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EQUITY INVESTMENTS | 3 Months Ended
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Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract] |
EQUITY INVESTMENTS | EQUITY INVESTMENTS The Company's equity investments, classified as Equity investments in the Condensed Consolidated Balance Sheets are represented by the following:
| September 30, 2022 |  | June 30, 2022
Equity method investments: |  |  |
KKW Holdings (a) | $ | 11.7 |  |  | $ | 12.6 |
Equity investments at fair value: |  |  |
Wella (b) | 965.0 |  | $ | 830.0 |
Total equity investments | 976.7 |  | $ | 842.6 |
(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, 2022 and 2021, the Company recognized $(0.9) and $(0.6), 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 60% stake in Coty’s Wella Business. As of September 30, 2022 and June 30, 2022, the Company's stake in Wella was 25.9%. On October 20, 2021, the Company completed the sale of a 9.4% stake in Wella to an affiliate of KKR, KKR Rainbow Aggregator L.P. ("KKR Aggregator”) in exchange for the redemption of 290,465 shares of KKR Aggregator's Series B Convertible Preferred Stock shares in Coty and a portion of unpaid dividends (the "First Exchange"). On November 30, 2021, Coty completed the sale of an additional 4.7% stake in Wella to KKR Aggregator in exchange for the redemption of KKR Aggregator's remaining convertible preferred shares in Coty (the "Second Exchange"), reducing the Company’s total shareholding in Wella to 25.9%. Refer to Note 14—Equity and Convertible Preferred Stock. On March 3, 2022, Wella approved an interim distribution to its shareholders. As part of the transaction, Wella refinanced its third party debt and used $210.7 of such funds to make a distribution to the Company, which the Company has accounted for as a return of capital. In addition, on June 16, 2022, Wella approved an additional distribution to its shareholders. As part of the transaction, Wella made a distribution of $19.9 to the Company, which the Company has accounted for as a return of capital. In May 2022, the Wella Company divested its Russian operations. The impact of the divestiture was included for valuation purposes. For the three months ended September 30, 2022, the impact of the Briogeo acquisition was included for valuation purposes. The following table presents summarized financial information of the Company’s equity method investees for the period ending September 30, 2022. Amounts presented represent combined totals at the investee level and not the Company’s proportionate share:
|  | Three Months Ended September 30, |  |
|  | 2022 |  | 2021 |  |  |  |
Summarized Statements of Operations information: |  |  |  |  |  |  |
Net revenues | $ | 596.6 |  |  | $ | 619.2 |  |  |  |  |
Gross profit | 394.6 |  |  | 429.7 |  |  |  |  |
Operating income | 61.0 |  |  | 25.6 |  |  |  |  |
Income before income taxes | 20.0 |  |  | 7.5 |  |  |  |  |
Net income | 16.0 |  |  | 5.5 |  |  |  |  |
The following table summarizes movements in equity investments with fair value option that are classified within Level 3 for the period ended September 30, 2022. There were no internal movements to or from Level 3 and Level 1 or Level 2 for the period ended September 30, 2022.
Equity investments at fair value: |
Balance as of June 30, 2022 | $ | 830.0 |
Total gains included in earnings | 135.0 |
Balance as of September 30, 2022 | $ | 965.0 |
Level 3 significant unobservable inputs sensitivity 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, 2022. 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 | $ | 965.0 |  |  | Discounted cash flows |  | Discount rate |  | 11.75% (a)
|  | Growth rate |  | 1.8% - 13.8% (a)
| Market multiple |  | Revenue multiple |  | 2.2x – 2.5x (b)
|  | EBITDA multiple |  | 11.0x – 14.5x (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.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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