max Factor;

expected increased costs in the short-term to offset the lower service levels caused by supply chain disruptions;

and lower than expected net revenues and profitability for Younique.

Additionally, the Company included the impact of a 75 basis point increase in the discount rate in the valuation model, due to changes in the market assumptions, which adversely affected the fair values of the reporting unit and trademarks.

As a result, in the second quarter of fiscal 2019, the Company recognized asset impairment charges of $ 930.3 , of which $ 832.5 related to goodwill, $ 90.8 related to indefinite-lived other intangible assets (mainly related to the CoverGirl and Clairol trademarks) and $ 7.0 related to finite-lived other intangible assets, as described below and recorded in Asset impairment charges in the Consolidated Statements of Operations.

Also, in the second quarter of fiscal 2019, the Company identified indicators of impairment related to the philosophy trademark that is part of the Luxury reporting unit and recorded an asset impairment charge of $ 22.8 for the second quarter of fiscal 2019.

In addition to the impact of a 75 basis point increase in the discount rate for the trademark, the Company considered the impact of the business indicators of lower than expected net revenue growth in the U.S.

and a decrease in the level of expected profitability of the trademark.

In the fourth quarter of fiscal 2019, as a result of the annual impairment test, the Company recorded asset impairment charges of $ 2,558.6 related to goodwill of the Consumer Beauty reporting unit and $ 201.7 related to indefinite-lived other intangible assets (mainly CoverGirl, Max Factor, Bourjois, Sally Hansen and Clairol trademarks) that are part of the Consumer Beauty reporting unit.

The charges are recorded in Asset impairment charges in the Consolidated Statements of Operations.

The Company considered several factors that developed during the fourth quarter of fiscal 2019 that led to the conclusion that the fair values of the Consumer Beauty reporting unit and certain indefinite-lived other intangible assets were below their carrying amounts.

These factors included fourth quarter net revenue results and market share trends that were below expectations, continued net revenue and profitability declines for Younique in excess of management’s expectations, and the development of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

the Company’s Turnaround Plan to stabilize operations and improve profitability.

The Turnaround Plan impacted the projected cash flows associated with the Consumer Beauty reporting unit by lowering revenue growth and, in the near term, margin expectations.

Such changes in the Company’s estimated forecasts were based on a top down review of the business which resulted in decisions to simplify the product range as well as identify priority brand-country combinations and invest behind such combinations at scale, which will initially lower net revenues and profits.

The Turnaround Plan also considered the latest market data including continued negative category trends in the color cosmetics, hair color and mass fragrance categories that were below expectations and indicated a longer required recovery period.

Overall, these factors negatively impacted the cash flows of the Consumer Beauty reporting unit and indefinite-lived other intangible assets and resulted in a decrease in management’s assumed terminal growth rates, which also adversely affected their fair values.

Additionally, the Company included the impact of an additional 25 basis point increase in the discount rate in the valuation model for its trademarks, which adversely affected the fair values of the trademarks.

Based on the results of the annual impairment test, the Company also recorded an asset impairment charge of $ 86.8 in Asset impairment charges in the Consolidated Statements of Operations related to the philosophy trademark that is part of the Luxury reporting unit.

The cash flows related to the philosophy trademark decreased mainly due to updated projections as a result of a revised strategy for the business developed as part of the Turnaround Plan in the fourth quarter of fiscal 2019 to simplify the product range.

The fair value of the philosophy trademark was also adversely affected by a 25 basis point increase in the discount rate for trademarks since the second quarter of fiscal 2019.

Further, the Company recorded an asset impairment charge of $ 27.0 in Asset impairment charges in the Consolidated Statements of Operations for fiscal 2019 related to the professional product line of Wella trademark that is part of the Professional Beauty reporting unit.

In addition to the impact of a 100 basis point increase in the discount rate for the trademark since the fiscal 2018 annual impairment test, the Company considered the adverse impact of lower than expected revenue in the U.S.

on the cash flows associated with the professional product line of Wella trademark due to additional customer destocking activities as well as the impact of the strategy change to simplify the product range.

During the third quarter of fiscal 2020, the Company was adversely impacted by the COVID-19 global pandemic.

This drove a decrease in net revenue, impacting all product categories across the Company, due to the closure of retail malls, professional salons, travel retail channels and certain mass channels.

Management concluded that this adverse factor represented an indicator of impairment that warranted an interim impairment test for goodwill and certain other intangible assets.

As a result, in the three and nine months ended March 31, 2020, the Company recognized asset impairment charges of $ 40.4 , relating to indefinite-lived other intangible assets (related to the CoverGirl, Max Factor and Bourjois trademarks).

In the fourth quarter of fiscal 2020, a s a result of the May 1, 2020 annual impairment test, the Company recorded asset impairment charges of $ 288.6 related to indefinite-lived other intangible assets (mainly CoverGirl, Max Factor, Philosophy and Bourjois trademarks) that are all considered corporate assets.

There were no goodwill impairment charges recorded as a result of the annual impairment test performed on May 1, 2020.

On June 1, 2020, the Company entered into a definitive agreement with KKR, regarding a strategic transaction for the sale of Coty’s Wella Business.

A goodwill impairment test should be performed immediately before and after a Company reorganizes its reporting structure if the reorganization would affect the composition of one or more of its reporting units.

As a result, the Company determined that goodwill should be tested for potential impairment after considering the sale of the Wella Business.

As a result of the June 1, 2020 impairment test, the Company recorded impairment charges of $ 105.0 related to goodwill of the EMEA reporting unit.

The Company considered several factors that developed during the fourth quarter of fiscal 2020 that led to the conclusion that the fair values of the EMEA reporting unit and certain indefinite-lived other intangible assets were below their carrying amounts.

The continuing impacts of the COVID-19 pandemic was the principle driver of additional impairments.

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($ in millions, except per share data)

decrease in net revenue, impacting all product categories across the Company, due to the slow economic recovery that arose as a result of the pandemic.

The fair value of the EMEA reporting unit was also adversely impacted due to a loss of synergies from the sale of the Wella Business.

Additionally the fair values of the trademarks were adversely affected by a 165 and 190 basis point increase in the discount rate compared to the May 1, 2019 and March 31, 2020 test, respectively.

The Company estimated the fair values of its reporting units based on discounted cash flow methodology reflecting the latest projections which included, among other things, the impact of COVID-19 pandemic for the Company’s impairment testing performed during the fourth quarter of our 2020 fiscal year.

These projections assumed a gradual recovery from the COVID-19 pandemic beginning in early fiscal 2021 through the third quarter of fiscal 2021.

These projections also considered the targeted reduction in the Company’s fixed cost structure in line with the announced Transformation Plan.

These cost reductions will be achieved through a combination of further consolidating its supply network, headcount restructuring, and substantial reduction in its non-people costs.

Goodwill as of June 30, 2020, 2019 and 2018 is presented below:

Consumer Beauty

Professional Beauty

Americas EMEA APAC Total

Gross balance at June 30, 2018 $ 3,117.4 $ 3,793.4 $ 1,312.4 $ 8,223.2

2 unchanged sentences

Changes during the year ended June 30, 2019

Measurement period adjustments

Impairment charges ( 1,562.6 ) ( 1,455.3 ) ( 289.6 ) ( 3,307.5 )

Measurement period adjustments (a)

( 2.2 ) ( 4.8 ) ( 2.7 ) ( 9.7 )

Foreign currency translation ( 45.8 ) ( 50.7 ) ( 15.1 ) ( 111.6 )

3 unchanged sentences

Changes during the year ended June 30, 2020

Impairment charges

Measurement period adjustments (a)

Acquisitions (b)

128.6 — — 128.6

Dispositions ( 10.8 ) ( 10.1 ) ( 2.0 ) ( 22.9 )

Foreign currency translation ( 75.0 ) ( 88.9 ) ( 29.7 ) ( 193.6 )

Impairment charges — ( 105.0 ) — ( 105.0 )

Gross balance at June 30, 2020 $ 3,112.2 $ 3,638.9 $ 1,262.9 $ 8,014.0

1 unchanged sentence

Net balance at June 30, 2020 $ 1,343.5 $ 1,781.6 $ 848.8 $ 3,973.9

(a) Includes measurement period adjustments during the twelve month period ended June 30, 2019 in connection with the Burberry Beauty Business acquisition (Refer to Note 3 — Business Combinations ).

(a) Includes measurement period adjustments during the year ended June 30, 2019 in connection with the Burberry Beauty Business acquisition (Refer to Note 4—Business Combinations, Asset Acquisitions and Divestitures).

(b) Includes goodwill resulting from the King Kylie Transaction on January 6, 2020 (Refer to Note 4—Business Combinations, Asset Acquisitions and Divestitures).

As described in Note 5 — Segment Reporting, the Company changed its segments during the third quarter ended March 31, 2020.

As a result, the Company allocated goodwill to the new segments using a relative fair value approach.

In addition, the Company completed an assessment of any potential goodwill impairment for all reporting units immediately prior to the reallocation and determined that no impairment existed.

Further, the Company recast the goodwill and indefinite-lived intangible asset tables for the new segments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

As a result of the definitive agreement signed with KKR for the Wella Business (see Note 3 — Discontinued Operations), the results of the Wella Business are presented as discontinued operations.

The Professional Beauty business has historically been reported as the Company’s Professional Beauty reportable segment, and the Retail Hair business has been included within EMEA, Americas and Asia Pacific reportable segments.

The goodwill attributable to the Wella Business as of June 30, 2020, 2019 and 2018 is excluded from the preceding table and is reported as held for sale in the Consolidated Balance Sheets.

Other Intangible Assets, net

Other intangible assets, net as of June 30, 2020 and 2019 are presented below:

2020 June 30,

Indefinite-lived other intangible assets $ 995.5 $ 1,329.5

1 unchanged sentence

Total Other intangible assets, net $ 4,372.1 $ 4,531.3

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

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

Consumer Beauty

Professional Beauty

Trademarks Total

Gross balance at June 30, 2018 $ 1,932.7 $ 1,932.7

2 unchanged sentences

Changes during the year ended June 30, 2019

Measurement period adjustments

Impairment charges ( 389.8 ) ( 389.8 )

Foreign currency translation ( 18.7 ) ( 18.7 )

8 unchanged sentences

Net balance at June 30, 2020 $ 995.5 $ 995.5

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Intangible assets subject to amortization are presented below:

Accumulated Amortization

Accumulated Impairment

Cost Accumulated Amortization Accumulated Impairment Net

June 30, 2019

License agreements

License and collaboration agreements $ 3,240.2 $ ( 873.1 ) $ ( 19.6 ) $ 2,347.5

Customer relationships 978.6 ( 450.2 ) ( 5.5 ) 522.9

Trademarks 451.2 ( 157.8 ) ( 0.5 ) 292.9

Product formulations and technology 100.4 ( 61.9 ) — 38.5

Total $ 4,770.4 $ ( 1,543.0 ) $ ( 25.6 ) $ 3,201.8

June 30, 2020

License agreements (a)

License and collaboration agreements (a)

$ 3,861.2 $ ( 1,021.1 ) $ ( 19.6 ) $ 2,820.5

Customer relationships (a)

Trademarks (b)

786.1 ( 427.3 ) ( 5.5 ) 353.3

325.7 ( 154.0 ) ( 0.5 ) 171.2

Product formulations and technology 86.2 ( 54.6 ) — 31.6

(b) Includes acquired trademark of $ 40.8 .

During fiscal 2019, the Company acquired a trademark associated with a preexisting license.

As a result of the acquisition, the preexisting license was effectively terminated, and accordingly the Company recorded $ 12.6 of Asset impairment charges in the Consolidated Statement of Operations related to the license agreement that is part of the Luxury reporting unit.

During fiscal 2018, the Company sold assets related to the Playboy and Cerruti brands (including related licenses of $ 26.2 and goodwill of $ 12.3 ) for proceeds of $ 33.0 , resulting in a noncash loss of $ 28.6 .

During fiscal 2017, the Company sold assets related to the J.Lo brand for a total disposal price of $ 10.5 .

The Company allocated $ 2.4 of goodwill to the brand as part of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The Company recorded losses (gains) of $ 28.6 and $( 3.1 ) , which are reflected in Loss (gain) on sale of assets in the Consolidated Statements of Operations for the fiscal years ended June 30, 2018 and 2017 , respectively.

Total $ 5,059.2 $ ( 1,657.0 ) $ ( 25.6 ) $ 3,376.6

(a) Includes License agreements and Customer relationships of $ 649.0 and $ 27.0 , respectively resulting from the King Kylie acquisition on January 6, 2020 (Refer to Note 4—Business Combinations, Asset Acquisitions and Divestitures).

Due to the divestiture of the Wella Business, intangible assets specific to this business as of June 30, 2020 are excluded from the preceding tables and reported as Held for sale assets.

In September 2019, the Company divested all of its membership interest in Foundation, which held the net assets of Younique (including goodwill of $ 22.9 and other intangible assets of $ 228.6 ).

(Refer to Note 4—Business Combinations, Asset Acquisitions and Divestitures).

In July 2018, the Company acquired a trademark associated with a preexisting license.

Amortization expense totaled $ 233.1 , $ 246.7 and $ 244.3 for the fiscal years ended June 30, 2020, 2019 and 2018, respectively.

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

License agreements

Customer relationships

Product formulations and technology

License and collaboration agreements 22.5 years

Customer relationships 15.6 years

Trademarks 16.9 years

Product formulations and technology 20.0 years

As of June 30, 2020, the remaining weighted-average life of all intangible assets subject to amortization is 21.6 years.

2 unchanged sentences

The Company records assets for license agreements (“licenses”) acquired in transactions accounted for as business combinations.

These licenses provide the Company with the exclusive right to manufacture and market on a worldwide and/or regional basis, certain of the Company’s products which comprise a significant portion of the Company’s revenues.

These licenses provide the Company with the exclusive right to manufacture and market on a worldwide and/or

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

regional basis, certain of the Company’s products which comprise a significant portion of the Company’s revenues.

These licenses have initial terms covering various periods.

1 unchanged sentence

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of June 30, 2019 and 2018 are presented below:

Accrued expenses and other current liabilities as of June 30, 2020 and 2019 consist of the following:

2020 June 30,

Advertising, marketing and licensing $ 268.3 $ 343.1

1 unchanged sentence

Customer returns, discounts, allowances and bonuses 166.1 180.8

Value added tax, sales and other non-income taxes

Restructuring costs 120.5 55.2

Mandatorily redeemable financial instrument liability (See Note 20)

Value added, sales and other non-income taxes 97.0 87.8

Auditing, consulting, legal and litigation accruals 61.9 40.4

Interest rate swap liability 44.6 17.9

Deferred income

Interest 22.8 29.7

Factoring - due to counterparty 13.2 14.4

Cross currency swap liability 12.5 —

Unfavorable contract liability 10.9 11.0

Tax indemnity liability

Deferred income 10.0 13.5

Mandatorily redeemable financial interest liability (See Note 21) 1.9 51.8

Other 98.9 86.2

Total accrued expenses and other current liabilities $ 1,111.6 $ 1,188.5

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities as of June 30, 2020 and 2019 are presented below:

2020 June 30,

Noncurrent income tax liabilities $ 170.7 $ 170.6

Unfavorable contract liabilities 78.7 90.5

Deferred rent

Restructuring costs 26.6 24.9

Interest rate swap liability 25.0 24.1

Mandatorily redeemable financial instrument liability (See Note 20)

Burberry contingent consideration

Mandatorily redeemable financial interest liability (See Note 21) 6.9 6.1

Deferred income 6.7 10.5

Deferred rent — 45.6

Other 19.9 25.7

Total other noncurrent liabilities $ 334.5 $ 398.0

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

2020 June 30,

Short-term debt $ — $ 4.2

8 unchanged sentences

Other long-term debt and capital lease obligations 0.6 1.1

Total debt 8,156.3 7,745.8

Short-term debt and current portion of long-term debt ( 188.3 ) ( 193.8 )

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The Company maintains short-term lines of credit with financial institutions around the world.

