Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Common Stock
Our common stock is listed on the New York Stock Exchange under the symbol “COTY.”
Stockholders of Record
As of June 30, 2020 there were 825 stockholders of record of our Class A Common Stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Dividend Policy
We began paying annual dividend on our common stock in fiscal 2011, and we began paying a quarterly dividend in fiscal 2017. On May 8, 2019, the Board approved a stock dividend reinvestment program giving stockholders the option to receive their full dividend in cash or to receive their dividend in 50% cash / 50% common stock. The election was made available to stockholders beginning with the dividend declared on May 8, 2019, and stockholders were able to make this election on a quarterly basis. As of May 11, 2020, our Board of Directors (“Board”) has suspended the payment of cash dividends (on common and preferred stock), to strengthen our cash and liquidity and in keeping with our 2018 Coty Credit Agreement, as amended. As we focus on preserving cash, we expect to suspend the payment of dividends through April 1, 2021 or until such later date that we reach a Net debt to Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of 4x. Any determination to pay dividends in the future will be at the discretion of our Board.
Dividends on the Convertible Series B Preferred Stock are payable in cash, by increasing the amount of accrued dividends with respect to a share of Convertible Series B Preferred Stock or any combination thereof, at the sole discretion of the Company.
Furthermore, we are required to comply with certain covenants contained within the agreements that govern our indebtedness, including our credit agreements and the indenture relating to our senior unsecured notes. These agreements contain customary representations and warranties as well as customary affirmative and negative covenants, including but not limited to, restrictions on incurrence of additional debt, liens, dividends and other restricted payments, asset sales, investments, mergers, acquisitions and affiliate transactions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Liquidity and Capital Resources—Debt” and Note 15—“Debt” in the notes to our Consolidated Financial Statements.
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Market Performance Graph
Comparison of 5 Year Cumulative Total Return (a)
Coty Inc., The S&P 500 Index, and Fiscal 2020 Peer Group (b)
(a) Total return assumes reinvestment of dividends at the closing price at the end of each quarter, since June 30, 2015.
(b) The Peer Group includes L'Oréal S.A., Inc., Estée Lauder Companies, Inc., Revlon, Inc., Shiseido Company, Limited and Inter Parfums Inc.
The Market Performance Graph above assumes a $100.00 investment on June 30, 2015, in Coty Inc.’s common stock, the S&P 500 Index and the Peer Group. The dollar amounts indicated in the graph above are as of the last trading day in the quarter. The returns of each company in the Peer Group have been weighted according to their respective stock market capitalization at the beginning of each measurement period for purposes of arriving at a Peer Group average.
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Equity Compensation Plan Information
Plan Category
(1)
Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
Weighted-average
exercise price
of outstanding
options, warrants
and rights
Number of securities
remaining available
for future issuance
under equity
compensation plans (e )
(excluding securities
reflected in column (1) )
Equity compensation plans approved by security holders
Options (a)
17,898,383 $ 12.93
Series A Preferred Stock (b)
495,074 21.52
Restricted Stock Units 11,970,824 N/A
Subtotal 30,364,281 — 44,278,711
Equity compensation plans not approved by security holders
Series A Preferred Stock (b)(c)
1,000,000 $ 22.39
Phantom Units (d)
349,432 N/A
Subtotal 1,349,432 0 —
Total 31,713,713 44,278,711
N/A is not applicable
(a) For information about options, see Note 24, — Share-Based Compensation Plans in the notes to our Consolidated Financial Statements.
(b) Upon vesting of the Series A Preferred Stock, the recipient receives, in cash or shares, at our sole election, the fair market value of our Class A Common Stock on the vest date of the Series A Preferred Stock less the sum of the fair market value of our Class A Common Stock on the original issue date of the Series A Preferred Stock and a hurdle price specified in the recipient’s subscription agreement. As such, the benefit provided under the Series A Preferred Stock will always be based solely on the increase in value of our Class A Common Stock after the date of grant and the Series A Preferred Stock will not have any value to the participant until the value of our Class A Common Stock exceeds the value of such shares on the date of grant plus the specified hurdle.
