UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED		SEPTEMBER 30, 2022
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                    TO
COMMISSION FILE NUMBER		001-35964

COTY INC.

(Exact name of registrant as specified in its charter)

Delaware		13-3823358
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
350 Fifth Avenue,
New York,	NY	10118
(Address of principal executive offices)		(Zip Code)

(212) 389-7300

Registrant’s telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes ý      No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes ý      No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ☐     No ý

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	COTY	New York Stock Exchange

At October 31, 2022, 850,112,500 shares of the registrant’s Class A Common Stock, $0.01 par value, were outstanding.

COTY INC.

INDEX TO FORM 10-Q

		Page
Part I:	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations for the three months ended September 30, 2022 and 2021	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2022 and 2021	2
	Condensed Consolidated Balance Sheets as of September 30, 2022 and June 30, 2022	3
	Condensed Consolidated Statements of Equity for the three months ended September 30, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2022 and 2021	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
Part II:	OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 6.	Exhibits	50
Signatures		51

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

	Three Months Ended September 30,
	2022		2021
Net revenues	$	1,390.0	$	1,371.7
Cost of sales	501.3		504.8
Gross profit	888.7		866.9
Selling, general and administrative expenses	670.7		776.3
Amortization expense	47.3		57.0
Restructuring costs	(1.2)		12.4
Acquisition- and divestiture-related costs	—		4.0
Operating income	171.9		17.2
Interest expense, net	65.9		59.8
Other income, net	(98.2)		(386.1)
Income from continuing operations before income taxes	204.2		343.5
Provision for income taxes on continuing operations	69.7		114.6
Net income from continuing operations	134.5		228.9
Net income	134.5		228.9
Net income (loss) attributable to noncontrolling interests	—		(0.5)
Net income attributable to redeemable noncontrolling interests	5.9		3.4
Net income attributable to Coty Inc.	$	128.6	$	226.0
Amounts attributable to Coty Inc.
Net income from continuing operations	128.6		226.0
Convertible Series B Preferred Stock dividends	(3.3)		(123.0)
Net income from continuing operations attributable to common stockholders	125.3		103.0
Net income attributable to common stockholders	$	125.3	$	103.0
Earnings per common share:
Earnings from continuing operations per common share - basic	$	0.15	$	0.13
Earnings from continuing operations per common share - diluted	0.15		0.13
Earnings per common share - basic	0.15		0.13
Earnings per common share - diluted	0.15		0.13
Weighted-average common shares outstanding:
Basic	842.0		777.6
Diluted	882.2		787.7

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)

	Three Months Ended September 30,
	2022		2021
Net income	$	134.5	$	228.9
Other comprehensive income (loss):
Foreign currency translation adjustment	(264.1)		(143.1)
Net unrealized derivative gain (loss) on cash flow hedges, net of taxes of $(0.5) and $(1.6) during the three months ended, respectively	0.9		4.4
Pension and other post-employment benefits adjustment, net of tax of $0.8 and $0.0 during the three months ended, respectively	(3.2)		0.5
Total other comprehensive (loss) income, net of tax	(266.4)		(138.2)
Comprehensive (loss) income	(131.9)		90.7
Comprehensive income attributable to noncontrolling interests:
Net income (loss)	—		(0.5)
Foreign currency translation adjustment	—		(0.2)
Total comprehensive income (loss) attributable to noncontrolling interests	—		(0.7)
Comprehensive income attributable to redeemable noncontrolling interests:
Net income	5.9		3.4
Foreign currency translation adjustment	(0.2)		—
Total comprehensive income attributable to noncontrolling interests	5.7		3.4
Comprehensive (loss) income attributable to Coty Inc.	$	(137.6)	$	88.0

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

(Unaudited)

