BUSINESS COMBINATIONS

The Company completed one material acquisition during fiscal 2016:



Acquired entity	Date acquired	Purchase Price	Segment
Beauty Business acquired from Hypermarcas S.A. (“Brazil Acquisition”)	February 1, 2016	$901.9	Brazil Acquisition

Brazil Acquisition

On February 1, 2016, the Company completed the acquisition of 100% of the net assets of the personal care and beauty business of Hypermarcas S.A. (the “Brazil Acquisition”) pursuant to the Share Purchase Agreement in order to further strengthen its position in the Brazilian beauty and personal care market. The total consideration was R$3,599.5 million, the equivalent of $901.9 and was paid in cash during fiscal 2016.

The Company estimated the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information currently available. The Company is still evaluating the fair value of certain intangible assets and finalizing the accounting for income taxes. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period in fiscal 2017. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized.

The following table summarizes the allocation of the purchase price to the net assets of the Brazil Acquisition as of February 1, 2016 (the acquisition date) including the impact of measurement period adjustments through the end of fiscal 2016:



	Estimated fair value as previously reported ^(a)			Measurement period adjustments ^(b)			Estimated fair value as adjusted			Estimated useful life (in years)
Cash and cash equivalents	$	7.3		$	3.8		$	11.1
Inventories	50.2			(4.6		)	45.6
Property, plant and equipment	96.7			(1.3		)	95.4			2 - 40
Goodwill	496.8			56.9			553.7			Indefinite
Trademarks - indefinite	157.1			(10.0		)	147.1			Indefinite
Trademarks - finite	10.0			0.3			10.3			5 - 15
Customer relationships	108.2			(63.6		)	44.6			13 - 28
Product formulations	11.8			1.0			12.8			3
Other net working capital	4.7			(4.0		)	0.7
Net other assets	2.3			(0.2		)	2.1
Deferred tax liability, net	(46.1		)	24.6			(21.5		)
Total purchase price	$	899.0		$	2.9		$	901.9

^(a)As previously reported in the Company’s Form 10-Q for the quarter ended March 31, 2016.

^(b)The measurement period adjustments principally relate to the final net working capital adjustments and changes in the estimated fair values of certain assets and liabilities, primarily related to intangible assets and deferred income taxes as a result of new information on facts and circumstances that existed at the time of acquisition.

Goodwill is not initially deductible for tax purposes. However, the Company is in the process of complying with local tax regulation which will allow a portion of the goodwill to become tax deductible. The Company expects to complete this process within fiscal 2017.

The goodwill is attributable to expected synergies resulting from market expansion for the Company’s existing and future products and avoidance of start-up capital expenditures for manufacturing facilities in Brazil. Goodwill of $241.3, $132.8, $102.2 and $77.4 is allocated to the Brazil Acquisition, Fragrances, Color Cosmetics, and Skin & Body Care segments, respectively. The allocation of goodwill to Fragrances, Color Cosmetics, and Skin & Body Care was based on the relative fair values of synergies of selling the Company’s existing brands through the acquired entity as well as the reduction in corporate and regional overhead allocated to these segments due to the addition of the Brazil Acquisition segment.

For fiscal 2016, Net revenues and Net loss of the Brazil Acquisition included in the Company’s Consolidated Statements of Operations from the date of acquisition were $95.5 and $(1.0), respectively.

The Company recognized acquisition-related costs associated with the Brazil Acquisition of $4.8 during fiscal 2016 which are included in Acquisition-related costs in the Consolidated Statements of Operations.

Unaudited Pro Forma Information

The unaudited pro forma financial information in the table below summarizes the combined results of the Company and the Brazil Acquisition, as though the companies had been combined on July 1, 2014, and gives pro forma effect to events that are: (1) directly attributable to the transaction, (2) factually supportable, and (3) expected to have a continuing impact on the combined results. The pro forma adjustments include incremental amortization of intangible assets and increased depreciation of property, plant and equipment, based on preliminary values of each asset as well as costs related to financing the acquisition. The unaudited pro forma information also includes non-recurring acquisition-related costs and the amortization of the inventory step-up. Pro forma adjustments were tax-effected at the Company’s statutory rates. 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 acquisition had taken place on July 1, 2014 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 years ended 2016 and 2015 are as follows:



	Year Ended June 30,
	2016		2015
Pro forma Net revenues	$	4,531.8	$	4,748.1
Pro forma Net income	207.7		278.8
Pro forma Net income attributable to Coty Inc.	185.4		251.9
Pro forma Net income attributable to Coty Inc. per common share
Basic	$	0.54	$	0.71
Diluted	$	0.52	$	0.69

