EMPLOYEE BENEFIT PLANS

12 Months Ended

Jun. 30, 2020

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Savings and Retirement Plans - The Company’s Savings and Retirement Plans include a U.S. defined contribution plan for employees primarily in the U.S. and international savings plans for employees in certain other countries. In the U.S., hourly and salary based employees are eligible to participate in the plan after 90 days of service and the Company matches 100% of employee contributions up to 6.0% of employee compensation. In addition, the Company makes contributions to the plan on behalf of employees determined by their age and compensation.

During fiscal 2020, 2019 and 2018, the defined contribution expense for Coty Inc. for the U.S. 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. and international employees primarily in France, Germany and Switzerland. Participants in the U.S. defined benefit pension plan no longer accrue benefits. The Company measures defined benefit plan assets and obligations as of the date of the Company’s fiscal year-end. The Company’s defined benefit pension plans are funded primarily through contributions from the Company after consideration of recommendations from the pension plans’ independent actuaries and are funded at levels sufficient to comply with local requirements.

Settlements and Curtailments for Pension 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 non-U.S. pension plans. 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. 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 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

$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. postretirement healthcare plan during fiscal 2018, which significantly reduced the expected years of future service for employees participating in the plan. 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				Total
	U.S.				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
Plan participants’ contributions	—		—		6.1		7.0		0.3		0.2		6.4		7.2
Plan amendments	—		—		—		(10.3)		—		—		—		(10.3)
Benefits paid	(1.4)		(1.3)		(16.8)		(16.9)		(2.1)		(1.8)		(20.3)		(20.0)
New employees transfers in	—		—		18.7		16.2		—		—		18.7		16.2
Premiums paid	—		—		(2.3)		(2.5)		—		—		(2.3)		(2.5)
Pension curtailment	—		—		(11.2)		(5.4)		(0.8)		—		(12.0)		(5.4)
Pension settlement	—		—		(39.0)		(37.4)		—		—		(39.0)		(37.4)
Actuarial loss (gain)	1.6		0.8		(30.6)		69.9		(4.2)		4.1		(33.2)		74.8
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
Change in plan assets
Fair value of plan assets—July 1	$	—	$	—	$	268.5	$	261.8	$	0.4	$	0.4	$	268.9	$	262.2
Actual return on plan assets	—		—		3.4		3.5		—		—		3.4		3.5
Employer contributions	1.3		1.3		33.2		36.4		1.9		1.6		36.4		39.3
Plan participants’ contributions	—		—		6.1		7.0		0.3		0.2		6.4		7.2
Benefits paid	(1.3)		(1.3)		(16.5)		(16.9)		(2.1)		(1.8)		(19.9)		(20.0)
New employees transfers in	—		—		18.7		16.2		—		—		18.7		16.2
Premiums paid	—		—		(2.2)		(2.5)		—		—		(2.2)		(2.5)
Plan settlements	—		—		(39.0)		(37.4)		—		—		(39.0)		(37.4)
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, 2020 and 2019, are presented below (this table excludes discontinued operations):

	Pension Plans								Other Post-Employment Benefits				Total
	U.S.				International
	2020		2019		2020		2019		2020		2019		2020		2019
Noncurrent assets	$	—	$	—	$	1.5	$	1.5	$	—	$	—	$	1.5	$	1.5
Current liabilities	(1.3)		(1.4)		(6.9)		(0.8)		(3.0)		(2.5)		(11.2)		(4.7)
Noncurrent liabilities	(17.2)		(16.3)		(332.9)		(376.5)		(50.2)		(54.9)		(400.3)		(447.7)
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)

The accumulated benefit obligation for the U.S. defined benefit pension plans was $18.5 and $17.7 as of June 30, 2020 and 2019, respectively. The accumulated benefit obligation for international defined benefit pension plans was $712.1 and $733.7 as of June 30, 2020 and 2019, respectively.