(c) On March 27, 2017, the Board approved an award of 1,000,000 shares of Series A Preferred Stock, par value $0.01 per share, to Lambertus J.H. Becht in his capacity as a non-employee director to compensate him for services performed in connection with closing the P&G Beauty Business transaction, aiding with the transition of the new chief executive officer into his role and integrating the P&G Beauty Business.
(d) On December 1, 2014, the Board granted Lambertus J.H. Becht an award of 49,432 phantom units (the “December Grant”). On July 21, 2015, the Board granted to Mr. Becht an award of 300,000 phantom units (the “July Grant”). Both the December Grant and July Grant to Mr. Becht were outside of the Company’s Equity and Long-Term Incentive Plan. At the time of December Grant, the phantom units had a value of $1,000,009 based on the closing price of the Company’s Class A Common Stock on December 1, 2014, and at the time of the July Grant, the phantom units had a value of approximately $8,106,000 based on the closing price of the 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. 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. Within 30 days of the grant date, Mr. Becht had the ability to elect whether to receive payment in respect of the phantom units in cash or shares of Class A Common Stock. Mr. Becht elected to receive payment in respect of the December Grant and the July Grant in shares of Class A Common Stock.
(e) Reflects number of securities remaining available for future issuance under equity compensation plans, excluding share reserves related to terminated equity plans.
Issuer Purchases of Equity Securities
453,488 shares of Class A Common Stock were repurchased during the fiscal year ende d June 30, 2020.
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Item 6. Selected Financial Data.
(in millions, except per share data) Year Ended June 30,
2020 (a)
2019 (c)(g)
2018 (d)(h)
2017 (e)(h)(i)
2016 (f)(h)(i)
Condensed Consolidated Statements of Operations Data:
Net revenues $ 4,717.8 $ 6,287.9 $ 6,841.8 $ 7,650.3 $ 4,349.1
Gross profit 2,726.6 3,789.4 4,123.6 4,622.0 2,603.1
Restructuring costs 130.2 34.2 134.9 374.8 86.9
Acquisition- and divestiture-related costs 157.3 — 64.2 355.4 174.0
Asset impairment charges 434.0 3,729.0 — — 5.5
Operating (loss) income (1,236.5) (3,688.4) (155.5) (420.9) 254.2
Interest expense, net 242.7 225.2 200.6 218.6 81.9
(Loss) income before income taxes from continuing operations (1,467.6) (3,945.4) (394.5) (658.0) 138.8
(Benefit) provision for income taxes (377.7) (54.8) (32.2) (259.5) (40.4)
Net (loss) income from continuing operations (1,089.9) (3,890.6) (362.3) (398.5) 179.2
Net income from discontinued operations 87.2 121.0 234.5 — —
Net (loss) income (1,002.7) (3,769.6) (127.8) (398.5) 179.2
Net (loss) income attributable to Coty Inc. for common stockholders $ (1,006.7) $ (3,784.2) $ (168.8) $ (422.2) $ 156.9
Amounts attributable to Coty Inc.:
(Loss) income from continuing operations attributable to Coty Inc. common stockholders (1,100.4) (3,905.2) (403.3) (398.5) 179.2
Net (loss) income attributable to Coty Inc. common stockholders $ (1,013.2) $ (3,784.2) $ (168.8) $ (398.5) $ 179.2
Per Share Data:
Net (loss) income attributable to Coty Inc. per common share:
Basic earnings (loss) from continuing operations $ (1.45) $ (5.20) $ (0.54)
Basic earnings (loss) for Coty Inc. $ (1.33) $ (5.04) $ (0.23) $ (0.66) $ 0.45
Diluted earnings (loss) from continuing operations $ (1.45) $ (5.20) $ (0.54)
Diluted earnings (loss for Coty Inc. $ (1.33) $ (5.04) $ (0.23) $ (0.66) $ 0.44
Weighted-average common shares
Basic 759.1 751.2 749.7 642.8 345.5
Diluted 759.1 751.2 749.7 642.8 354.2
Dividends declared per common share $ 0.38 $ 0.50 $ 0.50 $ 0.65 $ 0.25