	September 30, 2022		June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	215.7	$	233.3
Restricted cash	35.4		30.5
Trade receivables—less allowances of $43.0 and $53.4, respectively	483.0		364.6
Inventories	676.4		661.5
Prepaid expenses and other current assets	419.5		392.0
Total current assets	1,830.0		1,681.9
Property and equipment, net	668.6		715.5
Goodwill	3,796.4		3,914.7
Other intangible assets, net	3,714.6		3,902.8
Equity investments	976.7		842.6
Operating lease right-of-use assets	299.6		320.9
Deferred income taxes	580.7		651.8
Other noncurrent assets	81.3		85.9
TOTAL ASSETS	$	11,947.9	$	12,116.1
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,229.7	$	1,268.3
Accrued expenses and other current liabilities	1,181.0		1,097.1
Short-term debt and current portion of long-term debt	32.7		23.0
Current operating lease liabilities	59.2		67.8
Income and other taxes payable	108.0		109.4
Total current liabilities	2,610.6		2,565.6
Long-term debt, net	4,312.8		4,409.1
Long-term operating lease liabilities	265.0		282.2
Pension and other post-employment benefits	276.7		292.2
Deferred income taxes	677.6		669.0
Other noncurrent liabilities	350.4		340.0
Total liabilities	8,493.1		8,558.1
COMMITMENTS AND CONTINGENCIES (See Note 18)
CONVERTIBLE SERIES B PREFERRED STOCK, $0.01 par value; 1.0 shares authorized; 0.1 and 0.1 issued and 0.1 and 0.1 and outstanding, respectively, at September 30, 2022 and June 30, 2022	142.4		142.4
REDEEMABLE NONCONTROLLING INTERESTS	69.3		69.8
EQUITY:
Preferred Stock, $0.01 par value; 20.0 shares authorized, 1.5 issued and outstanding at September 30, 2022 and June 30, 2022	—		—
Class A Common Stock, $0.01 par value; 1,250.0 shares authorized, 915.7 and 905.5 issued and 849.3 and 839.2 outstanding, respectively, at September 30, 2022 and June 30, 2022	9.0		9.0
Additional paid-in capital	10,840.7		10,805.8
Accumulated deficit	(5,367.5)		(5,496.1)
Accumulated other comprehensive loss	(984.1)		(717.9)
Treasury stock—at cost, shares: 66.4 and 66.3, respectively, at September 30, 2022 and June 30, 2022	(1,446.3)		(1,446.3)
Total Coty Inc. stockholders’ equity	3,051.8		3,154.5
Noncontrolling interests	191.3		191.3
Total equity	3,243.1		3,345.8
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY	$	11,947.9	$	12,116.1

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, 2022

(In millions, except per share data)

(Unaudited)

	Preferred Stock			Class A Common Stock			Additional Paid-in Capital		(Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Treasury Stock			Total Coty Inc. Stockholders’ Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests		Convertible Series B Preferred Stock
	Shares	Amount		Shares	Amount								Shares	Amount
BALANCE—July 1, 2022	1.5	$	—	905.5	$	9.0	$	10,805.8	$	(5,496.1)	$	(717.9)	66.3	$	(1,446.3)	$	3,154.5	$	191.3	$	3,345.8	$	69.8	$	142.4
Reacquired Class A Common Stock for employee taxes													0.1			—
Exercise of employee stock options and restricted stock units				10.2	—											—				—
Shares withheld for employee taxes							(1.1)									(1.1)				(1.1)
Share-based compensation expense							31.4									31.4				31.4
Dividends accrued- Convertible Series B Preferred Stock							(3.3)									(3.3)				(3.3)				3.3
Dividends paid - Convertible Series B Preferred Stock																—				—				(3.3)
Net (loss) income									128.6							128.6		—		128.6		5.9
Other comprehensive loss											(266.2)					(266.2)		—		(266.2)		(0.2)
Adjustment of redeemable noncontrolling interests to redemption value							6.2									6.2				6.2		(6.2)
Equity investment contribution for share-based compensation							1.7									1.7				1.7
BALANCE—September 30, 2022	1.5	$	—	915.7	$	9.0	$	10,840.7	$	(5,367.5)	$	(984.1)	66.4	$	(1,446.3)	$	3,051.8	$	191.3	$	3,243.1	$	69.3	$	142.4

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, 2021

(In millions, except per share data)

(Unaudited)