Total available lines of credit were $ 113.5 and $ 129.2 , of which $ 2.3 and $ 4.7 were outstanding at June 30, 2019 and 2018 , respectively.

Total available lines of credit were $ 87.8 and $ 113.5 , of which nil and $ 2.3 were outstanding at June 30, 2020 and 2019, respectively.

Interest rates on these short-term lines of credit vary depending on market rates for borrowings within the respective geographic locations plus applicable spreads.

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The Company’s long-term debt facilities consisted of the following as of June 30, 2020 and 2019:

Maturity Date

Borrowing Capacity (in millions)

Interest Rate Terms

Applicable Interest Rate Spread as of

June 30, 2018

Debt Discount

Repayment Schedule

2018 Coty Revolving Credit Facility

LIBOR (b) plus a margin ranging from 1.00% to 2.00% per annum or a base rate plus a margin ranging from 0.00% to 1.00% per annum, based on the Company’s total net leverage ratio (d) (e) (f)

Facility Maturity Date Borrowing Capacity (in millions) Interest Rate Terms Applicable Interest Rate Spread as of

June 30, 2020 Debt Discount Repayment Schedule

2018 Coty Revolving Credit Facility April 2023 $ 2,750.0 LIBOR (a) plus a margin ranging from 1.00 % to 2.00 % per annum or a base rate plus a margin ranging from 0.00 % to 1.00 % per annum, based on the Company’s total net leverage ratio (c) (d) (e)

1.75 % N/A (b)

Payable in full at maturity date

2018 Coty Term A Facility - USD Portion

2018 Coty Term A Facility - USD Portion April 2023 $ 1,000.0 1.75 % N/A (b)

Quarterly repayments beginning September 30, 2018 at 1.25 % of original principal amount

2018 Coty Term A Facility - EUR Portion

2018 Coty Term B Facility - USD Portion

LIBOR (b) plus a margin of 2.25% per annum or a base rate plus a margin of 1.25% per annum (e)

2018 Coty Term A Facility - EUR Portion April 2023 € 2,035.0 1.75 % N/A (b)

2018 Coty Term B Facility - USD Portion April 2025 $ 1,400.0 LIBOR (a) plus a margin of 2.25 % per annum or a base rate plus a margin of 1.25 % per annum (d)

2.25 % 0.25 % Quarterly repayments beginning September 30, 2018 at 0.25 % of original principal amount

2018 Coty Term B Facility - EUR Portion

LIBOR (b) plus a margin of 2.50% per annum (e)

2026 Dollar Notes

6.5% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2018

2018 Coty Term B Facility - EUR Portion April 2025 € 850.0 LIBOR (a) plus a margin of 2.50 % per annum (d)

2.50 % 0.25 %

2026 Dollar Notes April 2026 $ 550.0 6.5 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2018

Payable in full at maturity date

2023 Euro Notes

4.0% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2018

2026 Euro Notes

4.75% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2018

As of June 30, 2018, the 2018 Coty Revolving Credit Facility borrowing capacity was $ 3,250.0 .

As a result of the June 27, 2019 credit agreement amendment (as described below), the borrowing capacity was reduced to $ 2,750.0 as of June 30, 2019.

As defined in the Interest section below.

N/A - Not Applicable.

As defined per the 2018 Coty Credit Agreement.

The selection of the applicable one, two, three, six or twelve month interest rate for the period is at the discretion of the Company.

The Company will pay to the Revolving Credit Facility lenders an unused commitment fee calculated at a rate ranging from 0.10 % to 0.35 % per annum, based on the Company’s total net leverage ratio (d) .

2023 Euro Notes April 2023 € 550.0 4.0 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2018

2026 Euro Notes April 2026 € 250.0 4.75 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2018

(a) As defined in the Interest section below.

(b) N/A - Not Applicable.

(d) The selection of the applicable one, two, three, six or twelve month interest rate for the period is at the discretion of the Company.

(e) The Company will pay to the Revolving Credit Facility lenders an unused commitment fee calculated at a rate ranging from 0.10 % to 0.35 % per annum, based on the Company’s total net leverage ratio (d) .

As of June 30, 2020 and 2019, the applicable rate on the unused commitment fee was 0.30 % and 0.30 %, respectively.

Prior Coty Inc.

Credit Facilities

On October 27, 2015, the Company entered into a Credit Agreement (the “2015 Coty Credit Agreement”).

The 2015 Coty Credit Agreement was subsequently amended on April 8, 2016 and October 28, 2016.

On October 1, 2016, at the closing of the P&G Beauty Business acquisition, the Company assumed the debt facilities available under the Galleria Credit Agreement (the “Galleria Credit Agreement”).

These credit agreements were settled on April 5, 2018 as noted below.

Offering of Senior Unsecured Notes

On April 5, 2018 the Company issued, at par, $ 550.0 of 6.50 % senior unsecured notes due 2026 (the “2026 Dollar Notes”), € 550.0 million of 4.00 % senior unsecured notes due 2023 (the “2023 Euro Notes”) and € 250.0 million of 4.75 % senior unsecured notes due 2026 (the “2026 Euro Notes” and, together with the 2023 Euro Notes, the “Euro Notes,” and the Euro Notes together with the 2026 Dollar Notes, the “Senior Unsecured Notes”) in a private offering.

The net proceeds of this offering, together with borrowings under the Company’s 2018 Credit Agreement were used to repay in full and refinance the indebtedness outstanding under the 2015 Coty Credit Agreement and Galleria Credit Agreement and to pay accrued interest, related premiums, fees and expenses in connection therewith.

The Senior Unsecured Notes are senior unsecured debt obligations of the Company and will be pari passu in right of payment with all of the Company’s existing and future senior indebtedness (including the 2018 Coty Credit Facilities described

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

On April 5, 2018 the Company issued, at par, $ 550.0 of 6.50 % senior unsecured notes due 2026 (the “2026 Dollar Notes”), € 550.0 of 4.00 % senior unsecured notes due 2023 (the “2023 Euro Notes”) and € 250.0 of 4.75 % senior unsecured notes due 2026 (the “2026 Euro Notes” and, together with the 2023 Euro Notes, the “Euro Notes,” and the Euro Notes together with the 2026 Dollar Notes, the “Senior Unsecured Notes”) in a private offering.

The Senior Unsecured Notes are guaranteed, jointly and severally, on a senior basis by the Guarantors (as later defined under “ 2018 Coty Credit Agreement ”).

1 unchanged sentence

The related guarantees are senior unsecured obligations of each Guarantor and are effectively junior to all existing and future secured indebtedness of such Guarantor to the extent of the value of the collateral securing such indebtedness.

In addition to the optional redemption outlined below, the Company may, at its option, redeem either series of the Euro Notes, in whole but not in part, at a redemption price equal to 100 % of the principal amount of the Euro Notes to be redeemed, together with any accrued and unpaid interest thereon to, but excluding, the redemption date, at any time, upon the occurrence of certain tax events.

The 2026 Dollar Notes will mature on April 15, 2026.

The 2026 Dollar Notes will bear interest at a rate of 6.50 % per annum.

Interest on the 2026 Dollar Notes is payable semi-annually in arrears on April 15 and October 15 of each year.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The 2023 Euro Notes will mature on April 15, 2023 and the 2026 Euro Notes will mature on April 15, 2026.

The 2023 Euro Notes will bear interest at a rate of 4.00 % per annum, and the 2026 Euro Notes will bear interest at a rate of 4.75 % per annum.

Interest on the Euro Notes is payable semi-annually in arrears on April 15 and October 15 of each year.

Upon the occurrence of certain change of control triggering events with respect to a series of Senior Unsecured Notes, the Company will be required to offer to repurchase all or part of the Senior Unsecured Notes of such series at 101 % of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the purchase date applicable to such Senior Unsecured Notes.

The Notes contain customary covenants that place restrictions in certain circumstances on, among other things, incurrence of liens, entry into sale or leaseback transactions, sales of all or substantially all of the Company’s assets and certain merger or consolidation transactions.

The Notes also provide for customary events of default.

The Senior Unsecured Notes contain customary covenants that place restrictions in certain circumstances on, among other things, incurrence of liens, entry into sale or leaseback transactions, sales of all or substantially all of the Company’s assets and certain merger or consolidation transactions.

The Senior Unsecured Notes also provide for customary events of default.

Optional Redemption

Applicable Premium

The indenture governing the Senior Unsecured Notes (the “Indenture”) specifies the Applicable Premium (as defined in the Indenture) to be paid upon early redemption of some or all of the 2026 Dollar Notes, 2023 Euro Notes or 2026 Euro Notes.

The Applicable Premium related to the 2026 Dollar Notes, 2023 Euro Notes and 2026 Euro Notes on any redemption date and as calculated by the Company is the greater of:

1.0 % of the then outstanding principal amount of the respective 2026 Dollar Notes, 2023 Euro Notes and 2026 Euro Notes;

the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of such 2026 Dollar Notes, 2023 Euro Notes or 2026 Euro Notes that would apply if such 2026 Dollar Notes, 2023 Euro Notes or 2026 Euro Notes were redeemed on April 15, 2021, April 15, 2020 or April 15, 2021, respectively (such redemption price is expressed as a percentage of the principal amount being set forth in the table appearing in the Redemption Pricing section below), plus (ii) all remaining scheduled payments of interest due on the 2026 Dollar Notes, 2023 Euro Notes or 2026 Euro Notes to and including April 15, 2021, April 15, 2020 and April 15, 2021, respectively (excluding accrued but unpaid interest, if any, to, but excluding, the redemption date), with respect to each of subclause (i) and (ii), computed using a discount rate equal to the Treasury Rate in the case of the 2026 Dollar Notes or Bund Rate in the case of both the 2020 Euro Notes or 2026 Euro Notes (both Treasury Rate and Bund Rate as defined in the Indenture) as of such redemption date plus 50 basis points;

over (b) the principal amount of the respective 2026 Dollar Notes, 2023 Euro Notes or 2026 Euro Notes.

The Applicable Premium related to the 2026 Dollar Notes and 2026 Euro Notes on any redemption date and as calculated by the Company is the greater of:

(1) 1.0 % of the then outstanding principal amount of the respective 2026 Dollar Notes and 2026 Euro Notes;

(2) the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of such 2026 Dollar Notes or 2026 Euro Notes that would apply if such 2026 Dollar Notes or 2026 Euro Notes were redeemed on April 15, 2021 or April 15, 2021, respectively (such redemption price is expressed as a percentage of the principal amount being set forth in the table appearing in the Redemption Pricing section below), plus (ii) all remaining scheduled payments of interest due on the 2026 Dollar Notes or 2026 Euro Notes to and including April 15, 2021 and April 15, 2021, respectively (excluding accrued but unpaid interest, if any, to, but excluding, the redemption date), with respect to each of subclause (i) and (ii), computed using a discount rate equal to the Treasury Rate in the case of the 2026 Dollar Notes or Bund Rate in the case of the 2026 Euro Notes (both Treasury Rate and Bund Rate as defined in the Indenture) as of such redemption date plus 50 basis points;

over (b) the principal amount of the respective 2026 Dollar Notes or 2026 Euro Notes.

Redemption Pricing

At any time and from time to time prior to April 15, 2021, April 15, 2020 and April 15, 2021, the Company may redeem some or all of the 2026 Dollar Notes, 2023 Euro Notes and 2026 Euro Notes, respectively, at redemption prices equal to 100 % of the respective principal amounts being redeemed plus the Applicable Premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption dates.

At any time and from time to time prior to April 15, 2021 and April 15, 2021, the Company may redeem some or all of the 2026 Dollar Notes, and 2026 Euro Notes, respectively, at redemption prices equal to 100 % of the respective principal amounts being redeemed plus the Applicable Premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption dates.

At any time on or after April 15, 2021, April 15, 2020 and April 15, 2021, the Company may redeem some or all of the 2026 Dollar Notes, 2023 Euro Notes and 2026 Euro Notes, respectively, at the redemption prices (expressed in percentage of principal amount) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the redemption dates, if redeemed during the twelve-month period beginning on April 15 of each of the years indicated below:

Year 2026 Dollar Notes 2023 Euro Notes 2026 Euro Notes

2021 104.8750 % 101.0000 % 103.5625 %

2022 103.2500 % 100.0000 % 102.3750 %

2023 101.6250 % 100.0000 % 101.1875 %

2024 and thereafter 100.0000 % N/A 100.0000 %

In addition, at any time prior to April 15, 2021 and April 15, 2021, the Company may redeem up to 35 % of the aggregate principal amounts of the outstanding 2026 Dollar Notes and 2026 Euro Notes, respectively, using the net cash proceeds from certain equity offerings at redemption prices (expressed as a percentage of the principal amount) of 106.50 % and 104.75 %, respectively, plus accrued and unpaid interest, if any, to, but excluding, the redemption dates;

provided that (i) at least 65 % of the aggregate principal amount of 2026 Dollar Notes and 2026 Euro Notes, respectively, originally issued on the date of the Indenture remain outstanding after each such redemption, and (ii) notice of any such redemption is delivered to the Trustee within 90 days of the closing of each such equity offering.

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

2026 Dollar Notes

2023 Euro Notes

2026 Euro Notes

2024 and thereafter

In addition, at any time prior to April 15, 2021, April 15, 2020 and April 15, 2021, the Company may redeem up to 35 % of the aggregate principal amounts of the outstanding 2026 Dollar Notes, 2023 Euro Notes and 2026 Euro Notes, respectively, using the net cash proceeds from certain equity offerings at redemption prices (expressed as a percentage of the principal amount) of 106.50 % , 104.00 % and 104.75 % , respectively, plus accrued and unpaid interest, if any, to, but excluding, the redemption dates;

provided that (i) at least 65 % of the aggregate principal amount of 2026 Dollar Notes, 2023 Euro Notes and 2026 Euro Notes, respectively, originally issued on the date of the Indenture remain outstanding after each such redemption, and (ii) notice of any such redemption is delivered to the Trustee within 90 days of the closing of each such equity offering.

2018 Coty Credit Agreement

On April 5, 2018, the Company entered into a new credit agreement (the “2018 Coty Credit Agreement”), which amended and restated the previously existing 2015 Coty Credit Agreement.

The 2018 Coty Credit Agreement provides for (a) (1) a senior secured term A facility (as described in the table above, the “2018 Coty Term A Facility”) and (2) a senior secured term B facility (as described in the table above, the “2018 Coty Term B Facility”) and (b) the incurrence by the Company and Coty B.V., a Dutch subsidiary of the Company (the “Dutch Borrower” and, together with the Company, the “Borrowers”), of a senior secured revolving facility (as described in the table above, the “2018 Coty Revolving Credit Facility”) (the 2018 Coty Term A Facility, together with the 2018 Coty Term B Facility and the 2018 Coty Revolving Credit Facility, the “2018 Coty Credit Facilities”).

the incurrence by the Company of (1) a senior secured term A facility in an aggregate principal amount of (i) $ 1,000.0 denominated in U.S.

dollars and (ii) € 2,035.0 denominated in euros (the “2018 Coty Term A Facility”) and (2) a senior secured term B facility in an aggregate principal amount of (i) $ 1,400.0 denominated in U.S.

dollars and (ii) € 850.0 denominated in euros (the “2018 Coty Term B Facility”) and (b) the incurrence by the Company and Coty B.V., a Dutch subsidiary of the Company (the “Dutch Borrower” and, together with the Company, the “Borrowers”), of a senior secured revolving facility in an aggregate principal amount of $ 3,250.0 denominated in U.S.

dollars, specified alternative currencies or other currencies freely convertible into U.S.

dollars and readily available in the London interbank market (the “2018 Coty Revolving Credit Facility”) (the 2018 Coty Term A Facility, together with the 2018 Coty Term B Facility and the 2018 Coty Revolving Credit Facility, the “2018 Coty Credit Facilities”).

