SUBSEQUENT EVENTS

P&G Beauty Brands Acquisition

On October 1, 2016, pursuant to the Transaction Agreement, the Company completed the Transactions and acquired the P&G Beauty Brands in order to further strengthen the Company’s position in the global beauty industry. The preliminary 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 common stock, together with cash in lieu of fractional shares. Immediately after consummation of the Merger, approximately 54% of the fully-diluted shares of the Company’s common stock was held by pre-Merger holders of Galleria common stock, and approximately 46% of the fully-diluted shares of the Company’s common stock was held by pre-Merger holders of the Company’s common stock.

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 the assets and liabilities assumed in the Transactions. 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 and 2018. 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 of the P&G Beauty Brands as of the October 1, 2016 acquisition date:



	Estimated fair value			Estimated useful life (in years)
Net working capital	$	1,118.8
Property, plant and equipment	838.8			3 - 45 years
Goodwill	4,798.3			Indefinite
Indefinite-lived intangible assets	2,180.0			Indefinite
Finite-lived intangible assets	4,468.2			2 - 30 years
Net other assets / (liabilities)	(347.4		)
Deferred tax liability, net	(1,486.3		)
Total purchase price	$	11,570.4

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 Transactions. The assignment of goodwill to the Company’s reportable segments has not yet been completed. Goodwill is not expected to be deductible for tax purposes.

The Company recognized acquisition-related costs of $79.4 and $15.1 during the three months ended September 30, 2016 and 2015, respectively which are included in Acquisition-related costs in the Consolidated Statements of Operations.

P&G Beauty Brands acquisition tax related impacts

As a result of the Transactions, the Company expects to realize a tax benefit as a result of releasing valuation allowances related to ongoing operating losses in the U.S. The amount of this benefit was $111.2 as of June 30, 2016.

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 Brands, as though the companies had been combined on July 1, 2015. 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 includes the non-recurring acquisition-related costs, amortization of the inventory step-up and one-time tax expenses. 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, 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 three months ended September 30, 2016 and 2015 are as follows:



	Three Months Ended September 30,
	2016			2015
Pro forma Net revenues	$	2,111.2		$	2,185.3
Pro forma Net (loss) income	(185.9		)	66.2
Pro forma Net (loss) income attributable to Coty Inc.	(195.7		)	58.8
Pro forma Net (loss) income attributable to Coty Inc. per common share
Basic	$	(0.26	)	$	0.08
Diluted	$	(0.26	)	$	0.08

Galleria Credit Agreement

At the closing of the Transactions, the Company assumed the debt facilities available under the Galleria Credit Agreement (the “Galleria Credit Agreement”) which was entered into by Galleria on January 26, 2016. The Galleria Credit Agreement provides for the Galleria Senior Secured Credit Facilities comprised of (i) a $2,000.0 five year term loan A facility (“Galleria Term Loan A Facility”), (ii) a $1,000.0 seven year term loan B facility (“Galleria Term Loan B Facility”) and (iii) a $1,500.0 five year revolving credit facility (“Galleria Revolving Facility”). The Galleria Term Loan B Facility was issued at a 0.50% discount. At the closing of the Transactions, the Company assumed $1,941.8 of aggregate debt outstanding consisting of $944.3 Galleria Term Loan A Facility, $995.0 Galleria Term Loan B Facility, net of a discount and $0.0 Galleria Revolving Facility, as well as $2.5 in assumed fees payable. At the closing of the Transactions, the remaining loan commitments for the Galleria Term Loan A Facility expired.

The Galleria Credit Facility is guaranteed by Coty Inc.’s wholly-owned domestic subsidiaries and secured by a first priority lien on substantially all of the assets of Coty Inc. and its wholly-owned domestic subsidiaries, in each case subject to certain carve outs and exceptions.

The Company is required to comply with certain affirmative and negative covenants contained within the Galleria Credit Agreement. The Galleria Credit Agreement includes a financial covenant that requires the Company to maintain a total net leverage ratio, as defined therein, equal to or less than 5.50 to 1.00 for each fiscal quarter through December 31, 2016, subject to certain agreed step-downs thereafter. In the four fiscal quarters following the closing of any material acquisition (as defined in the Galleria Credit Agreement), 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 described in the prior sentence). Immediately after any such four fiscal quarter period, there shall be at least two consecutive fiscal quarters during which the Company's 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.

Incremental Assumption Agreement and Refinancing Amendment to Credit Agreement

On October 28, 2016, the Company entered into an Incremental Assumption Agreement and Refinancing Amendment (the “Incremental Agreement”), with Coty B.V., a subsidiary of the Company formed under the laws of the Netherlands (the “Dutch Borrower”), the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, which amended the Coty Credit Agreement.

The Incremental Agreement provides for:


•	an additional Term Loan A Facility in aggregate principal amount of $975.0 in commitments (the “Incremental Term A Facility”);


•	an additional Term Loan B Facility in aggregate principal amount of $100.0 in commitments (the “Incremental Term B Facility”);


•	refinancing of the previously existing term B facilities consisting of:


◦	a refinancing term B USD facility in an aggregate principal amount of in the aggregate principal amount of $497.5 (the “Refinancing Term B USD Facility”);


◦	a refinancing term B-1 EUR facility in an aggregate principal amount of €661.7 million(the “Refinancing Term B-1 EUR Facility”);


◦	a refinancing term B-2 EUR facility in an aggregate principal amount of €324.2 million; (the Refinancing Term B-2 Facility” and together with the Refinancing Term B USD Facility and the Refinancing Term B-1 EUR Facility, the “Refinancing Facilities”).

The loans made under the Incremental Term A Facility have terms that are substantially identical to the existing Term Loan A Facility under the Credit Agreement except that the loans will mature on the date that is five years after October 28, 2016.

The loans under the Incremental Term B Facility and the Refinancing Facilities have substantially identical terms as the term B loans existing under the Coty Credit Agreement prior to effectiveness of the Incremental Agreement, except that, among other things: (i) the interest rate will be LIBOR plus an applicable margin of 2.50% with respect to the Refinancing Term B USD Facility and the Incremental Term B Facility and (ii) the LIBOR floor was reduced to 0.00%.

The proceeds of the Incremental Term A Facility and Incremental Term B Facility will be used by the Company for general corporate purposes.

Acquisition of ghd

On October 17, 2016, the Company entered into a share purchase agreement (the “SPA”) to acquire ghd (“ghd”) which stands for “Good Hair Day”, a premium brand in high-end hair styling appliances for approximately ₤420.0 million (approximately $510.0), subject to certain adjustments, in cash. The ghd acquisition is expected to further strengthen the Company’s professional hair category. In accordance with the terms of the SPA, at closing, Coty will acquire all of the issued shares in Lion/Gloria TopCo Limited, a private limited company organized under the laws of Jersey, which includes the net assets of ghd. The acquisition is expected to be funded with a combination of cash on hand and borrowings under available debt facilities. The closing of the transaction is subject to certain regulatory clearances and is expected to occur by the end of calendar year 2016.

U.S. Del Laboratories, Inc. Pension Plan Settlement

The Company transferred the remainder of its pension obligation related to the U.S. Del Laboratories, Inc. pension plan to a third-party insurance provider by purchasing annuity contracts in October 2016, contributing approximately $8.0 to effectuate the remainder of the U.S. Del Laboratories, Inc. pension plan settlement. The Company expects the termination of the plan will be completed during fiscal 2017 after paying the remaining administrative costs of approximately $1.0.