	Preferred Stock			Class A Common Stock			Additional Paid-in Capital		(Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Treasury Stock			Total Coty Inc. Stockholders’ Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests		Convertible Series B Preferred Stock
	Shares	Amount		Shares	Amount								Shares	Amount
BALANCE—July 1, 2021	1.5	$	—	832.3	$	8.3	$	10,376.2	$	(5,755.6)	$	(321.9)	66.3	$	(1,446.3)	$	2,860.7	$	201.5	$	3,062.2	$	84.1	$	1,036.3
Exercise of employee stock options and restricted stock units				51.0	—		—									—				—
Shares withheld for employee taxes							(4.2)									(4.2)				(4.2)
Share-based compensation expense							107.8									107.8				107.8
Equity Investment contribution for share-based compensation							1.6									1.6				1.6
Changes in dividends accrued							0.5									0.5				0.5
Conversion of Convertible Series B Preferred Stock					0.5		307.4									307.9				307.9				(307.9)
Reclassification to Mandatorily redeemable Convertible Series B Preferred Stock							—									—				—				(394.2)
Dividends Accrued - Convertible Series B Preferred Stock							(22.7)									(22.7)				(22.7)				22.7
Deemed Dividends - Conversion of Convertible Series B Preferred Stock							(6.7)									(6.7)				(6.7)				6.7
Deemed Dividends - Exchange Agreement							(93.6)									(93.6)				(93.6)				93.6
Dividends Paid - Convertible Series B Preferred Stock																—				—				(3.5)
Net income (loss)									226.0							226.0		(0.5)		225.5		3.4
Other comprehensive loss											(138.0)					(138.0)		(0.2)		(138.2)
Adjustment of redeemable noncontrolling interests to redemption value							4.1									4.1				4.1		(4.1)
BALANCE—September 30, 2021	1.5	$	—	883.3	$	8.8	$	10,670.4	$	(5,529.6)	$	(459.9)	66.3	$	(1,446.3)	$	3,243.4	$	200.8	$	3,444.2	$	83.4	$	453.7

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Three Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	134.5	$	228.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	106.6		137.8
Non-cash lease expense	16.0		18.2
Deferred income taxes	59.5		89.9
(Releases) provision for bad debts	(3.3)		1.9
Provision for pension and other post-employment benefits	2.3		4.1
Share-based compensation	31.1		108.2
Losses on disposals of long-term assets, net	2.4		3.3
Realized and unrealized gains from equity investments, net	(134.1)		(389.4)
Foreign exchange effects	3.8		(3.9)
Unrealized losses on forward repurchase contracts, net	45.2		—
Other	10.5		7.2
Change in operating assets and liabilities
Trade receivables	(133.8)		(183.5)
Inventories	(42.1)		(24.4)
Prepaid expenses and other current assets	(58.4)		(2.6)
Accounts payable	50.6		82.9
Accrued expenses and other current liabilities	119.1		231.0
Operating lease liabilities	(18.0)		(20.4)
Income and other taxes payable	10.4		16.1
Other noncurrent assets	(20.4)		3.3
Other noncurrent liabilities	(18.7)		(22.9)
Net cash provided by operating activities	163.2		285.7
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(75.0)		(45.0)
Net cash used in investing activities	(75.0)		(45.0)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving loan facilities	220.7		285.3
Repayments of revolving loan facilities	(208.9)		(365.5)
Repayments of term loans and other long-term debt	(5.6)		(6.0)
Dividend payments on Class A Common Stock and Class B Preferred Stock	(3.6)		(4.3)
Net payments of foreign currency contracts	(89.5)		(11.0)
Purchase of remaining mandatorily redeemable noncontrolling interest	—		(7.1)
Payment of deferred financing fees	—		(10.4)
All other	(0.9)		(3.7)
Net cash used in financing activities	(87.8)		(122.7)
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(13.1)		(6.0)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(12.7)		112.0
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period	263.8		310.4
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period	$	251.1	$	422.4

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SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for interest	$	32.9	$	20.9
Net cash payments for income taxes	5.6		13.1
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Accrued capital expenditure additions	$	60.5	$	53.1
Non-cash Series B Preferred Stock dividends and deemed dividends	—		119.5

See notes to Condensed Consolidated Financial Statements.

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COTY INC. & SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

(Unaudited)

1. DESCRIPTION OF BUSINESS

Coty Inc. and its subsidiaries (collectively, the “Company” or “Coty”) manufacture, market, sell and distribute branded beauty products, including fragrances, color cosmetics and skin & body related products throughout the world. Coty is a global beauty company with a rich entrepreneurial history and an iconic portfolio of brands.

The Company operates on a fiscal year basis with a year-end of June 30. Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2023” refer to the fiscal year ending June 30, 2023. When used in this Quarterly Report on Form 10-Q, the term “includes” and “including” means, unless the context otherwise indicates, including without limitation.