Initial borrowings under the 2018 Coty Term Loan B Facility were issued at a 0.250 % discount.

The 2018 Coty Credit Agreement provides that with respect to the 2018 Coty Revolving Credit Facility, up to $ 150.0 is available for letters of credit and up to $ 150.0 is available for swing line loans.

5 unchanged sentences

In connection with the 2019 Amendment, the Company wrote off $ 3.8 of unamortized deferred financing fees, which were recorded as Other expense, net in the Consolidated Statement of Operations.

On April 29, 2020, the Company amended its existing credit agreement.

The amendment (i) provides a net debt to EBITDA financial covenant "holiday" through March 31, 2021;

(ii) establishes a minimum liquidity covenant through March 31, 2021 of $ 350.0 ;

and (iii) effectively places certain limitations on the ability to make certain investments and restricted payments (including limiting our ability to pay dividends in cash through March 31, 2021) and on incurring additional secured indebtedness.

The amendment does not modify the applicable funding costs during the period through March 31, 2021.

Deferred Issuance Costs

1 unchanged sentence

The Company incurred $ 0.8 and $ 0.8 in third-party debt issuance costs during the fiscal years ended June 30, 2020 and 2019, respectively, which were recorded as Other expense, net in the Consolidated Statement of Operations.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Loss on Early Extinguishment of Debt

3 unchanged sentences

The 2018 Coty Credit Agreement facilities will bear interest at rates equal to, at the Company’s option, either:

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

• 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;

1 unchanged sentence

In the case of the 2018 Coty Revolving Credit Facility and the 2018 Coty Term A Facility, the applicable margin means the lesser of a percentage per annum to be determined in accordance with the leverage-based pricing grid and the debt rating-based grid below:

Total Net Leverage Ratio:

Pricing Tier Total Net Leverage Ratio:

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

Debt Ratings S&P/Moody’s:

Pricing Tier Debt Ratings S&P/Moody’s:

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 %

2 unchanged sentences

In no event will LIBOR be deemed to be less than 0.00 % per annum.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Fair Value of Debt

June 30, 2019

June 30, 2018

June 30, 2020 June 30, 2019

Value Carrying

2018 Coty Credit Agreement

$ 6,706.3 $ 5,962.3 $ 6,281.4 $ 6,058.9

Senior Unsecured Notes 1,449.4 1,270.3 1,459.1 1,439.6

2 unchanged sentences

Based on the assumptions used to value these liabilities at fair value, these debt instruments are categorized a Level 2 in the fair value hierarchy.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Debt Maturities Schedule

1 unchanged sentence

Fiscal Year Ending June 30,

Thereafter 831.1

Total $ 8,155.7

The 2018 Coty Credit Agreement contains affirmative and negative covenants.

1 unchanged sentence

With certain exceptions as described below, the 2018 Coty Credit Agreement, as amended, includes a financial covenant that requires us to maintain a Total Net Leverage Ratio (as defined below), equal to or less than the ratios shown below for each respective test period.

Quarterly Test Period Ending

Total Net Leverage Ratio (a)

June 30, 2019 through December 31, 2021

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

March 31, 2023 through June 30, 2023

Quarterly Test Period Ending Total Net Leverage Ratio (as amended April 29, 2020) (a)

June 30, 2020 through March 31, 2021 N/A (not tested)

June 30, 2021 through December 31, 2021 5.25 to 1.00

3/31/2022 5.00 to 1.00

6/30/2022 4.75 to 1.00

9/30/2022 4.50 to 1.00

12/31/2022 4.25 to 1.00

March 31, 2023 through June 30, 2023 4.00 to 1.00

(a) Total Net Leverage Ratio means, as of any date of determination, the ratio of:

(a) (i) Total Indebtedness minus (ii) unrestricted cash and Cash Equivalents of the Parent Borrower and its Restricted Subsidiaries as determined in accordance with GAAP to (b) Adjusted EBITDA for the most recently ended Test Period (each of the defined terms used within the definition of Total Net Leverage Ratio have the meanings ascribed to them within the 2018 Coty Credit Agreement, as amended).

(a) (i) Total Indebtedness minus (ii) unrestricted and Cash Equivalents of the Parent Borrower and its Restricted Subsidiaries as determined in accordance with GAAP to (b) Adjusted EBITDA for the most recently ended Test Period (each of the defined terms, including Adjusted EBITDA, used within the definition of Total Net Leverage Ratio have the meanings ascribed to them within the 2018 Coty Credit Agreement, as amended).

Adjusted EBITDA, as defined in the 2018 Coty Credit Agreement, as amended, includes certain add backs related to cost savings, operating expense reductions and future unrealized synergies subject to certain limits and conditions as specified in the 2018 Coty Credit Agreement, as amended.

The 2018 Coty Credit Agreement, as amended, establishes a quarterly minimum liquidity covenant for this period of $ 350.0 .

As of June 30, 2020, the current immediate liquidity was $ 1,618.1 .

In the four fiscal quarters following the closing of any Material Acquisition (as defined in the 2018 Coty Credit Agreement, as amended), including the fiscal quarter in which such Material Acquisition occurs, the maximum Total Net Leverage Ratio shall be the lesser of (i) 5.95 to 1.00 and (ii) 1.00 higher than the otherwise applicable maximum Total Net Leverage Ratio for such quarter (as set forth in the table above).

Immediately after any such four fiscal quarter period, there shall be at least two consecutive fiscal quarters during which our Total Net Leverage Ratio is no greater than the maximum Total Net Leverage Ratio that would otherwise have been required in the absence of such Material Acquisition, regardless of whether any additional Material Acquisitions are consummated during such period.

On January 6, 2020, the Company entered into a purchase agreement for the King Kylie Transaction, which constituted a Material Acquisition.

As of June 30, 2020, the Company was in compliance with all covenants contained within the 2018 Coty Credit Agreement, as amended.

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

Ratio that would otherwise have been required in the absence of such Material Acquisition, regardless of whether any additional Material Acquisitions are consummated during such period.

As of June 30, 2019 , the Company was in compliance with all covenants contained within the Debt Agreements.

LEASE AND OTHER COMMITMENTS

The Company leases office facilities, equipment and vehicles under non-cancellable operating leases.

These leases expire on varying dates, in some instances contain renewal and expansion options, do not restrict the payment of dividends or the incurrence of debt or additional lease obligations, and contain no significant purchase options.

In addition to the base rental costs, occupancy lease agreements generally provide for rent escalations resulting from increased assessments for real estate taxes and other charges.

The Company incurred rent expense of $ 197.7 , $ 208.2 and $ 166.1 relating to operating leases in fiscal 2019 , 2018 and 2017 , respectively.

The Company collected payments from sub-lessors relating to facilities no longer in use by the Company of $ 9.4 , $ 6.2 and $ 6.0 for fiscal 2019 , 2018 and 2017 , respectively.

Minimum rental commitments under non-cancellable operating leases at June 30, 2019 are included in the following table under Leases.

Purchase obligations include commitments to purchase inventory and other services.

Fiscal Year Ending June 30,

Purchase Obligations

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

The Company determines if an arrangement is a lease at lease inception.

For operating leases entered into prior to July 1, 2019, the ROU assets and operating lease liabilities are recognized in the balance sheet based on the present value of the remaining future minimum payments over the lease term from the implementation date of the standard, July 1, 2019.

For leases entered into subsequent to July 1, 2019, the operating lease ROU assets and operating lease liabilities are based on the present value of minimum payments over the lease term at the commencement date of the lease.

The Company uses discount rates to determine the present value of future lease payments.

The Company uses its secured incremental borrowing rate, based on the information available for leases, including the lease term and interest rate environment in the country in which the lease exists.

The lease terms used to calculate the ROU assets and lease liabilities may include options to extend or terminate when it is reasonably certain that the Company will exercise that option.

The Company leases office facilities under non-cancelable operating leases with terms generally ranging between 10 and 25 years.

The Company utilizes these leased office facilities for use by its employees in countries in which the Company conducts its business.

Leases are negotiated with third parties and, in some instances contain renewal, expansion and termination options.

The Company also subleases certain office facilities to third parties when the Company no longer intends to utilize the space.

None of the Company’s leases restricts the payment of dividends or the incurrence of debt or additional lease obligations, or contain significant purchase options.

A portion of our real estate lease portfolio contains base rents subject to annual changes in the Consumer Price Index (“CPI”) as well as charges for operating expenses which are reimbursable to the landlord based on actual usage.

Changes to the CPI and payments for such reimbursable operating expenses that are not defined with a minimum rate increase are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred.

As a practical expedient, the Company has elected an accounting policy not to separate non-lease components from lease components and instead, account for these components as a single lease component.

The Company has made an accounting policy election not to recognize ROU assets and lease liabilities for leases that, at the commencement date, are for 12 months or less.

All of the Company’s material leases are operating leases.

These are primarily real estate properties, including corporate offices, retail stores and facilities to support the Company's manufacturing, research and development and distribution operations.

Due to the divestiture of the Wella Business, lease assets, liabilities and expenses specific to this business for the fiscal year ended June 30, 2020 are excluded from the subsequent tables and reported as held for sale.

The following chart provides additional information about the Company’s operating leases for the fiscal year ended June 30, 2020.

June 30, 2020

Operating lease cost $ 97.0

Short-term lease cost 2.3

Variable lease cost 53.4

Sublease income ( 4.8 )

Total minimum payments required

(Loss) income before income taxes in fiscal 2019 , 2018 and 2017 is presented below:

Net lease cost $ 147.9

Other information:

Operating cash outflows from operating leases ( 100.9 )

Right-of-use assets obtained in exchange for lease obligations 6.3

Weighted-average remaining lease term - real estate 6.9 years

Weighted-average discount rate - real estate leases 3.09 %

The Company incurred net rent expense of $ 197.7 and $ 208.2 relating to operating leases under ASC 840 in fiscal years 2019 and 2018, respectively.

The Company collected payments from sub-lessors relating to facilities no longer in use by the Company of $ 9.4 and $ 6.2 for fiscal years 2019 and 2018, respectively.

The fiscal years ended 2019 and 2018 rent expense and sub-lessor payments include amounts related to discontinued operations.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

During fiscal 2020, 2019 and 2018, we recorded asset impairment charges of $ 7.8 , $ 0.0 and $ 0.0 .

The fiscal 2020 impairment charges are recorded in selling, general and administrative expenses in the Consolidated Statements of Operations and primarily relate to abandonment of a retail store no longer in use.

Future minimum lease payments for the Company’s operating leases as of June 30, 2020 are as follows:

June 30, 2020

Thereafter 119.5

Total future lease payments 465.6

imputed interest ( 43.2 )

Total present value of lease liabilities $ 422.4

Current operating lease liabilities 105.0

Long-term operating lease liabilities 317.4

Total operating lease liabilities $ 422.4

Table excludes obligations for leases with original terms of 12 months or less which have not been recognized as ROU assets or liabilities in the Consolidated Balance Sheets.

At June 30, 2019, the aggregate future minimum rental commitments under all non-cancelable operating lease agreements are disclosed below.

The table below includes amounts related to discontinued operations.

Fiscal Year Ending June 30, Leases

Thereafter 252.3

sublease income ( 20.1 )

Total payments $ 701.4

(Loss) income before income taxes from continuing operations in fiscal 2020, 2019 and 2018 is presented below:

Year Ended June 30,

2020 2019 2018

United States $ ( 960.3 ) $ ( 2,003.5 ) $ ( 379.3 )

Foreign ( 507.3 ) ( 1,941.9 ) ( 15.2 )

Total $ ( 1,467.6 ) $ ( 3,945.4 ) $ ( 394.5 )

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

The components of the Company’s total (benefit) provision for income taxes during fiscal 2019 , 2018 and 2017 are presented below:

The components of the Company’s total (benefit) provision for income taxes from continuing operations during fiscal 2020, 2019 and 2018 are presented below:

Year Ended June 30,

(Benefit) provision for income taxes:

2020 2019 2018

(Benefit) provision for income taxes from continuing operations:

Federal $ — $ 0.8 $ 0.2

State and local ( 0.3 ) 8.2 9.8

Foreign 90.7 129.4 ( 33.9 )

Total 90.4 138.4 ( 23.9 )

Federal ( 286.7 ) ( 116.1 ) 87.7

State and local ( 50.6 ) ( 49.9 ) 1.3

Benefit for income taxes

Foreign ( 130.8 ) ( 27.2 ) ( 97.3 )

Total ( 468.1 ) ( 193.2 ) ( 8.3 )

Benefit for income taxes from continued operations $ ( 377.7 ) $ ( 54.8 ) $ ( 32.2 )

During fiscal 2020, the Company recorded a benefit of $ 105.7 for the capital loss generated as a result of the disposition of its investment in Younique.

During fiscal 2019, the Company recorded goodwill impairment that is not tax-deductible.

During fiscal 2018, the Company incurred an expense of $ 123.0 as a result of the Tax Act.

During the second quarter of fiscal 2017 , the Company released a valuation allowance in the U.S.

as a result of the P&G Beauty Business acquisition of $ 111.2 .

The reconciliation of the U.S.

1 unchanged sentence

Year Ended June 30,

Income (loss) before income taxes

2020 2019 2018

Income (loss) from continuing operations before income taxes $ ( 1,467.6 ) $ ( 3,945.4 ) $ ( 394.5 )

Benefit for income taxes at statutory rate $ ( 308.2 ) $ ( 828.5 ) $ ( 110.7 )

3 unchanged sentences

Change in unrecognized tax benefit 21.3 43.3 ( 26.7 )

Tax Act — — 123.0

Permanent differences—net 14.3 5.0 ( 9.3 )

1 unchanged sentence

Goodwill impairment 26.1 675.6 —

(Benefit) provision for income taxes

Gain on sale of business adjustment ( 132.1 ) — —

Other 14.3 36.1 1.7

Benefit for income taxes from continuing operations $ ( 377.7 ) $ ( 54.8 ) $ ( 32.2 )

Effective income tax rate 25.7 % 1.4 % 8.2 %

3 unchanged sentences

($ in millions, except per share data)

2020 June 30,

Deferred income tax assets:

Inventories $ 14.2 $ 21.2

Accruals and allowances 66.9 50.5

3 unchanged sentences

Net operating loss carry forwards and tax credits 446.5 268.4

Capital loss carry forwards 105.7 —

Interest expense limitation carry forward 122.1 52.3

Lease liability 22.6 8.0

Other 54.3 32.2

valuation allowances ( 40.0 ) ( 59.2 )

5 unchanged sentences

Licensing rights 20.9 23.7

Right of use asset 32.0 —

Other 15.2 63.6

Deferred income tax liabilities 709.7 744.0

Net deferred income tax liabilities

Net deferred income tax asset (liability) $ 187.3 $ ( 240.9 )

The expirations of tax loss carry forwards, amounting to $ 2,075.5 as of June 30, 2020, in each of the fiscal years ending June 30, are presented below:

Fiscal Year Ending June 30,

United States

Western Europe

Rest of World

Fiscal Year Ending June 30, United States Western Europe Rest of World Total

2021 $ — $ — $ 11.1 $ 11.1

2022 — — 3.5 3.5

2023 — — 5.6 5.6

2024 — 0.1 7.0 7.1

2025 and thereafter 645.5 1,246.8 155.9 2,048.2

Total $ 645.5 $ 1,246.9 $ 183.1 $ 2,075.5

The total valuation allowances recorded are $ 40.0 and $ 59.2 as of June 30, 2020 and 2019, respectively.

In fiscal 2019 , the change in the valuation allowance was due primarily to valuation allowances released on net operating losses and due to less foreign tax credit carryforwards being available after the one-time deemed repatriation tax under the Tax Act.

In fiscal 2020, the change in the valuation allowance was due primarily to valuation allowances released as a result of the underlying net operating losses either expiring or being written off due to the entity being liquidated.

