DISCONTINUED OPERATIONS

3 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

On June 1, 2020, the Company entered into a definitive agreement with Rainbow UK Bidco Limited (“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 second quarter 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 Business 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 Condensed Consolidated Balance Sheets. The Wella 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.


	Three Months Ended September 30,
	2020		2019
Net revenues	$	566.4	$	531.6
Cost of sales	181.0		176.5
Gross profit	385.4		$	355.1
Selling, general and administrative expenses	240.0		265.9
Amortization expense	—		26.0
Restructuring costs	—		1.2



Operating income	145.4		62.0
Interest expense, net (a)	11.8		14.3
Other (income) expense, net	0.1		(0.1)
Income from discontinued operations before income taxes	133.5		47.8
Income tax on discontinued operations	28.8		8.3
Net income from discontinued operations	$	104.7	$	39.5

(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 through March 31, 2021 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:


	Three Months Ended September 30,
	2020		2019
NON-CASH OPERATING ITEMS
Depreciation and amortization	$	—	$	36.3

CASH FLOW FROM INVESTING ACTIVITIES
Capital Expenditures	$	4.7	$	7.9

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.


	September 30, 2020(a)		June 30, 2020(a)
ASSETS


Trade receivables	$	239.3	$	168.0
Inventories	252.8		269.2
Prepaid expenses and other current assets	138.1		134.9


Property and equipment, net	246.1		241.3
Goodwill	900.4		874.8
Other intangible assets, net	2,801.1		2,770.4
Operating lease right of use asset	115.4		73.4
Deferred income taxes	21.8		25.5
Other noncurrent assets	48.4		55.6

TOTAL ASSETS HELD FOR SALE	$	4,763.4	$	4,613.1

LIABILITIES
Accounts payable	$	111.9	$	128.3
Accrued expenses and other current liabilities	233.4		236.4
Current operating lease liabilities	24.0		17.2
Income and other taxes payable	17.5		15.8
Long-term operating lease liabilities	92.9		65.9

Noncurrent deferred tax liabilities	322.3		324.8
Pension and other post-employment benefits	154.0		140.8
Other noncurrent liabilities	29.1		27.5

TOTAL LIABILITIES HELD FOR SALE	$	985.1	$	956.7

(a) The Company expects that the transaction will close in the second quarter of fiscal 2021. As such, for the periods ending September 30, 2020 and 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.