The Company’s sales generally increase during the second fiscal quarter as a result of increased demand associated with the winter holiday season. Financial performance, working capital requirements, sales, cash flows and borrowings generally experience variability during the three to six months preceding the holiday season. Product innovations, new product launches and the size and timing of orders from the Company’s customers may also result in variability.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim Condensed Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and include the Company’s consolidated domestic and international subsidiaries. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these unaudited interim Condensed Consolidated Financial Statements and accompanying footnotes should be read in conjunction with the Company’s Consolidated Financial Statements as of and for the year ended June 30, 2022. In the opinion of management, all adjustments, of a normal recurring nature, considered necessary for a fair presentation have been included in the Condensed Consolidated Financial Statements. The results of operations for the three months ended September 30, 2022 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending June 30, 2023. All dollar amounts (other than per share amounts) in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated.

Restricted Cash

Restricted cash represents funds that are not readily available for general purpose cash needs due to contractual limitations. Restricted cash is classified as a current or long-term asset based on the timing and nature of when or how the cash is expected to be used or when the restrictions are expected to lapse. As of September 30, 2022 and June 30, 2022, the Company had restricted cash of $35.4 and $30.5, respectively, included in Restricted cash in the Condensed Consolidated Balance Sheets. The Restricted cash balance as of September 30, 2022 primarily provides collateral for certain bank guarantees on rent, customs and duty accounts and also consists of collections on factored receivables that remain unremitted to the factor as of September 30, 2022. Restricted cash is included as a component of Cash, cash equivalents and restricted cash in the Condensed Consolidated Statement of Cash Flows.

Equity Investments

The Company elected the fair value option to account for its investment in Rainbow JVCO LTD and subsidiaries (together, "Wella" or the “Wella Company”) to align with the Company’s strategy for this investment. The fair value is updated on a quarterly basis. The investment is classified within Level 3 in the fair value hierarchy because the Company estimates the fair value of the investment using a combination of the income approach, the market approach and private transactions, when applicable. Changes in the fair value of equity investment under the fair value option are recorded in Other income, net within the Condensed Consolidated Statements of Operations (see Note 7—Equity Investments).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, the net realizable value of inventory, the fair value of acquired assets and liabilities associated with acquisitions, the fair value of equity investments, the

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assessment of goodwill, other intangible assets and long-lived assets for impairment and income taxes. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the Condensed Consolidated Financial Statements in future periods.

Tax Information

The effective income tax rate for the three months ended September 30, 2022 and 2021 was 34.1% and 33.4%, respectively. The change in the effective tax rate for the three months ended September 30, 2022, as compared with the three months ended September 30, 2021, is primarily due to larger fair value gains related to the investment in Wella recorded in the prior period.

The effective income tax rates vary from the U.S. federal statutory rate of 21% due to the effect of (i) jurisdictions with different statutory rates, (ii) adjustments to the Company’s unrealized tax benefits (“UTBs”) and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes.

As of September 30, 2022 and June 30, 2022, the gross amount of UTBs was $250.9 and $251.6, respectively. As of September 30, 2022, the total amount of UTBs that, if recognized, would impact the effective income tax rate is $169.8. As of September 30, 2022 and June 30, 2022, the liability associated with UTBs, including accrued interest and penalties, was $197.4 and $191.8, respectively, which was recorded in Income and other taxes payable and Other noncurrent liabilities in the Condensed Consolidated Balance Sheets. The total interest and penalties recorded in the Condensed Consolidated Statements of Operations related to UTBs was $1.3 and $0.7 for the three months ended September 30, 2022 and 2021, respectively. The total gross accrued interest and penalties recorded in the Condensed Consolidated Balance Sheets as of September 30, 2022 and June 30, 2022 was $27.7 and $26.4, respectively. On the basis of the information available as of September 30, 2022, it is reasonably possible that a decrease of up to $13.5 in UTBs may occur within twelve months as a result of projected resolutions of global tax examinations and a potential lapse of the applicable statutes of limitations.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The Company adopted this guidance using the modified retrospective method in the first quarter of fiscal year 2023. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors-Certain Leases with Variable Lease Payments, which requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate as an operating lease on the commencement date of the lease if specified criteria are met. The Company adopted this guidance in the first quarter of fiscal year 2023. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

The FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting in March 2020 and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope in January 2021. The new guidance under these ASUs provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. As of September 30, 2022, the Company has not applied any of the optional expedients or exceptions allowed under these ASUs. The Company does not believe that these ASUs will have a material impact on its consolidated financial position, results of operations or cash flows.