& SUBSIDIARIES

3 unchanged sentences

Year Ended June 30,

2020 2019 2018

UTBs—July 1 $ 263.6 $ 235.7 $ 256.7

Additions based on tax positions related to the current year 15.9 43.9 43.6

1 unchanged sentence

Reductions for tax positions of prior years ( 27.6 ) ( 9.6 ) ( 39.9 )

Settlements ( 0.1 ) ( 2.7 ) ( 42.3 )

Lapses in statutes of limitations ( 12.7 ) ( 9.0 ) ( 10.4 )

Foreign currency translation ( 4.1 ) ( 3.0 ) ( 1.6 )

UTBs—June 30 $ 277.9 $ 263.6 $ 235.7

As of June 30, 2020, the Company had $ 277.9 of UTBs of which $ 150.1 represents the amount that, if recognized, would impact the effective income tax rate in future periods.

34 unchanged sentences

Year Ended June 30,

2020 2019 2018

Interest expense $ 233.3 $ 252.0 $ 222.7

Foreign exchange (gain) losses, net of derivative contracts (a)

14.8 ( 7.6 ) ( 8.5 )

Interest income ( 5.4 ) ( 19.2 ) ( 13.6 )

10 unchanged sentences

In addition, the Company makes contributions to the plan on behalf of employees determined by their age and compensation.

During fiscal 2019 , 2018 and 2017 , the defined contribution expense for the U.S.

During fiscal 2020, 2019 and 2018, the defined contribution expense for Coty Inc.

defined contribution plan was $ 20.5 , $ 20.4 and $ 22.0 , respectively, and the defined contribution expense for the international savings plans was $ 14.1 , $ 12.9 and $ 18.3 , respectively.

Defined contribution expense includes amounts related to discontinued operations, which are not material for any period.

Pension Plans - The Company sponsors contributory and noncontributory defined benefit pension plans covering certain U.S.

5 unchanged sentences

Settlements and Curtailments for Pension Plans

As part of Global Integration Activities, the Company concluded that restructuring actions resulted in a significant reduction of future services of active employees in certain of our non-U.S.

As part of the Turnaround Plan, the Company concluded that restructuring actions resulted in a significant reduction of future services of active employees in certain of our non-U.S.

pension plans.

As a result, the Company recognized curtailment gains of $ 5.1 during the year ended June 30, 2019, and net settlement gains of $ 0.4 and net curtailment gains of $ 0.4 during the year ended June 30, 2017.

The impact of settlement and curtailment activity on the current and prior comparative periods is included in Other expense, net in the Consolidated Statements of Operations, after the adoption of ASU 2017-07.

During fiscal 2017, the Company recognized a curtailment gain of $ 1.8 in connection with involuntary employee terminations as part of an integration and restructuring program in connection with the Bourjois acquisition, which significantly reduced the expected years of future service of employees within one of the Company’s non-U.S.

As a result, the Company recognized curtailment gains of $ 14.1 during the year ended June 30, 2020.

The impact of settlement and curtailment activity on the current and prior comparative periods is included in Other expense, net in the Consolidated Statements of Operations.

During fiscal 2019, as part of Global Integration Activities, the Company concluded that restructuring actions resulted in a significant reduction of future services of active employees in certain of our non-U.S.

pension plans.

This curtailment gain is included in Other expense, net in the Consolidated Statements of Operations.

The Company settled obligations to U.S.

Del Laboratories, Inc.

pension plan (the “Del Plan”) participants during fiscal 2017 resulting in the recognition of pre-tax settlement losses of $ 15.9 , included in Other expense, net in the Consolidated Statement of Operations for the year ended June 30, 2017.

The Del Plan was fully terminated as a result of these actions.

Plan Amendments for Pension Plans - In June of fiscal 2019, an international pension plan in Switzerland was amended to reduce the interest rate used to calculated future payments to 2.00 % from 2.25 % .

In addition, the annuity conversion rate related to this pension plan was reduced to 5.10 % from 6.21 % .

The impact of these changes resulted in a reduction to the benefit obligation associated with this plan of $ 10.3 .

As a result, the Company recognized curtailment gains of $ 5.1 during the year ended June 30, 2019.

Plan Amendments for Pension Plans - There were no Plan amendments as of June 30, 2020.

Other Post-Employment Benefit Plans (“OPEB”) - The Company provides certain post-employment health and life insurance benefits for certain employees and spouses principally in the U.S.

and France if certain age and service requirements are met.

Estimated benefits to be paid by the Company are expensed over the service period of each employee based on

Estimated benefits to be paid by the Company are expensed over the service period of each employee based on calculations performed by an independent actuary.

In addition, the Company has a supplemental retirement plan and a termination benefit plan for selected salaried employees.

Settlements and Curtailments for OPEB Plans

As part of the Turnaround Plan, the Company concluded that restructuring actions resulted in a significant reduction of future services of active employees in certain of our US OPEB Plans.

As a result, the Company recognized curtailment gains of

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

calculations performed by an independent actuary.

In addition, the Company has a supplemental retirement plan and a termination benefit plan for selected salaried employees.

Settlements and Curtailments for OPEB Plans

$ 0.8 during the year ended June 30, 2020.

The impact of settlement and curtailment activity on the current and prior comparative periods is included in Other expense, net in the Consolidated Statements of Operations.

The Company amended a non-U.S.

1 unchanged sentence

The amendment triggered a curtailment gain of $ 10.4 , which is included in Other expense, net in the Consolidated Statement of Operations for the year ended June 30, 2018.

All of the disclosures below include amounts related to discontinued operations, except when otherwise noted.

The aggregate reconciliation of the projected benefit obligations, plan assets, funded status and amounts recognized in the Company’s Consolidated Financial Statements related to the Company’s pension plans and other post-employment benefit plans is presented below:

Pension Plans

Other Post-Employment Benefits

Pension Plans Other Post-Employment Benefits Total

International

2020 2019 2020 2019 2020 2019 2020 2019

Change in benefit obligation

Benefit obligation—July 1 $ 17.7 $ 17.5 $ 790.1 $ 732.6 $ 57.8 $ 53.2 $ 865.6 $ 803.3

Service cost — — 33.1 33.3 1.1 1.2 34.2 34.5

Interest cost 0.6 0.7 9.1 12.8 1.7 2.1 11.4 15.6

8 unchanged sentences

Effect of exchange rates — — ( 4.0 ) ( 10.8 ) ( 0.1 ) ( 0.1 ) ( 4.1 ) ( 10.9 )

Other — — — 1.6 — ( 1.1 ) — 0.5

Benefit obligation—June 30 $ 18.5 $ 17.7 $ 753.2 $ 790.1 $ 53.7 $ 57.8 $ 825.4 $ 865.6

9 unchanged sentences

Effect of exchange rates — — 1.9 ( 0.1 ) — — 1.9 ( 0.1 )

Other — — — 0.5 — — — 0.5

Fair value of plan assets—June 30 — — 274.1 268.5 0.5 0.4 274.6 268.9

Reclassification of net obligation to held for sale liabilities — — 140.8 145.8 — — 140.8 145.8

Funded status—June 30 $ ( 18.5 ) $ ( 17.7 ) $ ( 338.3 ) $ ( 375.8 ) $ ( 53.2 ) $ ( 57.4 ) $ ( 410.0 ) $ ( 450.9 )

With respect to the Company’s pension plans and other post-employment benefit plans, amounts recognized in the Company’s Consolidated Balance Sheets as of June 30, 2019 and 2018 , are presented below:

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

Pension Plans

Other Post-Employment Benefits

With respect to the Company’s pension plans and other post-employment benefit plans, amounts recognized in the Company’s Consolidated Balance Sheets as of June 30, 2020 and 2019, are presented below (this table excludes discontinued operations):

Pension Plans Other Post-Employment Benefits Total

International

2020 2019 2020 2019 2020 2019 2020 2019

Noncurrent assets $ — $ — $ 1.5 $ 1.5 $ — $ — $ 1.5 $ 1.5

2 unchanged sentences

Funded status ( 18.5 ) ( 17.7 ) ( 338.3 ) ( 375.8 ) ( 53.2 ) ( 57.4 ) ( 410.0 ) ( 450.9 )

AOC(L)/I ( 0.7 ) 0.2 1.1 ( 20.3 ) 8.3 10.0 8.7 ( 10.1 )

Net amount recognized $ ( 19.2 ) $ ( 17.5 ) $ ( 337.2 ) $ ( 396.1 ) $ ( 44.9 ) $ ( 47.4 ) $ ( 401.3 ) $ ( 461.0 )

3 unchanged sentences

Pension plans with accumulated benefit obligations in excess of plan assets and projected benefit obligations in excess of plan assets are presented below:

Pension plans with accumulated benefit obligations in excess of plan assets

Pension plans with projected benefit obligations in excess of plan assets

International

Pension plans with accumulated benefit obligations in excess of plan assets Pension plans with projected benefit obligations in excess of plan assets

International U.S.

International

2020 2019 2020 2019 2020 2019 2020 2019

Projected benefit obligation $ 18.5 $ 17.7 $ 730.7 $ 767.5 $ 18.5 $ 17.7 $ 739.1 $ 775.9

4 unchanged sentences

Year Ended June 30,

Pension Plans

Pension Plans Other Post-

Employment Benefits

International

International Total

2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018

Service cost $ — $ — $ — $ 33.1 $ 33.3 $ 38.8 $ 1.1 $ 1.2 $ 1.4 $ 34.2 $ 34.5 $ 40.2

Interest cost 0.6 0.7 0.7 9.1 12.8 12.6 1.7 2.1 2.0 11.4 15.6 15.3

5 unchanged sentences

Net periodic benefit cost $ 1.3 $ — $ — $ 18.6 $ 32.2 $ 45.4 $ ( 4.0 ) $ ( 2.7 ) $ ( 13.0 ) $ 15.9 $ 29.5 $ 32.4

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Net periodic benefit costs include amounts related to discontinued operations of $ 14.4 , $ 12.2 and $ 14.9 for the years ended June 30, 2020, 2019, and 2018, respectively.

Pre-tax amounts recognized in AOC(L)/I, which have not yet been recognized as a component of net periodic benefit cost are presented below:

Pension Plans

Other Post-Employment Benefits

International

Pension Plans Other Post-Employment Benefits

International Total

2020 2019 2020 2019 2020 2019 2020 2019

Net actuarial (loss) gain $ ( 0.7 ) $ 0.2 $ ( 2.8 ) $ ( 29.0 ) $ 4.2 $ ( 0.4 ) $ 0.7 $ ( 29.2 )

1 unchanged sentence

Total recognized in AOC(L)/I $ ( 0.7 ) $ 0.2 $ 1.1 $ ( 20.3 ) $ 8.3 $ 10.0 $ 8.7 $ ( 10.1 )

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Changes in plan assets and benefit obligations recognized in OCI/(L) during the fiscal year are presented below:

Pension Plans

Other Post-Employment Benefits

International

Pension Plans Other Post-Employment Benefits

International Total

2020 2019 2020 2019 2020 2019 2020 2019

Net actuarial (loss) gain $ ( 1.6 ) $ ( 0.8 ) $ 25.6 $ ( 74.6 ) $ 5.2 $ ( 4.1 ) $ 29.2 $ ( 79.5 )

Amortization of prior service (credit) cost — — ( 0.8 ) 0.2 ( 5.9 ) ( 5.9 ) ( 6.7 ) ( 5.7 )

Curtailment recognition of prior service credit (cost) — — ( 2.9 ) — ( 0.4 ) — ( 3.3 ) —

Recognized net actuarial (gain)

loss 0.7 ( 0.7 ) ( 0.6 ) ( 0.5 ) ( 0.6 ) ( 0.1 ) ( 0.5 ) ( 1.3 )

Prior service credit (cost) — — — 10.3 — — — 10.3

2 unchanged sentences

Amounts in AOCI/(L) expected to be amortized as components of net periodic benefit cost during fiscal 2021 are presented below:

Pension Plans

Other Post-Employment Benefits

Pension Plans Other Post-Employment Benefits Total

International

1 unchanged sentence

Net gain (loss) ( 1.5 ) 0.1 0.1 ( 1.3 )

Total $ ( 1.5 ) $ 0.7 $ 3.4 $ 2.6

Pension and Other Post-Employment Benefit Assumptions

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

Pension Plans

Other Post-Employment Benefits

Pension Plans Other Post-Employment Benefits

International

2020 2019 2020 2019 2020 2019

Discount rates 2.5 %- 2.8 %

Future compensation growth rates

Future compensation growth rates N/A N/A 1.0 %- 5.8 %

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The weighted-average assumptions used to determine the Company’s net periodic benefit cost in fiscal 2020, 2019 and 2018 are presented below:

Pension Plans

Pension Plans Other Post-

Employment Benefits

International

2020 2019 2018 2020 2019 2018 2020 2019 2018

Discount rates 3.2 %- 3.6 %

Future compensation growth rates

Expected long-term rates of return on plan assets

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

4 % 3.6 % 0.4 %- 8.4 %

Future compensation growth rates N/A N/A N/A 1.0 %- 5.8 %

Expected long-term rates of return on plan assets N/A N/A N/A 1.4 %- 8.9 %

The health care cost trend rate assumptions have a significant effect on the amounts reported.

Year Ended June 30,

2020 2019 2018

Health care cost trend rate assumed for next year 6.8 %- 7.6 %

2 unchanged sentences

A one-percentage point change in assumed health care cost trend rates would have the following effects:

One Percentage Point Increase

One Percentage Point Decrease

One Percentage Point Increase One Percentage Point Decrease

Effect on total service cost and interest cost $ 6.1 $ ( 5.3 )

10 unchanged sentences

% of Plan Assets at Year Ended

Target 2020 2019

Equity securities 40 % 35 % 41 %

1 unchanged sentence

Cash and other investments 10 % 27 % 17 %

Fair Value of Plan Assets

The international pension plan assets that the Company measures at fair value on a recurring basis, based on the fair value hierarchy as described in Note 2 — Summary of Significant Accounting Policies , as of June 30, 2019 and 2018 are presented below:

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

Fair Value of Plan Assets

The international pension plan assets that the Company measures at fair value on a recurring basis, based on the fair value hierarchy as described in Note 2—Summary of Significant Accounting Policies, as of June 30, 2020 and 2019 are presented below:

Level 1 Level 2 Level 3 Total

2020 2019 2020 2019 2020 2019 2020 2019

Equity securities $ 67.5 $ 66.8 $ — $ — $ — $ — $ 67.5 $ 66.8

31 unchanged sentences

The plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long term at an acceptable level of risk.

The reconciliations of Level 3 plan assets measured at fair value in fiscal 2019 and 2018 are presented below:

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

The reconciliations of Level 3 plan assets measured at fair value in fiscal 2020 and 2019 are presented below:

2020 June 30,

Insurance contracts:

Fair value—July 1 $ 143.2 $ 143.7

Plan assets from acquisitions

Return on plan assets 4.3 ( 0.2 )

7 unchanged sentences

Expected benefit payments, which reflect expected future service, as appropriate, are presented below:

Pension Plans

Other Post-Employment Benefits

Fiscal Year Ending June 30,

Pension Plans Other Post-Employment Benefits Total

Fiscal Year Ending June 30, U.S.

International

2021 $ 1.3 $ 79.0 $ 2.9 $ 83.2

2022 1.3 25.3 3.0 29.6

2023 1.3 26.3 3.0 30.6

2024 1.3 26.1 3.0 30.4

2025 1.2 26.7 3.1 31.0

2026 - 2030 5.7 159.8 16.0 181.5

DERIVATIVE INSTRUMENTS

Foreign Exchange Risk

Foreign Exchange Risk Management

The Company is exposed to foreign currency exchange fluctuations through its global operations.

The Company may reduce its exposure to fluctuations in the cash flows associated with changes in foreign exchange rates by creating offsetting positions through the use of derivative instruments and also by designating foreign currency denominated borrowings as hedges of net investments in foreign subsidiaries.