The Company completed one acquisition during fiscal 2015:



Acquired entity	Date acquired	Purchase Price		Segment
Bourjois cosmetics brand ("Bourjois")	April 1, 2015	$	376.8	Color Cosmetics

Bourjois Acquisition

On April 1, 2015, the Company completed its purchase of 100% of the net assets of Bourjois from Chanel International B.V. (“CHANEL”) pursuant to the Stock Purchase Agreement, dated March 12, 2015, between the Company and CHANEL (the “Stock Purchase Agreement”), in order to further strengthen its position in the global color market.

The Company issued to its foreign subsidiaries 15.5 million shares of the Company’s Class A Common Stock for $376.8 in cash and subsequently exchanged these shares with CHANEL as consideration for Bourjois. The shares had a fair value of $376.8 based on the closing price of the Company’s Class A Common Stock on the New York Stock Exchange on April 1, 2015.

The business purpose of having the Company’s foreign subsidiaries (rather than the parent company) exchange shares with CHANEL was to acquire the respective Bourjois foreign entities based in France, the Netherlands, Switzerland, and the United Kingdom by the Company’s foreign entity organized in the same countries, wherever feasible, in order to make the post-acquisition integration of Bourjois’ foreign businesses and Coty’s foreign businesses as efficient as possible. None of the Bourjois entities acquired from CHANEL were organized or operated as a business in the United States, and thus, none of the shares issued to CHANEL were issued by a U.S. subsidiary. Under applicable tax principles, exchanges of shares between the Company and its affiliates do not result in a taxable gain or loss for the Company or its foreign subsidiaries.

The Company has finalized the valuation of assets acquired and liabilities assumed for the Bourjois acquisition. The Company did not recognize any measurement period adjustments during fiscal 2016 and the measurement period for the Bourjois acquisition is now closed.

The following table summarizes the consideration and the allocation of the purchase price to the net assets acquired in the Bourjois acquisition:



Consideration:
Fair Value of Coty Inc. Class A Stock	$	376.8
Purchase price	$	376.8

Recognized amounts of identifiable assets and liabilities assumed:



	Estimated fair value		Estimated useful life (in years)
Cash	$	12.3
Inventories	31.5
Property and equipment	9.0
Goodwill	194.8
Trademark	112.0		Indefinite
Customer relationships	66.0		13-14
Product formulations	1.1		3
Net working capital	10.7
Net other assets/(liabilities)	(3.9)
Deferred tax liability, net	(56.7)
Total identifiable net assets:	$	376.8

Goodwill is deductible for tax purposes and is attributable to expected synergies. Goodwill of $148.7, $11.1, and $35.0 is allocated to the Color Cosmetics, Skin & Body Care, and Fragrances segments, respectively.

For the year ended June 30, 2015, Net revenues and Net loss of Bourjois included in the Company’s Consolidated Statements of Operations from the date of acquisition were $46.1 and $(16.1), respectively.

The Company recorded $1.9 and $3.9 of Acquisition-related costs during fiscal 2016 and 2015, which were expensed as incurred and included in Acquisition-related costs in the Consolidated Statements of Operations.

Unaudited Pro Forma Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations of the Company and Bourjois, as though the companies had been combined on July 1, 2013, and gives effect to pro forma events that are: (1) directly attributable to the transaction, (2) factually supportable, and (3) expected to have a continuing impact on the combined results. The unaudited pro forma results include adjustments for non-recurring transaction costs (including distributor termination fees, transaction specific costs, and the amortization of the inventory step-up) and incremental intangible asset amortization to be incurred on a recurring basis, based on values of each identifiable intangible asset. Pro forma adjustments were tax-effected at the Company’s statutory rates. The pro forma Consolidated Statements of Operations is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the acquisition had taken place on July 1, 2013 or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings. The pro forma financial information for fiscal 2015 and 2014 are as follows:



	Year Ended June 30,
	2015		2014
Pro forma Net revenues	$	4,553.2	$	4,788.7
Pro forma Net income (loss)	275.3		(77.0)
Pro forma Net income (loss) attributable to Coty Inc.	248.4		(110.2)
Pro forma Net income (loss) attributable to Coty Inc. per common share
Basic	$	0.68	$	(0.28	)
Diluted	$	0.66	$	(0.28	)