EQUITY INVESTMENTS (Tables)

3 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Equity investments

The Company's equity investments, classified as Equity investments on the Condensed Consolidated Balance Sheets are represented by the following:

	September 30, 2021		June 30, 2021
Equity method investments:
KKW Holdings (a)	$	15.6	$	16.2
Equity investments at fair value:
Wella (b)	1,650.0		1,260.0
Total equity investments	$	1,665.6	$	1,276.2

(a)On January 4, 2021, the Company completed its purchase of 20% of the outstanding equity of KKW Holdings. The Company accounts for this minority investment under the equity method, given it has the ability to exercise significant influence over, but not control, the investee. The carrying value of the Company’s investment includes basis differences allocated to amortizable intangible assets.

During the three months ended September 30, 2021 and 2020, the Company recognized ($0.6) and nil, respectively, representing its share of the investee’s net loss in Other income, net within the Condensed Consolidated Statements of Operations.

(b)On November 30, 2020, the Company completed the previously announced strategic transaction with KKR for the sale of a majority stake in Coty’s Wella Business. As part of the transaction, Coty received initial cash proceeds of $2,451.7, and retained a 40% stake in Wella. The Company initially computed the fair value of its retained noncontrolling interest investment based on the fair value of the Wella Business exchanged with KKR. This resulted in an initial fair value of $1,634.5 for the retained noncontrolling interest investment in Wella. Immediately after closing, Wella drew down on their third party debt for $1,282.4 and used $448.0 of such funds to make a distribution to the Company, which the Company has accounted for as a return of capital. As of September 30, 2021 and June 30, 2021, the fair value of the Company's investment in Wella was estimated to be $1,650.0 and $1,260.0, respectively.

The following table presents summarized financial information of the Company’s equity method investees for the period ending September 30, 2021. Amounts presented represent combined totals at the investee level and not the Company’s proportionate share:

	Three Months Ended September 30,
	2021
Summarized Statements of Operations information:
Net revenues	$	619.2
Gross profit	429.7
Operating income	25.6
Income before income taxes	7.5
Net income	5.5

Summary of movement in equity investments

The following table summarizes movements in equity investments with fair value option that are classified within Level 3 for the period ended September 30, 2021. There were no internal movements to or from Level 3 from Level 1 or Level 2 for the period ended September 30, 2021.

Equity investments at fair value:
Balance as of June 30, 2021	$	1,260.0
Total gains/(losses) included in earnings - unrealized	390.0
Balance as of September 30, 2021	$	1,650.0

Summary of significant unobservable inputs used in Level 3 valuation

The following table summarizes the significant unobservable inputs used in Level 3 valuation of the Company's investments carried at fair value as of September 30, 2021. Included in the table are the inputs or range of possible inputs that have an effect on the overall valuation of the financial instruments.

	Fair value		Valuation Technique	Unobservable input	Range
Equity investments at fair value	$	1,650.0	Discounted cash flows	Discount rate	11.00% (a)
				Growth rate	1.5% - 4.2% (a)
			Market multiple	Revenue multiple	2.0x (b)
				EBITDA multiple	11.5x – 17.5x (b)

(a)The primary unobservable inputs used in the fair value measurement of the Company's equity investments with fair value option, when using a discounted cash flow method, are the discount rate and revenue growth rate. Significant increases (decreases) in the discount rate in isolation would result in a significantly lower (higher) fair value measurement. The Company estimates the discount rate based on the investees' projected cost of equity and debt. The revenue growth rate is forecasted for future years by the investee based on their best estimates. Significant increases (decreases) in the revenue growth rate in isolation would result in a significantly higher (lower) fair value measurement.

(b)The primary unobservable inputs used in the fair value measurement of the Company's equity investments with fair value option, when using a market multiple method, are the revenue multiple and EBITDA multiple. Significant increases (decreases) in the revenue multiple or EBITDA multiple in isolation would result in a significantly higher (lower) fair value measurement. The market multiples are derived from a group of guideline public companies.