EQUITY AND CONVERTIBLE PREFERRED STOCK

3 Months Ended

Sep. 30, 2021

Equity [Abstract]

EQUITY AND CONVERTIBLE PREFERRED STOCK

EQUITY AND CONVERTIBLE PREFERRED STOCK

Common Stock

As of September 30, 2021, the Company’s common stock consisted of Class A Common Stock with a par value of $0.01 per share. The holders of Class A Common Stock are entitled to one vote per share. As of September 30, 2021, total authorized shares of Class A Common Stock was 1,250.0 million and total outstanding shares of Class A Common Stock was 817.0 million.

As of September 30, 2021, the Company’s largest stockholder was Cottage Holdco B.V., which owned approximately 57% of Coty’s outstanding Class A Common Stock. Cottage Holdco B.V., a wholly-owned subsidiary of JAB Cosmetics B.V. (“JABC”), is indirectly controlled by Lucresca SE, Agnaten SE and JAB Holdings B.V. (“JAB”). During the three months ended September 30, 2021, JABC did not acquire any shares of Class A Common Stock.

Series A and A-1 Preferred Stock

As of September 30, 2021, total authorized shares of preferred stock are 20.0 million. There are two classes of Preferred Stock, Series A Preferred Stock and Series A-1 Preferred Stock, both with a par value of $0.01 per share.

As of September 30, 2021, there were 1.5 million shares of Series A and no shares of Series A-1 Preferred Stock authorized, issued and outstanding. Series A Preferred Stock and Series A-1 Preferred Stock are not entitled to receive any dividends and have no voting rights except as required by law.

As of September 30, 2021, the Company has $1.2 Series A Preferred Stock classified as a liability recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheet.

Convertible Series B Preferred Stock

On May 11, 2020, the Company entered into an Investment Agreement with KKR Aggregator, relating to the issuance and sale by the Company to KKR Aggregator of up to 1,000,000 shares of the Company’s new Convertible Series B Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), for an aggregate purchase price of up to $1,000.0, or $1,000 per share (the “Issuance”). The Issuance was proposed to be issued in two tranches: (i) an initial issuance of 750,000 shares of Series B Preferred Stock (the “Initial Issuance”) and (ii) a subsequent issuance of 250,000 shares of Series B Preferred Stock (the “Second Issuance”), which was subject to the execution and delivery of a definitive purchase agreement between the Company and KKR Aggregator or certain of its affiliates in respect of the Wella Business.

On May 26, 2020 (the “Closing Date”), the Company and KKR Aggregator completed the issuance and sale of 750,000 shares of Series B Preferred Stock for an aggregate purchase price of $750.0. On July 31, 2020, the Company completed the sale of 250,000 shares of the Company’s Series B Preferred Stock to KKR Aggregator for an aggregate purchase price of $250.0.

On November 16, 2020, KKR Aggregator and affiliated investment funds agreed to sell 146,057 shares of Series B Preferred Stock, to HFS Holdings S.à r.l, that is beneficially owned by Peter Harf, a director of the Company. The transaction, which was subject to customary closing conditions, closed on August 27, 2021.

On September 10, 2021, KKR Aggregator converted 285,576 shares of Series B Preferred Stock, and $26.4 of unpaid dividends into 50,000,088 shares of Class A common stock. Immediately after the conversion, KKR Aggregator completed the public secondary offering of 50,000,088 shares of Class A common stock. The Company did not receive any proceeds from the sale of the shares of Class A Common Stock by KKR Aggregator. As a result of the conversion, the Company measured the accrued dividends at fair value, which resulted in an increase of $6.7. Such adjustment is considered a deemed dividend for purposes of calculating basic and diluted EPS.

On September 30, 2021, the Company entered into a definitive agreement to sell a 9.4% stake in Wella to KKR Aggregator in exchange for the redemption of 290,465 shares of Series B Preferred Stock, and $22.5 of unpaid dividends (the "Exchange Agreement"). The transaction was completed on October 20, 2021. As a result of the Exchange Agreement, the Series B Preferred Stock, net of issuance costs, and related accrued dividends were reclassified from temporary equity to liability as Mandatorily redeemable Convertible Series B Preferred Stock, as of September 30, 2021. Upon reclassification, the Company measured the Series B Preferred Stock and accrued dividends at fair value, which resulted in an increase of $93.6. Such adjustment is considered a deemed dividend for purposes of calculating basic and diluted EPS. A key input in determining the fair value of the liability is based on the Company's share price as of September 30, 2021. As this liability is not actively traded, it is classified as Level 2 fair value measurements. See Note 8—Equity Investments for additional information.