The Company may reduce its exposure to fluctuations in the cash flows associated with changes in foreign exchange rates by creating offsetting positions through the use of derivative instruments and also by designating foreign currency denominated borrowings and cross-currency swaps as hedges of net investments in foreign subsidiaries.

The Company expects that through hedging, any gain or loss on the derivative instruments would generally offset the expected increase or decrease in the value of the underlying forecasted transactions.

The Company entered into derivatives for which hedge accounting treatment has been applied which the Company anticipates realizing in the Consolidated Statements of Operations through fiscal 2020 .

The Company entered into foreign exchange forward contracts for which hedge accounting treatment has been applied, which the Company anticipates realizing in the Consolidated Statements of Operations through fiscal 2021.

In addition, in September 2019, the Company entered into cross-currency swap contracts in the notional amount of $ 550.0 and designated these cross-currency swaps as hedges of its net investment in certain foreign subsidiaries.

These cross-currency swaps allow for the exchange of fixed interest payments on the agreed upon notional amounts, between the Company and the related counterparties, effectively converting the Company’s fixed rate U.S.

dollar denominated debt to euro denominated debt with more favorable fixed rate interest payments over the contracts’ term.

Cross-currency swaps designated as net investment hedges are marked-to-market using the current spot exchange rate as of the end of each reporting period, with gains and losses included in the foreign currency translation component of accumulated other comprehensive income (loss) (“AOCI/(L)”) until the sale or substantial liquidation of the underlying net investments.

The Company enters into foreign exchange forward contracts to hedge anticipated transactions for periods consistent with the Company’s identified exposures to minimize the effect of foreign exchange rate movements on revenues, costs and on the cash flows that the Company receives from foreign subsidiaries and third parties where there is a high probability that anticipated exposures will materialize.

1 unchanged sentence

Hedge effectiveness of foreign exchange forward contracts is based on the forward-to-forward hypothetical derivative methodology and includes all changes in value.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The Company also continued to use certain derivatives as economic hedges of foreign currency exposure on firm commitments and forecasted transactions, which do not qualify for hedge accounting.

2 unchanged sentences

For derivatives not designated as hedging instruments, changes in fair value are recorded in the line item in the Consolidated Statements of Operations to which the derivative relates.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Interest Rate Risk

7 unchanged sentences

As the forecasted interest expense under the original swap agreements is still probable, the related AOCI/(L) will be amortized in line with the timing of the forecasted transactions.

As of June 30, 2019 and 2018 , the Company had interest rate swap contracts designated as effective hedges in the notional amount of $ 2,000.0 .

During September 2019, the Company entered into incremental interest rate swap contracts in the notional amount of $ 1,000.0 , which extended the maturity of the interest rate swap portfolio from 2021 through 2023.

These interest rate swaps are designated and qualify as cash flow hedges.

As of June 30, 2020 and 2019, the Company had interest rate swap contracts designated as effective hedges in the notional amount of $ 3,000.0 and $ 2,000.0 , respectively.

Hedge Accounting

15 unchanged sentences

Accordingly, management of the Company believes risk of material loss under these hedging contracts is remote.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Net Investment Hedge

Foreign currency gains and losses on borrowings designated as a net investment hedge, except ineffective portions, are reported in the cumulative translation adjustment (“CTA”) component of AOCI/(L), along with the foreign currency translation adjustments on those investments.

Foreign currency denominated borrowings designated as net investment hedges had nominal exposures of € 3,699.3 million and € 3,204.1 million as of June 30, 2019 and 2018 , respectively.

Foreign currency denominated borrowings designated as net investment hedges had nominal exposures of € 3,591.0 and € 3,699.3 as of June 30, 2020 and 2019, respectively.

Net investment hedge effectiveness is assessed based on the change in the spot rate of the foreign currency denominated loans payable.

The critical terms (underlying notional and currency) of the loans payable match the portion of the net investments designated as being hedged.

The net investment hedges were equal to the designated portions of the international

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

subsidiaries’ investment balances as of June 30, 2019 .

The net investment hedges were equal to the designated portions of the international subsidiaries’ investment balances as of June 30, 2020.

As such, the net investment hedges were considered to be effective, and, as a result, the changes in the fair value were recorded within CTA on the Company’s Consolidated Balance Sheets.

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

The accumulated gain (loss) on foreign currency borrowings classified as net investment hedges in the foreign currency translation adjustment component of AOCI/(L) was $ 214.8 and $ 115.0 as of June 30, 2019 and 2018 , respectively.

The accumulated gain on foreign currency borrowings classified as net investment hedges in the foreign currency translation adjustment component of AOCI/(L) was $ 261.9 and $ 214.8 as of June 30, 2020 and 2019, respectively.

The accumulated loss on derivative instruments classified as net investment hedges in the foreign currency translation adjustment component of AOCI/(L) was $( 12.5 ) and $ 0.0 as of June 30, 2020 and 2019, respectively.

The amount of gains and losses recognized in OCI in the Consolidated Balance Sheets related to the Company’s derivative and non-derivative financial instruments which are designated as hedging instruments is presented below:

Gain (Loss) Recognized in OCI

Fiscal Year Ended June 30,

Gain (Loss) Recognized in OCI Fiscal Year Ended June 30,

2020 2019 2018

Foreign exchange forward contracts $ 1.3 $ 0.9 $ ( 0.3 )

Interest rate swap contracts ( 50.3 ) ( 47.4 ) 27.0

Cross-currency swap contracts ( 12.5 ) — —

Net investment hedges 47.1 99.8 138.7

1 unchanged sentence

The estimated net loss related to these effective hedges that is expected to be reclassified from AOCI/(L) into earnings, net of tax, within the next twelve months is $( 25.5 ).

As of June 30, 2020, all of the Company’s remaining foreign currency forward contracts designated as hedges were highly effective.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The amount of gains and losses reclassified from AOCI/(L) to the Consolidated Statements of Operations related to the Company’s derivative financial instruments which are designated as hedging instruments is presented below:

Consolidated Statements of Operations

Classification of Gain (Loss) Reclassified from AOCI/(L)

Fiscal Year Ended June 30,

Foreign exchange forward contract:

Cost of sales

Location and Amount of Gain (Loss) Recognized in Income on Cash Flow Hedging Relationships Fiscal Year Ended June 30,

2020 2019 2018

Net Revenues Interest expense, net Cost of sales Interest expense, net Net Revenues Cost of sales Interest expense, net

Foreign exchange forward contracts:

Amount of gain (loss) reclassified from AOCI into income $ 0.6 $ — $ 0.1 $ — $ ( 0.8 ) $ ( 0.7 ) $ —

Interest rate swap contracts:

Interest income (expense), net

Amount of gain (loss) reclassified from AOCI into income — ( 10.8 ) — 12.4 — — 6.9

Derivatives not designated as hedging instruments:

1 unchanged sentence

Consolidated Statements of Operations

Classification of Gain (Loss) Recognized in Operations

Fiscal Year Ended June 30,

Selling, general and administrative

Interest income (expense), net

Other income (expense), net

Classification of Gain (Loss) Recognized in Operations Fiscal Year Ended June 30,

2020 2019 2018

Foreign exchange contracts Selling, general and administrative expenses $ ( 0.8 ) $ — $ ( 0.8 )

Foreign exchange contracts Interest income (expense), net ( 3.1 ) 0.1 17.5

Foreign exchange contracts Other income (expense), net 0.4 — 0.2

MANDATORILY REDEEMABLE FINANCIAL INTEREST

2 unchanged sentences

subsidiary”) at the termination of the agreement.

The Company has determined such shares to be a mandatorily redeemable financial instrument (“MRFI”) that is recorded as a liability.

The Company has determined such shares to be a mandatorily redeemable financial interest (“MRFI”) that is recorded as a liability.

The liability is calculated based upon a pre-determined formula in accordance with the related U.A.E.

7 unchanged sentences

On May 23, 2017, the Company entered into the Sale of Shares and Termination Deed, as amended (the “Termination Agreement”) to purchase the remaining 49 % noncontrolling interest from the noncontrolling interest holder of a certain Southeast Asian subsidiary for a purchase price of $ 45.0 .

Additionally, all remaining retained earnings will be paid out as dividends by December 31, 2019.

As a result of the Termination Agreement, the noncontrolling interest balance is recorded as an MRFI.

The MRFI balance was accreted to the redemption value through the effective date of the purchase with changes in the balance being reflected in Other income (expense) in the Consolidated Statements of Operations.

The termination was effective on June 30, 2019 and the Company remitted purchase consideration of $ 45.0 in July of fiscal 2020 to the noncontrolling interest holder.

As of June 30, 2019 and 2018 , the MRFI liability, which includes the termination payment and dividends payable to the noncontrolling interest holder, amounted to $ 50.4 and $ 45.1 , respectively, which was recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheet.

REDEEMABLE NONCONTROLLING INTERESTS

As of June 30, 2019 , the redeemable noncontrolling interests (“RNCI”) consist of interests in a consolidated subsidiary in the Middle East and in the consolidated subsidiaries related to the Younique acquisition.

See Note 3 — Business Combinations .

As of June 30, 2018, the Younique membership holders had a 40.6 % membership interest in Foundation, which holds 100% of the units of Younique.

During the year ended June 30, 2019 , additional shares of Foundation were issued to employees of Younique under a stock ownership program and incentive stock grants were granted, resulting in a 0.1 % increase to the noncontrolling interest ownership percentage.

The cumulative impact of the additional shares for the year ended June 30, 2019 was recorded as an increase to RNCI of $ 1.6 and a decrease in additional paid-in capital (“APIC”) of $ 1.6 .

The Company accounts for the 40.7 % noncontrolling interest portion of Foundation as RNCI due to the noncontrolling interest holder’s ability to put their shares to the Company in certain circumstances.

While Foundation is a majority-owned consolidated subsidiary, the Company records income tax expense based on the Company’s 59.3 % membership interest in Foundation due to its treatment as a partnership for U.S.

income tax purposes.

Accordingly, Foundation’s net income attributable to RNCI is equal to the 40.7 % noncontrolling interest of Foundation’s net income excluding a provision for income taxes.

The Company recognized $ 365.3 and $ 597.7 as the redeemable noncontrolling interest balances as of June 30, 2019 and 2018 , respectively.

The Company has the right to purchase the RNCI in Foundation from the RNCI holders (each such right, a “Foundation Call right”) upon the occurrence of certain events that are not in the Company’s control.

In addition to the Foundation Call right features, the noncontrolling interest holders of Foundation have the right to sell the noncontrolling interests to the Company upon the occurrence of certain events (each such right, a “Foundation Put right”).

The amount at which the Foundation Put right and Foundation Call right can be exercised is based on a fair value at the exercise date, multiplied by the noncontrolling interest holder’s percentage interest in Foundation.

In certain circumstances the Foundation Put right or the Foundation Call right may be exercised at a discount or a premium.

Currently management views the possibility of these circumstances occurring as remote.

The noncontrolling interests are redeemable outside of the Company’s control and are recorded in the Consolidated Balance Sheets at the higher of the redemption value (fair value) or the carrying value (the acquisition date fair value adjusted for the noncontrolling interest’s share of net income (loss) and dividends).

The Company adjusts Foundation’s RNCI at the end of each reporting period with changes recognized as adjustments to APIC.

The Company uses an income approach, a market approach or a combination of these approaches to estimate the fair value of the Foundation RNCI.

The income approach is used to determine the fair value of the Foundation RNCI using a discounted cash flow method, projecting future cash flows of the business, as well as a terminal value, and discounting such cash flows at a rate of return that reflects the relative risk of the cash flows.

For the market approach the Company uses a selected multiple based on comparable companies multiplied by the forecasted cash flows.

The key estimates and factors used in this approach

In July 2019, the Company purchased the remaining 49 % noncontrolling interest of a certain Southeast Asian subsidiary from the noncontrolling interest holder for $ 45.0 , pursuant to a Sale of Shares and Termination Deed, as amended.

The termination was effective on June 30, 2019 and immediately prior to the cash purchase of the remaining noncontrolling interest, the noncontrolling interest balance was recorded as a MRFI liability.

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

include, but are not limited to, revenue growth rates and profit margins based on our internal forecasts and the entity specific weighted-average cost of capital used to discount future cash flows.

REDEEMABLE NONCONTROLLING INTERESTS

As of June 30, 2020, the redeemable noncontrolling interests (“RNCI”) consist of interests in a consolidated subsidiary in the Middle East.

On September 16, 2019, the Company completed the sale of all of its membership interest in Foundation, which held the net assets of Younique.

On the date of this transaction, the Younique membership holders had a 40.7 % membership interest in Foundation.

See Note 4—Business Combinations, Asset Acquisitions and Divestitures.

As a result of the Company’s sale of its membership interest in Foundation, RNCI of $ 360.4 was derecognized as of the date of sale.

The Company accounted for the 40.7 % noncontrolling interest portion of Foundation as RNCI due to the noncontrolling interest holder’s right to put their shares to the Company in certain circumstances.

Foundation was a majority-owned consolidated subsidiary through September 16, 2019 and the Company recorded income tax expense based on the Company’s 59.3 % membership interest in Foundation due to its treatment as a partnership for U.S.

income tax purposes.

Accordingly, Foundation’s net income attributable to RNCI is equal to the 40.7 % noncontrolling interest of Foundation’s net income excluding a provision for income taxes.

The Company recognized $ 365.3 as the RNCI balance as of June 30, 2019.

Subsidiary in the Middle East

6 unchanged sentences

The Company recognized $ 79.1 and $ 86.5 as the redeemable noncontrolling interest balances as of June 30, 2020 and 2019, respectively.

Percentage of redeemable noncontrolling interest

Earliest exercise date(s)

December 2028 (b)

Formula of redemption value

3-year average of EBIT (c) * 6

Percentage of redeemable noncontrolling interest (a)

Earliest exercise date(s) (b)

December 2028

Formula of redemption value (c)

3 -year average of EBIT * 6

(a) The parties are entitled to call or put the remaining interest in July 2028.

2 unchanged sentences

(c) EBIT is defined in the amended shareholders’ agreement as the consolidated net earnings before interest and income tax.

EQUITY AND CONVERTIBLE PREFERRED STOCK

As of June 30, 2020, the Company’s common stock consisted of Class A Common Stock with a par value of $ 0.01 per share.

The holders of Class A Common Stock are entitled to one vote per share.

Prior to September 30, 2016, the Company had Class B Common Stock outstanding.

As of June 30, 2019 , total authorized shares of Class A Common Stock was 1,000.0 million and total outstanding shares of Class A Common Stock was 754.2 million .

In the fiscal years ended June 30, 2019 , 2018 , and 2017 , the Company issued 1.0 million , 2.9 million , and 2.5 million shares of its Class A Common Stock, respectively, and received $ 5.2 , $ 22.6 , and $ 21.3 , in cash, respectively, in connection with the exercise of employee stock options and settlement of RSUs and special incentive awards.

As of June 30, 2020, total authorized shares of Class A Common Stock was 1,250.0 million and total outstanding shares of Class A Common Stock was 765.1 .

In the fiscal years ended June 30, 2020, 2019, and 2018, the Company issued 1.4 , 1.0 , and 2.9 million shares of its Class A Common Stock, respectively, and received $ 2.7 , $ 5.2 , and $ 22.6 , in cash, respectively, in connection with the exercise of employee stock options and settlement of RSUs and special incentive awards.

During the fiscal year ended June 30, 2020, the Company granted 2.3 million restricted stock awards to employees.

Of the 2.3 million, 0.3 million were withheld for employee taxes and 2.0 million shares of Class A Common Stock were issued.

Of the 2.0 million shares, 0.6 million shares vested immediately but are restricted from trading for one year and 1.4 million shares will vest in equal installments over the next three fiscal years .