(in millions) Year Ended June 30,
2020 (a)
2019 (c)
2018 (d)
2017 (e)
2016 (f)
Consolidated Cash Flows Data:
Net cash (used in) provided by operating activities $ (50.9) $ 639.6 $ 413.7 $ 757.5 $ 501.4
Net cash (used in) investing activities (833.4) (454.0) (687.6) (1,163.6) (1,059.2)
Net cash (used in) provided by financing activities 877.3 (160.3) 69.3 595.2 592.6
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(in millions) As of June 30,
2020 (a)(b)
2019 (c)
2018 (d)
2017 (e)
2016 (f)
Consolidated Balance Sheets Data:
Cash and cash equivalents $ 308.3 $ 340.4 $ 331.6 $ 535.4 $ 372.4
Total assets (g)(j)
16,728.8 17,710.0 22,630.2 22,548.2 7,035.6
Total debt, net of discount 8,147.3 7,735.0 7,610.5 7,205.0 4,162.8
Total Coty Inc. stockholders’ equity 3,004.6 4,586.9 8,849.7 9,314.7 360.2
(a) Included in fiscal 2020 are the financial impacts of the divestiture of Younique LLC on September 16, 2019, and the King Kylie transaction on January 6, 2020.
(b) In fiscal 2020, we adopted ASU 2016-02 , Leases (Topic 842) which requires lease assets and liabilities to be recorded on the balance sheet.
(c) In fiscal 2019, we adopted, on a modified retrospective basis as of July 1, 2018, authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for ASC 606, Revenue from Contracts with Customers and ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory .
(d) Included in fiscal 2018 are the financial impacts of the acquisition of the Burberry Beauty Business as of October 2, 2017.
(e) Included in fiscal 2017 are the financial impacts of the acquisitions of the P&G Beauty Business as of October 1, 2016, ghd as of November 21, 2016 and Younique as of February 1, 2017.
(f) Included in fiscal 2016 are the financial impacts of the Hypermarcas Brands as of February 1, 2016.
(g) In fiscal 2017, we adopted authoritative guidance issued by the FASB requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. Prior to the adoption of this guidance, debt issuance costs were presented within total assets in the Consolidated Balance Sheets. Total assets for all periods presented in the table above have been conformed to the current balance sheet presentation.
(h) In fiscal 2019, we adopted authoritative guidance issued by the FASB requiring employers to report the service cost component of net periodic benefit cost in the same line item or items as other compensation costs arising from services rendered by the underlying employees during the period. The other components of net periodic benefit cost are required to be reported separately and outside of operating income. In addition, only the service cost component would be eligible for capitalization in assets. The impacts of the adoption of this standard were retrospectively applied to fiscal years 2018 and 2017 presented in the table above.
(i) For fiscal years 2017 and 2016, the results were not recast to show discontinued operations. The P&G Beauty Business acquisition and the ghd acquisition were made during fiscal year 2017 and were mainly included in the Professional Beauty segment, which contributed net revenues of $1,395.5 and $250.0 for fiscal 2017 and 2016, respectively. Due to the purchase accounting adjustments for the acquisition for the P&G business, the Company concluded through a cost/benefit analysis that it was impractical to recast the discontinued operations impact for these two fiscal years due to the complexities of the recast.
(j) Due to the acquisition and purchase accounting adjustments for the acquisition of the P&G business, the Company concluded through a cost/benefit analysis that it was impractical to recast the assets held for sale impact for the fiscal years 2018, 2017, and 2016, due to the complexities of the recast.