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
	U.S.				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
Accumulated benefit obligation	18.5		17.7		694.9		716.3		18.5		17.7		712.1		733.7
Fair value of plan assets	—		—		254.4		248.2		—		—		261.0		254.9

Net Periodic Benefit Cost

The components of net periodic benefit cost for pension plans and other post-employment benefit plans recognized in the Consolidated Statements of Operations are presented below:

	Year Ended June 30,
	Pension Plans												Other Post- Employment Benefits
	U.S.						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
Expected return on plan assets	—		—		—		(8.4)		(8.2)		(7.5)		—		—		—		(8.4)		(8.2)		(7.5)
Amortization of prior service (credit) cost	—		—		—		(0.8)		0.2		0.2		(5.9)		(5.9)		(5.9)		(6.7)		(5.7)		(5.7)
Amortization of net (gain) loss	0.7		(0.7)		(0.7)		(0.1)		0.3		1.2		(0.1)		(0.1)		(0.1)		0.5		(0.5)		0.4
Settlements (gain) loss recognized	—		—		—		(0.2)		(0.8)		—		—		—		—		(0.2)		(0.8)		—
Curtailment (gain) loss recognized	—		—		—		(14.1)		(5.4)		0.1		(0.8)		—		(10.4)		(14.9)		(5.4)		(10.3)
Net periodic benefit cost	$	1.3	$	—	$	—	$	18.6	$	32.2	$	45.4	$	(4.0)	$	(2.7)	$	(13.0)	$	15.9	$	29.5	$	32.4

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
	U.S.				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)
Prior service credit (cost)	—		—		3.9		8.7		4.1		10.4		8.0		19.1
Total recognized in AOC(L)/I	$	(0.7)	$	0.2	$	1.1	$	(20.3)	$	8.3	$	10.0	$	8.7	$	(10.1)

Changes in plan assets and benefit obligations recognized in OCI/(L) during the fiscal year are presented below:

	Pension Plans								Other Post-Employment Benefits
	U.S.				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
Effect of exchange rates	—		—		0.2		(0.4)		—		—		0.2		(0.4)
Total recognized in OCI/(L)	$	(0.9)	$	(1.5)	$	21.5	$	(65.0)	$	(1.7)	$	(10.1)	$	18.9	$	(76.6)

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		Total
	U.S.		International
Prior service credit (cost)	$	—	$	0.6	$	3.3	$	3.9
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
	U.S.		International
	2020	2019	2020	2019	2020	2019
Discount rates	2.5%-2.8%	3.2%-3.6%	0.4%-6.7%	0.4%-8.4%	1.7%-2.8%	1.7%-3.5%
Future compensation growth rates	N/A	N/A	1.0%-5.8%	1.0%-5.8%	N/A	N/A

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						Other Post- Employment Benefits
	U.S.			International
	2020	2019	2018	2020	2019	2018	2020	2019	2018
Discount rates	3.2%-3.6%	4%	3.6%	0.4%-8.4%	0.6%-8.0%	0.4%-7.5%	1.7%-3.5%	2.3%-4.2%	1.9%-7.6%
Future compensation growth rates	N/A	N/A	N/A	1.0%-5.8%	1.5%-5.7%	1.5%-6.0%	N/A	N/A	N/A
Expected long-term rates of return on plan assets	N/A	N/A	N/A	1.4%-8.9%	2.0%-8.4%	1.8%-8.2%	N/A	N/A	N/A

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%	7.1%-8.0%	7.4%-8.5%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5%	5%	5%
Year that the rate reaches the ultimate trend rate	2026	2026	2026

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
Effect on total service cost and interest cost	$	6.1	$	(5.3)
Effect on post-employment benefit obligation	0.3		(0.3)

Pension Plan Investment Policy

The Company’s investment policies and strategies for plan assets are to achieve the greatest return consistent with the fiduciary character of the plan and to maintain a level of liquidity that is sufficient to meet the need for timely payment of benefits. The goals of the investment managers include minimizing risk and achieving growth in principal value so that the purchasing power of such value is maintained with respect to the rate of inflation.

The pension plan’s return on assets is based on management’s expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the assets in which the plan is invested, as well as current economic and market conditions.

The asset allocation decision includes consideration of future retirements, lump-sum elections, growth in the number of participants, the Company’s contributions and cash flow. These actual characteristics of the plan place certain demands upon the level, risk and required growth of trust assets. Actual asset allocation is regularly reviewed and periodically rebalanced to the strategic allocation when considered appropriate.

The target asset allocations for the Company’s pension plans as of June 30, 2020 and 2019, by asset category are presented below:

		% of Plan Assets at Year Ended
	Target	2020	2019
Equity securities	40%	35%	41%
Fixed income securities	50%	38%	42%
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, 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
Fixed income securities:
Corporate securities	58.6		57.9		—		—		—		—		58.6		57.9
Other:
Cash and cash equivalents	0.5		1.0		—		—				—		0.5		1.0
Insurance contracts and other	—		—		—		—		148.0		143.2		148.0		143.2
Total pension plan assets	$	126.6	$	125.7	$	—	$	—	$	148.0	$	143.2	$	274.6	$	268.9

The following is a description of the valuation methodologies used for plan assets measured at fair value:

Equity securities-The fair values reflect the closing price reported on a major market where the individual securities are traded. These investments are classified within Level 1 of the valuation hierarchy.

Corporate securities-The fair values are based on a compilation of primarily observable market information or a broker quote in a non-active market. These investments are classified within Level 1 of the valuation hierarchy.

Cash and cash equivalents-The carrying amount approximates fair value, primarily because of the short maturity of cash equivalent instruments. These investments are classified within Level 1 of the valuation hierarchy.

Insurance contracts and other- Includes contracts issued by insurance companies and other investments that are not publicly traded. These investments are generally classified as Level 3 as there are neither quoted prices nor other observable inputs for pricing. Insurance contracts are valued at cash surrender value, which approximates the contract fair value. Other Level 3 plan assets include real estate and other alternative investment funds requiring inputs that cannot be readily derived from observable market data due to the infrequency with which the underlying assets trade.

The Company sponsors a qualified defined benefit pension plan for all eligible Swiss employees. Retirement benefits are provided based on employees’ years of service and earnings, or in accordance with applicable employee regulations. Consistent with typical Swiss practice, the pension plan is funded through a guaranteed insurance contract with an insurance company (“IC”). The IC is responsible for the investment strategy of the insurance premiums that the Company submits and does not hold individual assets per participating employer. Assets are invested in accordance with the IC’s own strategies and risk assessments. Under the terms of the contract, the interest rate as well as the capital value is guaranteed for each participant, with the IC assuming any risk to the value of the underlying assets. The IC is a member of a security fund, whose purpose is to cover any shortfall in the event they are not able to fulfill its contractual agreements. The plan assets of the Swiss plan are included in the Level 3 valuation.

The Company also sponsors qualified defined benefit pension plans for certain eligible German employees. The Company’s German pension plans are partially funded with plan assets held in a Contractual Trust Arrangement, under which Company assets have been irrevocably transferred to a registered association for the exclusive purpose of securing and funding pension obligations in Germany. The association invests primarily in publicly tradable equity and fixed income securities, using a funding strategy that is reviewed on a regular basis.

Plan assets are also held in the Company’s other non-U.S. defined benefit pension plans. The other non-U.S. defined benefit pension plans provide benefits primarily based on earnings and years of service and are funded in compliance with local laws and practices. 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 2020 and 2019 are presented below:

	June 30, 2020		June 30, 2019
Insurance contracts:
Fair value—July 1	$	143.2	$	143.7
Return on plan assets	4.3		(0.2)
Purchases, sales and settlements, net	(2.8)		(2.5)
Effect of exchange rates	3.3		2.2
Fair value—June 30	$	148.0	$	143.2

Contributions

The Company plans to contribute approximately $1.3 to its remaining U.S. pension plan and expects to contribute approximately $33.6 and $2.9 to its international pension and other post-employment benefit plans, respectively, during fiscal 2021.

Estimated Future Benefit Payments

Expected benefit payments, which reflect expected future service, as appropriate, are presented below:

	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