DISCONTINUED OPERATIONS

6 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

As described in Note 1—Description of Business, on November 30, 2020, the Company completed the strategic transaction for the sale of a majority stake in the Wella Business.

In accordance with applicable accounting guidance for the disposal of long-lived assets, the results of the Wella Business are presented as discontinued operations for the period up to and including the date of the sale, and, as such, have been excluded from both continuing operations and segment results for all periods presented. Additionally, the Wella Business assets and liabilities included in the sale are presented as assets and liabilities held for sale in the Condensed Consolidated Balance Sheets for the comparative period provided. The Wella Business was comprised of the Professional Beauty reportable segment and the Retail Hair business, which was included in the Americas, EMEA and Asia Pacific reportable segments.

The following table has selected financial information included in Net (loss) income from discontinued operations for the Wella Business.


	Three Months Ended December 31,				Six Months Ended December 31,
	2020 (b)		2019		2020 (b)		2019
Net revenues	$	419.9	$	661.3	$	986.3	$	1192.9
Cost of sales	141.5		227.0		322.5		403.5
Gross profit	278.4		434.3		663.8		789.4
Selling, general and administrative expenses	203.7		286.2		443.7		552.1
Amortization expense	—		26.0		—		52.0
Restructuring costs	(0.7)		6.2		(0.7)		7.4


Operating income	75.4		115.9		220.8		177.9
Interest expense, net (a)	9.5		12.7		21.3		27.0
Loss on sale of business	219.1		—		219.1		—
Other expense (income), net	(1.1)		(0.1)		(1.0)		(0.2)
Income from discontinued operations before income taxes	(152.1)		103.3		(18.6)		151.1
Income tax on discontinued operations	83.5		18.4		112.3		26.7
Net (loss) income from discontinued operations	$	(235.6)	$	84.9	$	(130.9)	$	124.4

(a) Interest expense was allocated to the discontinued operations due to a requirement in the 2018 Coty Credit Agreement, as amended (defined in Note 12—Debt), 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 is reserved for reinvestment in the business.

(b) As the sale of the Wella Business occurred on November 30, 2020, discontinued operations activity comprises of two and five months, respectively, for the three and six month periods ended December 31, 2020.

The following is selected financial information included in cash flows from discontinued operations for the Wella Business held for sale:


	Six Months Ended December 31,
	2020 (a)		2019
NON-CASH OPERATING ITEMS
Depreciation and amortization	$	—	$	72.4

CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures	$	8.7	$	11.4

(a) As the sale of the Wella Business occurred on November 30, 2020, discontinued operations activity comprises of five months for the six month period ended December 31, 2020.

The major components of assets and liabilities of the Wella Business held for sale are provided below.


	June 30, 2020(a)
ASSETS


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


Property and equipment, net	241.3
Goodwill	874.8
Other intangible assets, net	2,770.4
Operating lease right-of-use assets	73.4
Deferred income taxes	25.5
Other noncurrent assets	55.6

TOTAL ASSETS HELD FOR SALE	$	4,613.1

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

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

TOTAL LIABILITIES HELD FOR SALE	$	956.7

(a) The sale of Wella closed on November 30, 2020. As such, there were no assets held for sale as of December 31, 2020. For the period ended on 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.

The loss on sale of the Wella Business included in Net (loss) income from discontinued operations in the Condensed Consolidated Statements of Operations was $219.1 for the three months ended December 31, 2020. Cash proceeds received by the Company for the sale of its 60% stake in Wella were $2,451.7 and the Company retained an equity interest of 40%, valued at $1,634.5. The loss on sale reflects the net assets sold, taxes and other costs to sell the Wella Business.