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

During the fiscal years ended June 30, 2020, 2019 and 2018, Cottage Holdco B.V.

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

(“JABC”), and JABC acquired 10.8 million , 14.9 million and 2.6 million shares, respectively, of Class A Common Stock in the open market.

(“JABC”), and JABC acquired 10.6 , 10.8 and 14.9 shares, respectively, of Class A Common Stock in the open market.

During the year ended June 30, 2020, JABC acquired 3.3 million shares of Class A Common Stock from the Company’s former CEO and elected to receive 7.3 million shares of Class A Common Stock, under the Company’s dividend reinvestment program.

The Company did not receive any proceeds from these stock purchases conducted by Cottage or JABC.

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The Company did not receive any proceeds from these stock purchases conducted by Cottage.

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

On September 30, 2016, JABC converted all of its shares of Class B Common Stock of the Company into shares of Class A Common Stock of the Company.

The Company issued approximately 262.0 million shares of Class A Common Stock to JABC upon the conversion of JABC’s shares of Class B Common Stock.

Prior to October 1, 2016, the Company was a majority-owned subsidiary of JABC.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

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

Preferred Stock

As of June 30, 2019 , the Company’s preferred stock consisted of Series A and Series A-1 Preferred Stock with a par value of $ 0.01 .

The Series A and Series A-1 Preferred Stock are not entitled to receive any dividends and have no voting rights except as required by law.

Series A and A-1 Preferred Stock

The Series A Preferred Stock, with a par value of $ 0.01 , are not entitled to receive any dividends and have no voting rights except as required by law.

As of June 30, 2020, total authorized shares of preferred stock are 20.0 million.

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On June 18, 2019, the Company cancelled 0.4 million shares of its Series A Preferred Stock that were forfeited during the three months ended March 31, 2019, reducing the total authorized number of shares of Series A Preferred Stock from 3.3 million to 2.9 million.

The Series A and Series A-1 Preferred Stock are issued to executive officers and directors under subscription agreements.

On March 27, 2020, the Company reacquired, retired and cancelled 7.9 million shares of its Series A-1 Preferred Stock, reducing the total authorized number of shares of Series A-1 Preferred Stock from 7.9 million to zero shares.

The Series A and Series A-1 Preferred Stock were issued to executive officers and directors under subscription agreements.

Generally, the subscription agreements entitle the holder of the vested Series A or Series A-1 Preferred Stock to exchange the Series A or Series A-1 Preferred Stock into either cash or shares of Class A Common Stock, at the election of the Company, at the exchange value.

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To the extent the Company controls whether such shares will be settled in cash or equity and intends to settle the grant in equity, the grant is treated as an equity grant, otherwise the grant is treated as a liability grant.

The following table summarizes the key terms of each outstanding issuance of Series A and Series A-1 Preferred Stock:

Issuance Date

Number of Shares Awarded at Grant Date (millions of shares)

Number of Shares Outstanding (millions of shares)

Hurdle Price per Share

The following table summarizes the key terms of each outstanding issuance of Series A Preferred Stock:

Issuance Date Type Number of Shares Awarded at Grant Date (millions of shares) Number of Shares Outstanding (millions of shares) Hurdle Price per Share

February 16, 2017 (a)

Series A 0.5 0.3 $ 22.66

March 27, 2017 (a) (b)

Series A 1.0 1.0 $ 22.39

November 16, 2017 (a)

February 4, 2019 (a)

June 14, 2019 (a)

If the holder does not exchange the vested Series A or Series A-1 Preferred Stock by a specified expiration date, the Company must automatically exchange the Series A or Series A-1 Preferred Stock into cash or shares, at election of the Company.

This grant was sold to Lambertus J.H.

Series A 1.0 0.2 $ 19.85

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

(a) If the h older does not exchange the vested Series A Preferred Stock by a specified expiration date, the Company must automatically exchange the Series A Preferred Stock into cash or shares, at election of the Company.

(b) This grant was sold to Lambertus J.H.

Becht”), the Company’s former Chairman of the Board.

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Therefore, the award is classified as a liability as of June 30, 2020.

An expense (income) of $( 0.1 ) and $( 1.7 ) and $ 3.8 was recorded during fiscal 2019 , 2018 and 2017 , respectively, and has been included in Selling, general and administrative expense on the Consolidated Statements of Operations.

Income of $ 1.9 and $ 0.1 and $ 1.7 was recorded during fiscal 2020, 2019 and 2018, respectively, and has been included in Selling, general and administrative expense on the Consolidated Statements of Operations.

As of June 30, 2020, total issued and outstanding shares of Series A and Series A-1 Preferred Stock are 1.5 million and nil , respectively.

Of the 1.5 million outstanding shares of Series A Preferred Stock, 1.0 million shares vested on March 27, 2017, 0.3 million shares vest on February 16, 2022 and 0.2 million shares vest on November 16, 2022.

As of June 30, 2020, the Company classified nil Series A and Series A-1 Preferred Stock as equity and $ 0.1 as a liability, inclusive of the related cash bonuses, recorded in Other noncurrent liabilities in the Consolidated Balance Sheet.

Convertible Series B Preferred Stock

On May 11, 2020, the Company entered into an Investment Agreement with KKR Aggregator (the “Investor”), relating to the issuance and sale by the Company to the Investor of up to 1,000,000 shares of the Company’s new Convertible Series B Preferred Stock, par value $ 0.01 per share (the “Series B Preferred Stock”), for an aggregate purchase price of up to $ 1,000.0 , or $ 1,000 per share (the “Issuance”).

The Issuance was proposed to be issued in two tranches:

(i) an initial issuance of 750,000 shares of Series B Preferred Stock (the “Initial Issuance”) and (ii) a subsequent issuance of 250,000 shares of Series B Preferred Stock (the “Second Issuance”), which was subject to the execution and delivery of a definitive purchase agreement between the Company and the Investor or certain of its affiliates in respect of the Wella Business.

On May 26, 2020 (the “Closing Date”), the Company and the Investor completed the issuance and sale of 750,000 shares of the Company’s Series B Preferred Stock for an aggregate purchase price of $ 750.0 .

In connection with the issuance of the Series B Preferred Stock, the Company incurred direct and incremental expenses of $ 40.7 , comprised of transaction fees, and financial advisory and legal expenses, which reduced the carrying value of the Series B Preferred Stock.

Cumulative preferred dividends accrue daily on the Series B Preferred Stock at a rate of 9.0 % per year.

The Series B Preferred Stock had accrued unpaid dividends of $ 6.5 as of June 30, 2020.

There were no dividends paid in relation to the Series B Preferred Stock in the year ended June 30, 2020.

On July 31, 2020, the Company completed the previously announced issuance and sale of 250,000 shares of the Company’s Series B Preferred Stock to the Investor for an aggregate purchase price of $ 250.0 .

Dividend Rights and Liquidation Preferences.

The Series B Preferred Stock rank senior to our common stock with respect to dividend rights and rights on the distribution of assets on any liquidation, dissolution or winding up of the affairs of the Company.

The Series B Preferred Stock has a liquidation preference of $ 1,000 per share, representing an aggregate liquidation preference of $ 1,000.0 upon issuance.

Holders of the Series B Preferred Stock are entitled to the dividend at the rate of 9 % per annum, accruing daily and payable quarterly in arrears.

The dividend rate will increase by a 1 % on the seven-year anniversary of the Closing Date and shall increase by an additional 1 % on each subsequent anniversary up to a total of 12 %.

If the Company does not declare and pay a dividend on the Series B Preferred Stock on any dividend payment date, the dividend rate will increase by 1 % per annum until all accrued but unpaid dividends have been paid in full.

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

Accrued and unpaid dividends are not payable in shares unless the Series B Preferred Stock is converted to Common Stock.

Conversion Features.

The Series B Preferred Stock is convertible at the option of the holders at any time into shares of Common Stock at an initial conversion price of $ 6.24 per share of Series B Preferred Stock and an initial conversion rate of 160.2564 shares of Common Stock per share of Series B Preferred Stock.

At any time after the third anniversary of the closing date, if the volume weighted average price of the Common Stock exceeds $ 12.48 per share for at least 20 trading dates in any period of 30 consecutive trading days, at the election of the Company, all or any portion of the Series B Preferred Stock will be convertible into the relevant number of shares of Common Stock.

As of June 30, 2020, Series B Preferred Stock and Accrued Dividends were convertible into 121,233,944 shares of Common Stock.

Redemption Features.

At any time following the fifth anniversary of the Closing Date, the Company may redeem some or all of the Series B Preferred Stock for a per share amount in cash equal to (i) the sum of (x) 100 % of the liquidation preference plus (y) all accrued and unpaid dividends, multiplied by (ii) (A) 107 % if the redemption occurs at any time after the fifth anniversary of the Closing Date and prior to the sixth anniversary of the Closing Date, (B) 105 % if the redemption occurs at

& SUBSIDIARIES

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($ in millions, except per share data)

As of June 30, 2019 , total authorized shares of Series A and Series A-1 Preferred Stock are 2.9 million and 7.9 million , respectively, and total outstanding shares of Series A and Series A-1 Preferred Stock are 1.5 million and 7.9 million , respectively.

Of the 7.9 million outstanding shares of Series A-1 Preferred Stock, 4.1 million shares vest on November 12, 2021, 1.4 million shares vest on November 12, 2022, 1.4 million shares vest on November 12, 2023, 0.6 million shares vest on May 10, 2022, 0.2 million shares vest on May 10, 2023 and 0.2 million shares vest on May 10, 2024.

As of June 30, 2019 , the Company classified $ 0.7 Series A and Series A-1 Preferred Stock as equity and $ 2.0 as a liability, inclusive of the related cash bonuses, recorded in Other noncurrent liabilities in the Consolidated Balance Sheet.

On June 6, 2019, the Company registered 9.3 million shares of Class A Common Stock for purchase under the Stock Dividend Reinvestment Program.

All holders of records of Class A Common Stock have the opportunity to participate in the program.

If a holder elects to participate in the program, fifty percent ( 50 % ) of their cash dividends will be reinvested in additional shares of Class A Common Stock.

Prior to October 2016, the Company declared annual cash dividends in the first quarter of the fiscal year.

Beginning after October 2016, the Company began declaring cash dividends on a quarterly basis.

The P&G Beauty Business Acquisition dated July 8, 2015 (the “Transaction Agreement”) restricted the Company’s ability to declare, make or pay any dividends, other than in the ordinary course and for an amount not to exceed $ 0.25 per share prior to the closing of the P&G Beauty Business transaction, without P&G consent.

In July 2016, P&G provided consent to the Company’s dividend declared on August 1, 2016.

The following dividends were declared during fiscal years 2019 , 2018 and 2017 :

any time after the sixth anniversary of the Closing Date and prior to the seventh anniversary of the Closing Date, and (C) 100 % if the redemption occurs at any time after the seventh anniversary of the Closing Date.

Voting rights.

Holders of Series B Preferred Stock are entitled to vote with holders of Common Stock on an as-converted basis, subject to the Ownership Limitation as defined in the Investment Agreement.

Holders of the Series B Preferred Stock are entitled to a separate class vote with respect to, among other things, amendments to the Company’s organizational documents that have an adverse effect on the Series B Preferred Stock, authorizations or issuances by the Company of securities that are senior to, or equal in priority with, the Series B Preferred Stock, increases or decreases in the number of authorized shares of Series B Preferred Stock, and issuances of shares of the Series B Preferred Stock.

Change of Control Put.

Upon certain change of control events involving the Company holders of Series B Preferred Stock may, at the holder’s election (i) convert their shares of Series B Preferred Stock into Common Stock at the then-current conversion price or (ii) cause the Company to redeem their shares of Series B Preferred Stock in an amount in cash equal to (x) if the change of control occurs on or before the fifth anniversary of the Closing Date, 110 % of the sum of the liquidation preference thereof plus any accrued and unpaid dividends and (y) if the change of control occurs on or after the fifth anniversary of the Closing Date, 100 % of the Redemption Price, provided that in the case of either clause (i) or (ii) above, if such change of control occurs on or before the fifth anniversary of the Closing Date, the Company will also be required to pay the holders of the Series B Preferred Stock a “make-whole” premium.

Participation and Other Pertinent Rights.

Pursuant to the Investment Agreement, the Company increased the size of its board of directors (the “Board”) in order to elect two individuals designated by the Investor (the “Designees”) to the Board.

On April 29, 2020, the Board of Directors suspended the payment of dividends, in keeping with the 2018 Coty Credit Agreement, as amended, which is expected to last through April 21, 2021 or until such later date that a Net debt to Adjusted EBITDA of 4x is reached.

During fiscal 2020, prior to the Board’s decision to suspend the payment of dividends, the Company maintained a Stock Dividend Reinvestment Program and had registered a total of 19.3 million shares of Class A Common Stock for purchase under the program.

All holders of records of Class A Common Stock had the opportunity to participate in the program;

if a holder elected to participate in the program, fifty percent ( 50 %) of their cash dividends were reinvested in additional shares of Class A Common Stock.

& SUBSIDIARIES

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($ in millions, except per share data)

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)

The following dividends were declared during fiscal years 2020, 2019 and 2018:

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)

August 21, 2018

August 31, 2018

September 14, 2018

November 7, 2018

November 30, 2018

December 14, 2018

February 8, 2019

February 28, 2019

March 15, 2019

June 28, 2019

August 22, 2017

September 1, 2017

September 14, 2017

November 9, 2017

November 30, 2017

December 14, 2017

February 8, 2018

February 28, 2018

March 15, 2018

June 14, 2018

August 1, 2016

August 11, 2016

August 19, 2016

December 9, 2016

December 19, 2016

December 28, 2016

February 9, 2017

February 28, 2017

March 10, 2017

2019 Quarterly $ 0.125 September 9, 2019 $ 95.3 September 30, 2019 $ 63.3 $ 30.9 $ 1.1

November 6, 2019 Quarterly 0.125 November 18, 2019 96.1 December 27, 2019 65.5 29.3 1.3

February 5, 2020 Quarterly 0.125 February 18, 2020 96.3 March 27,

2020 66.4 28.7 1.2

Fiscal 2020 $ 0.375 $ 287.7 $ 195.2 $ 88.9 $ 3.6

2018 Quarterly $ 0.125 August 31,

2018 $ 94.6 September 14, 2018 $ 93.8 N/A $ 0.8

November 7, 2018 Quarterly 0.125 November 30, 2018 95.1 December 14, 2018 93.9 N/A 1.2

February 8, 2019 Quarterly 0.125 February 28, 2019 95.1 March 15,

2019 93.9 N/A 1.2

2019 Quarterly 0.125 June 6,

2019 95.1 June 28,

The June 28, 2019 stock dividend payment of $ 30.6 resulted in the issuance of 2.4 million shares of Class A Common Stock.

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.

2019 63.4 30.6 1.1

Fiscal 2019 $ 0.500 $ 379.9 $ 345.0 $ 30.6 $ 4.3

2017 Quarterly $ 0.125 September 1, 2017 $ 94.4 September 14, 2017 $ 93.6 N/A $ 0.8

November 9, 2017 Quarterly 0.125 November 30, 2017 94.6 December 14, 2017 93.7 N/A 0.9

February 8, 2018 Quarterly 0.125 February 28, 2018 94.6 March 15,

2018 93.8 N/A 0.8

May 9, 2018 Quarterly 0.125 May 31, 2018 94.6 June 14,

2018 93.8 N/A 0.8

Fiscal 2018 $ 0.500 $ 378.2 $ 374.9 N/A $ 3.3

(a) The June 28, 2019, September 30, 2019 , December 27, 2019 and March 27, 2020 stock dividend payments of $ 30.6 , $ 30.9 , $ 29.3 and $ 28.7 resulted in the issuances of 2.4 million, 3.2 million , 2.4 million and 2.4 million shares of Class A Common Stock, respectively.

(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 Consolidated Balance Sheet.