3. SEGMENT REPORTING

Operating and reportable segments (referred to as “segments”) reflect the way the Company is managed and for which separate financial information is available and evaluated regularly by the Company's chief operating decision maker ("CODM")

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in deciding how to allocate resources and assess performance. The Company has designated its Chief Executive Officer ("CEO") as the CODM.

Certain income and shared costs and the results of corporate initiatives are managed by Corporate. Corporate primarily includes stock compensation expense, restructuring and realignment costs, costs related to acquisition and divestiture activities, and impairments of long-lived assets, goodwill and intangibles that are not attributable to ongoing operating activities of the segments. Corporate costs are not used by the CODM to measure the underlying performance of the segments.

With the exception of goodwill, the Company does not identify or monitor assets by segment. The Company does not present assets by reportable segment since various assets are shared between reportable segments. The allocation of goodwill by segment is presented in Note 8—Goodwill and Other Intangible Assets, net.

	Three Months Ended September 30,
SEGMENT DATA	2022		2021
Net revenues:
Prestige	$	863.4	$	870.7
Consumer Beauty	526.6		501.0
Total	$	1,390.0	$	1,371.7
Operating income (loss):
Prestige	170.3		132.1
Consumer Beauty	32.0		11.4
Corporate	(30.4)		(126.3)
Total	$	171.9	$	17.2
Reconciliation:
Operating income	171.9		17.2
Interest expense, net	65.9		59.8
Other income, net	(98.2)		(386.1)
Income from continuing operations before income taxes	$	204.2	$	343.5

Presented below are the percentage of revenues associated with the Company’s product categories:

	Three Months Ended September 30,
PRODUCT CATEGORY	2022		2021
Fragrance	59.3	%	59.7	%
Color Cosmetics	27.7		28.4
Body Care & Other	7.7		6.6
Skincare	5.3		5.3
Total	100.0	%	100.0	%

4. ACQUISITION- AND DIVESTITURE-RELATED COSTS

Acquisition-related costs, which are expensed as incurred, represent non-restructuring costs directly related to acquiring and integrating an entity, for both completed and contemplated acquisitions and can include finder’s fees, legal, accounting, valuation, other professional or consulting fees, and other internal costs, which can include compensation related expenses for dedicated internal resources. The Company recognized no acquisition-related costs for the three months ended September 30, 2022 and 2021.

Divestiture-related costs, which are expensed as incurred, represent non-restructuring costs directly related to divesting and selling an entity, including partial sales, for both completed and contemplated divestitures. These costs can include legal, accounting, information technology, other professional or consulting fees and other internal costs. Internal costs can include compensation related expenses for dedicated internal resources. Additionally, for divestitures, the Company includes write-offs of assets that are no longer recoverable and contract related costs due to the divestiture. The Company recognized divestiture-related costs of $0.0 and $4.0 for the three months ended September 30, 2022 and 2021, respectively. Divestiture-related costs incurred during the three months ended September 30, 2021 were primarily related to the strategic transaction with Rainbow UK Bidco Limited (“KKR Bidco”) (an affiliate of funds and/or separately managed accounts (“KKR Funds”) advised and/or

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managed by Kohlberg Kravis Roberts & Co. L.P. and its affiliates (“KKR”)), for the sale of a majority stake in Coty’s Professional and Retail Hair businesses, including the Wella, Clairol, OPI and ghd brands, (together, the “Wella Business”).

5. RESTRUCTURING COSTS

Restructuring costs for the three months ended September 30, 2022 and 2021 are presented below:

	Three Months Ended September 30,
	2022		2021
Transformation Plan	$	(1.2)	$	12.4
Total	$	(1.2)	$	12.4

Transformation Plan

In connection with the four-year plan announced on July 1, 2019 to drive substantial improvement and optimization in the Company's businesses (the “Turnaround Plan”), the Company has and expects to continue to incur restructuring and related costs. On May 11, 2020, the Company announced an expansion of the Turnaround Plan to further reduce fixed costs, (the “Transformation Plan”). Of the expected costs, the Company has incurred cumulative restructuring charges of $222.1 related to approved initiatives through September 30, 2022, which have been recorded in Corporate.

Over the next fiscal year, the Company expects to incur approximately $8.0 of additional restructuring charges pertaining to the approved actions, primarily related to employee termination benefits.

The following table presents aggregate restructuring charges for the program: