EQUITY AND CONVERTIBLE PREFERRED STOCK

6 Months Ended

Dec. 31, 2023

Equity [Abstract]

EQUITY AND CONVERTIBLE PREFERRED STOCK

EQUITY AND CONVERTIBLE PREFERRED STOCK

Common Stock

As of December 31, 2023, 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 December 31, 2023, total authorized shares of Class A Common Stock was 1,250.0 million and total outstanding shares of Class A Common Stock was 895.1 million.

On September 29, 2023 and October 2, 2023, the Company issued a total of 33.0 million shares of Class A common stock, par value $0.01 per share, at a public offering price of $10.80 (or €10.28) per share in a global offering (the “Offering”). The Company also announced the admission to listing and trading of its Common Stock on the professional segment of the Euronext Paris.

The Company received $348.4 from the Offering, net of $10.0 of underwriting fees. Additionally, the Company incurred $6.0 in other professional fees. The underwriting fees and other professional fees incurred in connection with the Offering were incremental costs directly attributable to the issuance and thus were presented as a reduction of Equity in the Condensed Consolidated Balance Sheets.

The Company's Majority Stockholder

Immediately after the Offering and taking into account the proxy agreement entered into on September 29, 2023 by and among JAB Beauty B.V. ("JAB"), Mr. Peter Harf, the Company's Chairman, and HFS Holdings S.à r.l, (“HFS”), which is beneficially owned by Mr. Harf, JAB, the Company’s largest stockholder, may be deemed to beneficially own approximately 53% of Coty’s Class A Common Stock. This is inclusive of all voting interests of HFS, including its shares of Series B Preferred Stock on an if converted basis.

The Company’s CEO, Sue Nabi, was granted a one-time sign-on award of restricted stock units on June 30, 2021. On October 29, 2021 and September 18, 2023, JAB completed the transfer of 10.0 million and 5.0 million shares of Common Stock, respectively, to Ms. Nabi pursuant to an equity transfer agreement. See Note 14—Share-Based Compensation Plans for additional information.

Series A and A-1 Preferred Stock

As of December 31, 2023, 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 December 31, 2023, there were 1.0 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 December 31, 2023, the Company has $0.1 Series A Preferred Stock classified as a liability recorded in Accrued expenses and other current 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 Rainbow Aggregator L.P. ("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 Company completed the issuances and sales of the Series B Preferred Stock on May 26, 2020 and July 31, 2020. On November 16, 2020, KKR Aggregator and affiliated investment funds agreed to sell 146,057 shares of Series B Preferred Stock, to HFS. The transaction closed on August 27, 2021.

As a result of various conversions and exchanges of KKR Aggregator's shares of the Series B Preferred Stock, as of December 31, 2021, Kohlberg Kravis Roberts & Co. L.P. and its affiliates ("KKR") has fully redeemed/exchanged all of their Series B Preferred Stock.

Cumulative preferred dividends accrue daily on the Series B Preferred Stock at a rate of 9.0% per year. During the three months ended December 31, 2023 and 2022, the Board of Directors declared dividends on the Series B Preferred Stock of $3.3 and paid accrued dividends of $3.3. During the six months ended December 31, 2023 and 2022, the Board of Directors declared dividends on the Series B Preferred Stock of $6.6 and paid accrued dividends of $6.6. As of December 31, 2023 and June 30, 2023, the Series B Preferred Stock had outstanding accrued dividends of $3.3.

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, and on November 13, 2023, the Board increased the Company's share repurchase authorization by an additional $600.0 (the “Share 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 and six months ended December 31, 2023, the Company did not repurchase any shares of its Class A Common Stock under the Share Repurchase Program. As of December 31, 2023, the Company had authority for $996.8 remaining under the Share Repurchase Program.

In June 2022, December 2022 and November 2023, the Company entered into forward repurchase contracts (the “Forward” and together the “Forwards”) with three large financial institutions (“Counterparties”) to start hedging for potential $200.0, $196.0 and $250.0 share buyback programs in 2024, 2025 and 2026, respectively.

As part of the Forward agreements, the Company will pay interest on the outstanding underlying notional amount of the Forwards held by the Counterparties during the contract periods. The interest rates are variable, based on the United States secured overnight funding rate (“SOFR”) plus a spread. The weighted average interest rate plus applicable spread for the June 2022, December 2022, and November 2023 Forward transactions were 9.7%, 9.8% and 8.2%, respectively, as of December 31, 2023.

Since the Forwards permit a net cash settlement alternative in addition to the physical settlement, the Company accounted for the Forwards initially and subsequently at their fair value, with changes in the fair value recorded in Other income, net in the Condensed Consolidated Statement of Operations. See Note 12—Derivative Instruments for additional information.

Dividends

On April 29, 2020, the Board of Directors suspended the payment of dividends on Common Stock. No dividends on Common Stock were declared for the period ended December 31, 2023.

The change in dividends accrued recorded to APIC in the Condensed Consolidated Balance Sheet as of December 31, 2023 and 2022 was nil and $0.1, respectively, which represent dividends no longer expected to vest as a result of forfeitures of outstanding restricted stock units (“RSUs”). In addition, the Company made payments of $0.3 and $0.7, of which $0.1 and $0.2 related to employee taxes, for the previously accrued dividends on RSUs that vested during the six months ended December 31, 2023 and 2022, respectively.

Total accrued dividends on unvested RSUs and phantom units included in Accrued expenses and other current liabilities are $0.8 and $1.0 as of December 31, 2023 and June 30, 2023, respectively. In addition, accrued dividends of $0.0 and $0.1 are included in Other noncurrent liabilities as of December 31, 2023 and June 30, 2023, respectively.

Accumulated Other Comprehensive Income (Loss)

			Foreign Currency Translation Adjustments
	Gain (loss) on Cash Flow Hedges		Loss on Net Investment Hedge		Other Foreign Currency Translation Adjustments		Pension and Other Post-Employment Benefit Plans (a)		Total
Balance—July 1, 2023	$	0.7	$	(49.8)	$	(667.9)	$	54.6	$	(662.4)
Other comprehensive (loss) income before reclassifications	(0.1)		(9.9)		66.8		1.0		57.8
Net amounts reclassified from AOCI/(L)	0.5		—		—		(2.5)		(2.0)
Net current-period other comprehensive income (loss)	0.4		(9.9)		66.8		(1.5)		55.8
Balance—December 31, 2023	$	1.1	$	(59.7)	$	(601.1)	$	53.1	$	(606.6)

(a) For the six months ended December 31, 2023, other comprehensive income before reclassifications of $1.0 and net amounts reclassified from AOCI/(L) related to pensions and other post-employment benefit plans included amortization of prior service credits and actuarial losses of $3.0, net of tax of $0.5.

			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, 2022	$	4.3	$	4.1	$	(770.8)	$	44.5	$	(717.9)
Other comprehensive income (loss) before reclassifications	1.1		(36.7)		(8.8)		1.3		(43.1)
Net amounts reclassified from AOCI/(L)	(4.1)		—		—		(3.0)		(7.1)
Net current-period other comprehensive loss	(3.0)		(36.7)		(8.8)		(1.7)		(50.2)
Balance—December 31, 2022	$	1.3	$	(32.6)	$	(779.6)	$	42.8	$	(768.1)