On November 6, 2021, Coty entered into a definitive agreement to sell an additional approximate 4.7% stake in Wella to KKR Aggregator in exchange for the redemption of 154,683 shares of Series B Preferred Stock. The transaction is expected close on November 30, 2021. See Note 8—Equity Investments for additional information.

Cumulative preferred dividends accrue daily on the Series B Preferred Stock at a rate of 9.0% per year. On September 30, 2021, the Board of Directors declared a dividend on the Series B Preferred Stock of $22.7, of which $3.5 was paid. The Series B Preferred Stock had accrued unpaid dividends of $66.8 and $74.1 as of September 30, 2021 and June 30, 2021, respectively.

In October 2021, the Company paid the remaining accrued unpaid dividends on the Series B Preferred Stock, totaling $44.3.

Treasury Stock

Share Repurchase Program

Since February 2014, the Board has authorized the Company to repurchase its Class A Common Stock under approved repurchase programs. On February 3, 2016, the Board authorized the Company to repurchase up to $500.0 of its Class A Common Stock (the “Incremental Repurchase Program”). Repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its Class A Common Stock, and general market conditions. For the three months ended September 30, 2021, the Company did not repurchase any shares of its Class A Common Stock. As of September 30, 2021, the Company had authority for $396.8 remaining under the Incremental Repurchase Program.

Other Repurchases

There were no other stock repurchases during the three months ended September 30, 2021 and 2020.

Dividends

On April 29, 2020, the Board of Directors suspended the payment of dividends.

During fiscal 2020, prior to the Board’s decision to suspend the payment of dividends, the Company maintained a Stock Dividend Reinvestment Program and had registered a total of 19.3 million shares of Class A Common Stock for purchase under the program. All holders of records of Class A Common Stock had the opportunity to participate in the program; if a holder elected to participate in the program fifty percent (50%) of their cash dividends were reinvested in additional shares of Class A Common Stock.

The change in dividends accrued recorded to additional paid-in capital (“APIC”) in the Condensed Consolidated Balance Sheet as of September 30, 2021 was $0.5, which represent dividends no longer expected to vest as a result of forfeitures of

outstanding restricted stock units (“RSUs”). In addition to the activity noted above, the Company made a payment of $0.8 for the previously accrued dividends on RSUs that vested during the three months ended September 30, 2021.

Total accrued dividends on unvested RSUs and phantom units of $1.6 and $1.1 are included in Accrued expenses and other current liabilities and Other noncurrent liabilities, respectively, in the Condensed Consolidated Balance Sheet as of September 30, 2021.

Accumulated Other Comprehensive Income (Loss)

			Foreign Currency Translation Adjustments
	(Loss) gain on Cash Flow Hedges		(Loss) gain on Net Investment Hedge		Other Foreign Currency Translation Adjustments		Pension and Other Post-Employment Benefit Plans (a)		Total
Balance—July 1, 2021	$	(15.5)	$	(32.2)	$	(259.3)	$	(14.9)	$	(321.9)
Other comprehensive income (loss) before reclassifications	0.6		16.7		(159.6)		—		(142.3)
Net amounts reclassified from AOCI/(L)	3.8		—		—		0.5		4.3
Net current-period other comprehensive income (loss)	4.4		16.7		(159.6)		0.5		(138.0)
Balance—September 30, 2021	$	(11.1)	$	(15.5)	$	(418.9)	$	(14.4)	$	(459.9)

(a) For the three months ended September 30, 2021, net amounts reclassified from AOCI/(L) related to pensions and other post-employment benefit plans included amortization of prior service credits and actuarial loss of $0.5, net of tax of nil.

			Foreign Currency Translation Adjustments
	Loss on Cash Flow Hedges		Gain (loss) on Net Investment Hedge		Other Foreign Currency Translation Adjustments		Pension and Other Post-Employment Benefit Plans		Total
Balance—July 1, 2020	$	(43.0)	$	261.9	$	(683.8)	$	8.7	$	(456.2)
Other comprehensive (loss) income before reclassifications	(1.0)		(210.7)		200.3		—		(11.4)
Net amounts reclassified from AOCI/(L)	6.7		—		—		(1.2)		5.5
Net current-period other comprehensive income (loss)	5.7		(210.7)		200.3		(1.2)		(5.9)
Balance—September 30, 2020	$	(37.3)	$	51.2	$	(483.5)	$	7.5	$	(462.1)