Total dividends in cash and other recorded to additional paid-in capital (“APIC”) in the Condensed Consolidated Balance Sheet as of June 30, 2019 was $( 347.5 ) , consisting of $ 345.0 dividends settled in cash, $ 4.3 dividends payable, offset by $ 1.8 of dividends no longer expected to vest as a result of forfeitures of outstanding RSUs.

Total dividends in cash and other recorded to additional paid-in capital (“APIC”) in the Consolidated Balance Sheet as of June 30, 2020 was $ 196.3 , consisting of $ 195.2 dividends settled in cash, $ 3.6 dividends payable, offset by $ 2.5 of dividends no longer expected to vest as a result of forfeitures of outstanding RSUs.

In addition to the activity noted above, the Company made a payment of $ 1.7 for the previously accrued dividends on RSUs that vested during the twelve months ended June 30, 2020.

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Foreign Currency Translation Adjustments

(Losses) Gains on Cash Flow Hedges

(Losses) Gains on Net Investment Hedge

Foreign Currency Translation Adjustments

Pension and Other Post-Employment Benefit Plans

(Losses) Gains on Cash Flow Hedges (Losses) Gains on Net Investment Hedge Foreign Currency Translation Adjustments Pension and Other Post-Employment Benefit Plans Total

Beginning balance at July 1, 2018 $ 31.7 $ 115.0 $ ( 44.3 ) $ 56.4 $ 158.8

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Net amounts reclassified from AOCI/(L) (a)

( 9.5 ) — — ( 5.5 ) ( 15.0 )

Net current-period other comprehensive income ( 45.0 ) 99.8 ( 213.1 ) ( 59.3 ) ( 217.6 )

Adjustment due to the adoption of ASU 2018-02 (Note 2)

Ending balance at June 30, 2019 $ ( 13.3 ) $ 214.8 $ ( 257.4 ) $ ( 2.9 ) $ ( 58.8 )

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Net amounts reclassified from AOCI/(L) (a)

7.8 — — ( 7.3 ) 0.5

Net current-period other comprehensive income ( 29.7 ) 47.1 ( 426.4 ) 11.6 ( 397.4 )

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As of June 30, 2020, the Company has $ 396.8 remaining under the Incremental Repurchase Program.

The following table summarizes the share repurchase activities during the years ended June 30, 2019, 2018 and 2017 :

Number of shares repurchased (in millions)

Cost of shares repurchased (in millions)

Lowest fair value of shares repurchased per share

Highest fair value of shares repurchased per share

Fiscal Year Ended June 30, 2019

Fiscal Year Ended June 30, 2018

Fiscal Year Ended June 30, 2017

There were no share repurchase activities during the years ended June 30, 2020, 2019 and 2018 under the Incremental Repurchase Program.

SHARE-BASED COMPENSATION PLANS

The Company has various share-based compensation programs (the “the Compensation Plans”) under which awards, including non-qualified stock options, Series A and Series A-1 Preferred Stock, RSUs and other share-based awards, may be granted or shares of Class A Common Stock may be purchased.

The Company has various share-based compensation programs (the “the Compensation Plans”) under which awards, including non-qualified stock options, Series A and Series A-1 Preferred Stock, RSUs, restricted stock and other share-based awards, may be granted or shares of Class A Common Stock may be purchased.

As of June 30, 2020, up to 74.6 million shares of the Company's Class A Common Stock were authorized to be granted pursuant to these Plans, of which 61.3 million shares were available.

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The share-based compensation for equity plans is estimated and fixed at the grant date, based on the estimated fair value of the award.

Series A Preferred Stock is accounted for partially as equity and partially using liability plan accounting to the extent the award is

Series A Preferred Stock is accounted for partially as equity and partially using liability plan accounting to the extent the award is expected to be settled in cash.

Accordingly, share-based compensation expense for the liability plan awards are measured at the end of each reporting period based on the fair value of the award on each reporting date and recognized as an expense to the extent earned.

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($ in millions, except per share data)

expected to be settled in cash.

Total share-based compensation is shown in the table below:

Equity plan expense

Total share-based compensation from continuing operations is shown in the table below:

2020 2019 2018

Equity plan expense (a)

$ 24.8 $ 13.4 $ 28.9

Equity plan modified and cash settled 18.3 — —

Liability plan (income) expense ( 2.0 ) ( 2.1 ) ( 1.0 )

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Total share-based compensation expense $ 42.2 $ 11.7 $ 30.4

The share-based compensation expense for fiscal 2019 , 2018 and 2017 of $ 15.2 , $ 33.4 and $ 29.0 , respectively, includes $ 33.5 , $ 33.4 , and $ 29.0 expense for the respective period offset by $( 18.3 ) , nil and nil income for the respective periods primarily due to significant executive forfeitures of share-based compensation instruments and the impact of actual forfeitures on the change in estimated forfeiture rates during the period.

As of June 30, 2019 , the total unrecognized share-based compensation expense related to unvested stock options, Series A and Series A-1 Preferred Stock and restricted stock units and other share awards is $ 50.5 , $ 9.1 and $ 80.9 , respectively.

The unrecognized share-based compensation expense related to unvested stock options, Series A and A-1 Preferred Stock, restricted stock units and other share awards is expected to be recognized over a weighted-average period of 4.26 , 4.44 and 3.52 years, respectively.

(a) Equity Plan shared-based compensation expense of $ 31.8 was recorded to additional paid in capital and presented in the Consolidated Statement of Equity for the period ended June 30, 2020.

Of the $ 31.8 , $ 7.0 was reclassified to discontinued operations.

The share-based compensation expense for fiscal 2020, 2019 and 2018 of $ 42.2 , $ 11.7 and $ 30.4 , respectively, includes $ 48.9 , $ 30.0 , and $ 30.4 expense for the respective period offset by $( 6.7 ), $( 18.3 ) and nil income for the respective periods primarily due to significant executive forfeitures of share-based compensation instruments and the impact of actual forfeitures on the change in estimated forfeiture rates during the period.

During fiscal 2020, $ 18.3 of share-based compensation expense related to the repurchase of Series A-1 Preferred Stock shares from the Company’s former CEO.

As of June 30, 2020, the total unrecognized share-based compensation expense related to unvested stock options, Series A and Series A-1 Preferred Stock, restricted stock, restricted stock units and other share awards is $ 24.3 , nil , $ 6.3 and $ 69.7 , respectively.

The unrecognized share-based compensation expense related to unvested stock options, Series A and A-1 Preferred Stock, restricted stock, restricted stock units and other share awards is expected to be recognized over a weighted-average period of 3.45 , nil, 1.93 and 2.23 years, respectively.

Nonqualified Stock Options

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During fiscal 2020, 2019 and 2018, the share-based compensation expense recognized on nonqualified stock options is based upon the fair value on the grant date estimated using the Black-Scholes valuation model with the following weighted-average assumptions:

Expected life

2020 2019 2018

Expected life 7.4 years 6.5 years 7.5 years

Risk-free interest rate 1.63 % 2.56 % 2.19 %

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The Company’s outstanding nonqualified stock options as of June 30, 2020 and activity during the fiscal year then ended are presented below:

(in millions)

(in millions) Weighted

Price Aggregate

Value Weighted

Term (in years)

Outstanding at July 1, 2019 27.9 $ 12.89

Granted 2.2 12.21

Exercised ( 0.3 ) 9.56

Forfeited ( 11.8 ) 12.79

Outstanding at June 30, 2020 18.0 $ 12.93

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A summary of the aggregated weighted-average grant date fair value of stock options granted and total intrinsic value of stock options exercised for fiscal 2020, 2019 and 2018 is presented below:

2020 2019 2018

Weighted-average grant date fair value of stock options $ 3.41 $ 2.87 $ 4.87

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The Company’s non-vested nonqualified stock options as of June 30, 2020 and activity during the fiscal year then ended are presented below:

(in millions)

(in millions) Weighted

Non-vested at July 1, 2019 26.8 $ 3.72

Granted 2.2 3.41

Forfeited ( 11.8 ) 3.64

Non-vested at June 30, 2020 17.2 $ 3.73

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In addition to the Executive Ownership Programs discussed above, the Series A Preferred Stock are accounted for partially as equity and partially as a liability as of June 30, 2020, 2019 and 2018 and the Company recognized an (income) expense of $ 15.8 , $( 4.4 ) and $ 0.1 in fiscal 2020, 2019 and 2018, respectively.

See Note 22 — Equity for additional information.

See Note 23—Equity and Convertible Preferred Stock for additional information.

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($ in millions, except per share data)

On February 27, 2020, the Company agreed to repurchase 6.9 million shares of Series A-1 Preferred Stock from the former CEO for $ 18.3 , which settled in cash during the fiscal 2020.

The repurchase was treated as a modification of stock compensation awards’ vesting and settlement terms.

The Company recorded an incremental expense of $ 18.3 related to the modification during the fiscal 2020.

In fiscal 2017, the Company granted Series A Preferred Stock that included cash bonus payments tied to the exercisability of the awards.

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In Fiscal 2019, the Company granted Series A-1 Preferred Stock with similar terms as previously granted Series A Preferred Stock and used the binomial lattice model to value the equity and cash bonus components of the combined instrument.

As of June 30, 2019 , the fair value of the Company’s outstanding Series A and Series A-1 Preferred Stock that are liability accounted were estimated with the following weighted-average assumptions.

Expected life, in years

The fair value of the Company’s outstanding Series A and Series A-1 Preferred Stock that are liability accounted were estimated with the following weighted-average assumptions.

2020 2019 2018

Expected life, in years 3.74 years 4.97 years 4.52 years

Expected volatility 53.20 % 42.53 % 35.00 %

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Dividend yield on Class A Common Stock 8.39 % 6.19 % 3.55 %

Yield on cash

Expected life, in years - The expected life represents the period of time (years) that Series A or Series A-1 Preferred Stock granted are expected to be outstanding, which the Company calculates using a formula based on the vesting term and the contractual life of the respective Series A or Series A-1 Preferred Stock.

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

Yield on cash - The Company calculated the weighted-average yield of comparable securities with a similar credit rating to the Company as of June 30, 2019 , 2018 and 2017 , respectively.

Series A and Series A-1 Preferred Shares generally expire seven years from the date of the grant.

The Company’s outstanding Series A and Series A-1 Preferred Shares as of June 30, 2020 and activity during the fiscal year then ended are presented below:

(in millions)

Exercise Price

Aggregate Intrinsic Value

Weighted Average Remaining Contractual Term (in years)

(in millions) Weighted

Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Term (in years)

Outstanding at July 1, 2019 9.4 $ 11.47

Forfeited ( 7.9 ) 9.46

Outstanding at June 30, 2020 1.5 22.10

Vested and expected to vest at June 30, 2020 1.0 $ 22.39 $ — 3.74

The Company’s non-vested shares of Series A and Series A-1 Preferred Stock as of June 30, 2019 and activity during the fiscal year then ended are presented below:

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($ in millions, except per share data)

(in millions)

The Company’s non-vested shares of Series A and Series A-1 Preferred Stock as of June 30, 2020 and activity during the fiscal year then ended are presented below:

(in millions) Weighted

Non-vested at July 1, 2019 8.4 $ 1.39

Forfeited ( 7.9 ) 3.72

Non-vested at June 30, 2020 0.5 $ 3.55

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During the fiscal year ended June 30, 2020, the incremental stock based compensation expense resulting from the modification was offset by income from actual and expected forfeitures in the modified awards.

During fiscal 2019 , 6.9 million RSUs were granted under the Omnibus LTIP and 0.1 million RSUs were granted under the 2007 Stock Plan for Directors.

During fiscal 2018 , 3.7 million RSUs were granted under the Omnibus LTIP and 0.1 million RSUs were granted under the 2007 Stock Plan for Directors.

During fiscal 2020, 2019 and 2018, 6.2 million, 6.9 million and 3.7 million RSUs were granted under the Omnibus LTIP and 0.1 million, 0.1 million and 0.1 million RSUs were granted under the 2007 Stock Plan for Directors, respectively.

The Company’s outstanding RSUs as of June 30, 2020 and activity during the fiscal year then ended are presented below:

(in millions)

(in millions) Aggregate

Value Weighted

Outstanding at July 1, 2019 10.5

Settled ( 1.4 )

Cancelled ( 3.6 )

Outstanding at June 30, 2020 11.9

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The Company’s outstanding and non-vested RSUs as of June 30, 2020 and activity during the fiscal year then ended are presented below:

(in millions)

(in millions) Weighted

Outstanding and nonvested at July 1, 2019 10.2 $ 14.79

Granted 6.4 10.95

Vested ( 1.4 ) 21.41

Cancelled ( 3.6 ) 13.17

Outstanding and nonvested at June 30, 2020 11.6 $ 12.48

The total intrinsic value of RSUs vested and settled during fiscal 2020, 2019 and 2018 is $ 30.3 , $ 11.1 and $ 12.5 , respectively.

Restricted Stock

During fiscal 2020, 2.3 million restricted stock awards were granted under the Omnibus LTIP.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The Company’s outstanding Restricted Stock as of June 30, 2020 and activity during the fiscal year then ended are presented below:

(in millions) Aggregate

Value Weighted

Outstanding at July 1, 2019 —

Settled ( 0.9 )

Outstanding at June 30, 2020 1.4

Vested and expected to vest at June 30, 2020 1.3 $ — 1.88

The share-based compensation expense recorded in connection with the restricted stock was $ 4.6 during fiscal 2020.

The Company’s outstanding and non-vested restricted stock as of June 30, 2020 and activity during the fiscal year then ended are presented below:

(in millions) Weighted

Outstanding and nonvested at July 1, 2019 — $ —

Granted 2.3 5.08

Vested ( 0.9 ) 5.08

Outstanding and nonvested at June 30, 2020 1.4 $ 5.08

The total intrinsic value of Restricted Stock vested and settled during fiscal 2020 was $ 4.5 .

Phantom Units

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Becht’s increased and continuing responsibilities as interim CEO of the Company.

At the time of grant, the phantom units had a value of $ 8.1 based on the closing price of the Company’s Class A

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Common Stock on July 21, 2015.

At the time of grant, the phantom units had a value of $ 8.1 based on the closing price of the Company’s Class A Common Stock on July 21, 2015.

Each phantom unit has an economic value equivalent to one share of the Company’s Class A Common Stock settleable in cash or shares at the election of Mr.

3 unchanged sentences

Becht elected to receive payment of the phantom units in the form of shares of Class A Common Stock and the phantom units were valued at $ 8.0 .

The phantom units will be settled in shares of Class A Common Stock on the fifth anniversary of the grant date or, in the event of a change of control or Mr.

Becht’s death or disability, immediately.

The phantom units vest on the fifth anniversary of the grant date and, in the event of a change in control or Mr.

Becht’s death or disability, the phantom units shall vest immediately.

The Company recognized $ 8.0 of share-based compensation expense during the fiscal year ended June 30, 2016 as there are no service or performance conditions with respect to the phantom units.

2 unchanged sentences

Net loss attributable to Coty Inc.

per common share (“basic EPS”) is computed by dividing net loss attributable to Coty Inc.

by the weighted-average number of common shares outstanding during the period.

common stockholders per common share (“basic EPS”) is computed by dividing net loss attributable to Coty Inc.

less any dividends on Convertible Series B Preferred Stock by the weighted-average number of common shares outstanding during the period.

Net loss attributable to Coty Inc.

per common share assuming dilution (“diluted EPS”) is computed by using the basic EPS weighted-average number of common shares and the effect of potentially dilutive securities outstanding during the period.

Potentially dilutive securities consist of nonqualified stock options, Series A and Series A-1 Preferred Stock and RSUs as of June 30, 2019 and 2018 .

The dilutive effect of these outstanding instruments is reflected in diluted EPS by application of the treasury stock method.

common stockholders per common share assuming dilution (“diluted EPS”) is computed by adjusting the numerator used in basic EPS to add back the dividends applicable to the Convertible Series B Preferred Stock and using the basic EPS weighted-average number of common shares and the effect of potentially dilutive securities outstanding during the period as the denominator.

Potentially dilutive securities consist of non-qualified stock options, Series A and Series A-1 Preferred Stock, RSUs, unvested restricted stock awards and potential shares resulting from the conversion of the Convertible Series B Preferred Stock as of June 30, 2020, 2019 and 2018.

The dilutive effect of the outstanding instruments, excluding the Convertible Series B Preferred Stock is reflected in diluted EPS by application of the treasury stock method.

The dilutive effect of the Convertible Series B Preferred Stock is reflected in diluted EPS by application of the if-converted method.

Net loss attributable to Coty Inc.

is adjusted through the application of the two-class method of income per share to reflect a portion of the periodic adjustment of the redemption value in excess of fair value of the redeemable noncontrolling interests.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

There is no excess of redemption value over fair value of the redeemable noncontrolling interests in fiscal 2020, 2019 and 2018.

2 unchanged sentences

Year Ended June 30,

Net loss attributable to Coty Inc.

2020 2019 2018

Amounts attributable to Coty Inc.:

Net loss from continuing operations $ ( 1,093.9 ) $ ( 3,905.2 ) $ ( 403.3 )

Convertible Series B Preferred Stock dividends

Net loss from continuing operations attributable to common stockholders ( 1,100.4 ) ( 3,905.2 ) ( 403.3 )

Net income from discontinued operations, net of tax 87.2 121.0 234.5

Net (loss) income attributable to common stockholders $ ( 1,013.2 ) $ ( 3,784.2 ) $ ( 168.8 )

Weighted-average common shares outstanding:

Weighted-average common shares outstanding—Basic 759.1 751.2 749.7

1 unchanged sentence

Effect of restricted stock and RSUs (b)

Effect of Convertible Series B Preferred Stock (c)

Weighted-average common shares outstanding—Diluted 759.1 751.2 749.7

Net loss attributable to Coty Inc.

per common share:

As of June 30, 2019 , 2018 and 2017 , 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.

As of June 30, 2019 , 2018 and 2017 , RSUs were excluded in the computation of diluted loss per share due to the net loss incurred during the period.

LEGAL CONTINGENCIES

(Loss) Earnings per common share

(Loss) from continued operations per common share - basic $ ( 1.45 ) $ ( 5.20 ) $ ( 0.54 )

(Loss) from continued operations per common share - diluted $ ( 1.45 ) $ ( 5.20 ) $ ( 0.54 )

Earnings from discontinued operations - basic $ 0.12 $ 0.16 $ 0.31

Earnings from discontinued operations - diluted $ 0.12 $ 0.16 $ 0.31

(Loss) per common share - basic $ ( 1.33 ) $ ( 5.04 ) $ ( 0.23 )

(Loss) per common share - diluted $ ( 1.33 ) $ ( 5.04 ) $ ( 0.23 )

(a) As of June 30, 2020, 2019 and 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) As of June 30, 2020, 2019 and 2018, RSUs were excluded in the computation of diluted loss per share due to the net loss incurred during the period.

(c) As of June 30, 2020, Convertible Series B Preferred Stock were excluded in the computation of diluted loss per share due to the net loss incurred during the period.

LEGAL AND OTHER CONTINGENCIES

Legal Matters

1 unchanged sentence

While the Company cannot predict any final outcomes relating thereto, management believes that the outcome of current Legal Proceedings will not have a material effect upon its business, prospects, financial condition, results of operations, cash flows or the trading price of the Company’s securities.

However, management’s assessment of the Company’s current Legal Proceedings is ongoing, and could change in light of the discovery of additional facts with respect to Legal Proceedings not presently known to the Company, further legal analysis, or determinations by judges, arbitrators, juries or other finders of fact or deciders of law which are not in accord with management’s evaluation of the probable liability or outcome of such Legal Proceedings.

From time to time, the Company is in discussions with regulators, including discussions initiated by the Company, about actual or potential violations of law in order to remediate or mitigate associated legal or compliance risks and liabilities or penalties.

As the outcomes of such proceedings

& SUBSIDIARIES

1 unchanged sentence

($ in millions, except per share data)

are unpredictable, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, prospects, financial condition, results of operations, cash flows or the trading price of its securities.

judges, arbitrators, juries or other finders of fact or deciders of law which are not in accord with management’s evaluation of the probable liability or outcome of such Legal Proceedings.

As the outcomes of such proceedings are unpredictable, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, prospects, financial condition, results of operations, cash flows or the trading price of its securities.

Certain Litigation .

Two purported stockholder class action complaints concerning the Cottage Tender Offer and the Schedule 14D-9 were filed by putative stockholders against the Company and the directors of the Company in the U.S.

District Court for the District of Delaware, but have not yet been served.

In both complaints, the plaintiffs allege that the Company’s Schedule 14D-9 omits certain information, including, among other things, certain financial data and certain analyses underlying the opinion of Centerview Partners LLC.

Plaintiffs assert claims under the federal securities laws and seek, among other things, injunctive and/or monetary relief.

A third consolidated purported stockholder class action and derivative complaint concerning the Cottage Tender Offer and the Schedule 14D-9 is pending against the directors of the Company, JAB Holding Company, S.à.r.l., JAB Cosmetics B.V., and Cottage Holdco B.V.

A purported stockholder class action complaint concerning the tender offer by Cottage Holdco B.V.

(the “Cottage Tender Offer”) and the Schedule 14D-9, captioned Rumsey v.

Coty, Inc., et al., Case No.

1:19-cv-00650-LPS, was filed by a putative stockholder against the Company and certain current and former directors of the Company in the U.S.

District Court for the District of Delaware, but has not yet been served.

The plaintiff alleges that the Company’s Schedule 14D-9 omits certain information, including, among other things, certain financial data and certain analyses underlying the opinion of Centerview Partners LLC.

The plaintiff asserts claims under the federal securities laws and seeks, among other things, injunctive and/or monetary relief.

A second consolidated purported stockholder class action and derivative complaint concerning the Cottage Tender Offer and the Schedule 14D-9 is pending against certain current and former directors of the Company, JAB Holding Company, S.à.r.l., JAB Holdings B.V., JAB Cosmetics B.V., and Cottage Holdco B.V.

in the Court of Chancery of the State of Delaware.

The Company was named as a nominal defendant.

The case, which was filed on May 6, 2019, was captioned Massachusetts Laborers’ Pension Fund, on behalf of itself and all similarly situated holders of Coty Inc., v.

Peter Harf, Pierre Laubies, Sabine Chalmers, Joachim Faber, Olivier Goudet, Anna-Lena Kamenetzky, Erhard Schoewel, Robert Singer, Paul S.

Michaels, JAB Holding Company, S.à.r.l., JAB Cosmetics B.V., and Cottage Holdco B.V., Case No.

2019-0336-CB (“ Massachusetts Laborers ”).

On June 14, 2019, plaintiffs in the consolidated action filed a Verified Amended Class Action and Derivative Complaint (“Amended Complaint”), alleging that the directors and JAB Holding Company, S.à.r.l., JAB Cosmetics B.V., and Cottage Holdco B.V.

The case, which was filed on May 6, 2019, was captioned Massachusetts Laborers’ Pension Fund v.

Harf et.al., Case No.

2019-0336-AGB.

On June 14, 2019, plaintiffs in the consolidated action filed a Verified Amended Class Action and Derivative Complaint (“Amended Complaint”).

After defendants responded to the Amended Complaint, on October 21, 2019, plaintiffs filed a Verified Second Amended Class Action and Derivative Complaint (the “Second Amended Complaint”), alleging that the directors and JAB Holding Company, S.à.r.l., JAB Holdings B.V., JAB Cosmetics B.V., and Cottage Holdco B.V.

breached their fiduciary duties to the Company’s stockholders and breached the Stockholders Agreement.

The Amended Complaint sought, among other things, monetary relief.

The defendants responded to the Amended Complaint on August 22, 2019.

The Second Amended Complaint seeks, among other things, monetary relief.

On November 21, 2019, the defendants moved to dismiss certain claims asserted in the Second Amended Complaint, and certain of the director defendants also answered the complaint.

On May 7, 2020, plaintiffs stipulated to the dismissal without prejudice of JAB Holding Company, S.à.r.l.

from the action.

On August 17, 2020, the court denied the remaining motions to dismiss.

This case remains at an early stage.

Brazilian Tax Assessments

In connection with a local tax audit of one of the Company’s subsidiaries in Brazil, the Company was notified of tax assessments issued in March of 2018.

The assessments relate to local sales tax credits, which the Treasury Office of the State of Goiás considers improperly registered for 2016-2017 tax periods.

The Company is currently seeking a favorable administrative decision on the tax enforcement action filed by the Treasury Office of the State of Goiás.

The assessments relate to local sales tax credits, which the Treasury Office of the State of Goiás considers as improperly registered for 2016-2017 tax periods.

These tax assessments, including estimated interest and penalties, through June 30, 2020 amount to a total R$ 249.0 million (approximately $ 46.1 as of June 30, 2020).

Additionally, the Company received tax assessments related to tax years 2017-2019 during August 2020.

These additional tax assessments, including estimated interest and penalties, through June 30, 2020 amount to a total R$ 579.0 million (approximately $ 107.1 as of June 30, 2020).

The Company is seeking a favorable administrative decision on the tax enforcement actions filed by the Treasury Office of the State of Goiás.

The Company believes it has meritorious defenses and it has not recognized a loss for these assessments as the Company does not believe a loss is probable.

Other Commitments

At June 30, 2020, the aggregate future minimum purchase obligations which include commitments to purchase inventory and other services agreements, including amounts related to discontinued operations, were as follows:

Fiscal Year Ending June 30, Purchase Obligations

Total $ 376.5

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

RELATED PARTY TRANSACTIONS

Performance Guarantee

In connection with the sales of certain businesses, the Company has assigned its rights and obligations under a real estate lease to JAB Partners LLP .

The remaining term of this lease is approximately 11 years.

While the Company is no longer the primary obligor under this lease, the lessor has not completely released the Company from its obligation, and holds it secondarily liable in the event that the assignee defaults on the lease.

The maximum potential future payments that the Company could be required to make, if the assignee was to default as of June 30, 2020, would be approximately $ 5.6 .

The Company has assessed the probability of default by the assignee and has determined it to be remote.

Relationship with KKR

As noted previously, in fiscal 2020 KKR Aggregator purchased Series B Preferred Stock.

This preferred stock conveys to KKR Aggregator the right to designate two directors to the Company’s Board of Directors and voting rights on an as-converted basis.

Assuming full conversion of the preferred stock and no other changes to the Company’s capitalization, KKR Aggregator would be the second largest shareholder, with a 17 % stake.

In June of 2020, KKR Bidco and Coty entered into a separate definitive agreement regarding a strategic transaction (“Wella Transaction”) for the sale of the Company’s Professional and Retail Hair business.

KKR will own 60 % of this separately managed entity and Coty will own the remaining 40 %.

During fiscal 2020, fees of $ 25.5 were paid to KKR in connection with the initial and subsequent closings of the Series B Preferred Stock;

these fees reduced the carrying value of the stock.

The Company also entered into agreements with KKR for potential consulting and advisory services.

No fees were incurred under such agreements in fiscal 2020.

From time to time, certain funds held by KKR may hold the Company’s Notes.

These funds may receive principal and interest payments on the same terms as other investors in the Company’s Notes.

Consulting Services and Other Arrangements

The Company had engaged certain affiliates of JAB to provide us with marketing technology services on customary market terms.

As of June 30, 2020, these arrangements were no longer in effect.

In addition, our former subsidiary, Beamly, entered into service agreements with affiliates of JAB for the provision of digital media services on customary market terms.

Fees under each of these arrangements totaled less than $ 1.0 in fiscal 2020 and 2019, respectively.

Beatrice Ballini, a director, serves as a senior member of the Retail Practice and a leader of the Board and CEO Advisory Partners group at Russell Reynolds Associates.

From time to time, the Company has engaged Russell Reynolds Associates, a global leadership and search firm, for recruiting assistance.

The amounts of such services provided to the Company for fiscal 2020 and 2019 were $ 0.6 and $ 0.1 , respectively.

In connection with the appointment of Fiona Hughes as our Chief Marketing Officer, Consumer Beauty, the Company agreed in principle to a secondment arrangement with Jacobs Douwe Egberts B.V., an affiliate of JAB, for the reimbursement of certain employment-related expenses through a transition period that ended February 2020.

The amount of such reimbursement was approximately $ 0.6 for fiscal 2020.

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

SUBSEQUENT EVENTS

Quarterly Dividend

On August 28, 2019 , the Company announced a quarterly cash dividend of $ 0.125 per share on its Common Stock, restricted stock units (the “RSUs”) and phantom units.

The dividend will be payable on September 30, 2019 to holders of record of Common Stock on September 9, 2019.

The shareholders will have an option to elect to receive their dividend 50 % in cash and 50 % in Common Stock.

Turnaround Plan

As described in Note 6 — Restructuring Costs , the Company announced the Turnaround Plan on July 1, 2019.

As part of this initiative, the Company intends to incur cash costs of $ 600.0 , beginning in fiscal 2020 through fiscal 2023.

The estimate includes cash costs associated with restructuring, primarily related to employee termination benefits, as well as other business realignment costs, including costs associated with the consolidation of management headquarters and systems redesign to support changes in the Company’s reporting structure.

In addition, the Company will continue to incur cash costs of $ 160.0 related to restructuring and other business realignment costs connected to previously announced programs.

On August 27, 2019, the Company entered into a Contribution and Redemption Agreement to transfer all of its membership interest in Foundation, which holds the net assets of Younique, to an existing noncontrolling interest holder.

The closing of the transaction is subject to certain regulatory clearances and is expected to occur by the end of calendar year 2019.

On July 31, 2020, the Company and KKR Aggregator, completed the previously announced issuance and sale of 250,000 shares of the Company’s Convertible Series B Preferred Stock, for an aggregate purchase price of $ 250.0 , pursuant to the terms of the Investment Agreement, dated as of May 11, 2020 and as amended on June 1, 2020.

See Note 23—Equity and Convertible Preferred Stock for additional information on the Investment Agreement.

& SUBSIDIARIES

2 unchanged sentences

($ in millions, except per share data)

Valuation and Qualifying Accounts

Three Years Ended June 30,

Balance Received through Acquisition

Valuation and Qualifying Accounts (d)

Description Three Years Ended June 30,

Period Balance Received through Acquisition Charged to

Expenses Deductions Balance at

End of Period

Allowance for doubtful accounts:

Allowance for doubtful accounts and other customer deductions:

2020 $ 48.1 $ — $ 55.4 $ ( 12.4 ) (a)(b) $ 91.1

2019 81.8 — 11.6 ( 45.3 ) (a)(b) 48.1

2018 58.5 — 16.3 7.0 (a)(b) 81.8

Allowance for customer returns:

2020 $ 56.3 $ — $ 160.5 $ ( 149.0 ) $ 67.8

2019 81.1 — 161.2 ( 186.0 ) 56.3

2018 67.3 10.1 169.8 ( 166.1 ) 81.1

Deferred tax valuation allowances:

Includes reclassification between the allowance for doubtful accounts and gross trade receivables for presentation purposes.

Includes amounts written-off, net of recoveries and cash discounts.

Includes foreign currency translation adjustments unless otherwise noted.

2020 $ 67.7 $ — $ 11.4 (c) $ ( 24.2 ) $ 54.9

2019 104.6 — 4.6 (c) ( 41.5 ) 67.7

2018 60.3 — 54.7 (c) ( 10.4 ) 104.6

(a) Includes reclassification between the allowance for doubtful accounts and gross trade receivables for presentation purposes.

(b) Includes amounts written-off, net of recoveries and cash discounts.

(d) Includes amounts from continuing operations and held for sale.

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 9A. Controls and Procedures