SEC Comment Letter for COTY INC. (COTY) (CIK 0001024305) (COTY) — Feb 8, 2013
COTY INC. (COTY) (CIK 0001024305)
Date: Feb. 8, 2013 · CIK: 0001024305 · Accession: 0000000000-13-007604
AI Filing Summary & Sentiment
Reasoning
Referenced dates: November 12, 2012
Letter
February 8, 2013 Via E -mail Jules Kaufman General Counsel Coty Inc. 2 Park Avenue New York, NY 10016
Re: Coty Inc. Amendment No. 2 to Registration Statement on Form S -1 Filed January 24, 2013 File No. 333 -182420
Dear Mr. Kaufman :
We have reviewed your response letter and the amendment to your registration statement , and we have the following comments.
General
1. If applicable, please provide updated financial statements and related disclosures to comply with Rule 3-12 of Regulation S -X. Please b e advised that if you intend to seek effectiveness before updated financial statem ents are required , you should provide a recent developments section t o disclose and discuss your results for the recently completed quarter ended December 31, 2012 and pr ovide pro forma discl osures related to the dividend declared subsequent to the current interim balance sheet date.
2. We note your response to comment 1 in our letter dated November 12, 2012, including the revised disclosure on pages 22 and 111 of the 10 -K. Please briefly describe to us the re-exports to Syria tha t you believe may constitute violations of the U.S. Export Administration Regulations.
Risk Factors, page 19 We may incur penalties and experience other adverse effects on our business as a result of possible EAR violations, page 22
3. We note in the course of your internal investigation you determined your majorit y-owned subsidiary in the EAU may have violated anti -boycott laws. We also note your disclosure that if OAC determines you violated U.S. anti -boycott laws “the penalties for these violations could be material”. Based on your disclosures, it is not clear to us if you believe a material loss related to violations of U.S. anti -boycott laws is remote, reasonabl y possible or probable. It is also not clear to us why these potential vio lations
Jules Kaufman Coty Inc. February 8, 2013 Page 2
are not also discussed under Legal Proceeding or in the notes to you r financial statements. Please clarify or revise. Please be advised that if your current conclusion regarding EAR violations on page 22 is also meant to cover the potential violations of U.S. anti -boycott laws , you should clarify that fact.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page Financial Condition, Liquidity and Capital Resources page 75 Cash Flows, page 78
4. Please disclose and discuss the reasons for the disproportionate increase in accounts receiv able relative to the decline in revenue that occurred during the quarter ended September 30, 2012.
Contractual Obligations and Commitments, page 80
5. Please provide a note to your tabular presentation to disclose how you estimated the interest on long -term debt obligations and disclose the potential impact that a fixed change in the interest rate on your variable rate debt would have on these amounts .
Critical Accounting Policies and Estimates, page 83 Goodwill, Other Intangible Assets and Long -Lived Assets , page 84
6. We note your response s to our prior comments 12 and 14 ; however, we also note the significant decline s in certain fair value assessments over a relatively short time frame and the continuing significance of goodwill and intangible assets to your financial statements . In light of these facts, it continues to appear to us that you should provide additional disclosures regarding the material assumptions underlying your impairment analyses relating to your other reporting units and intangible assets, as well as sensitivity analyses that disclose the potential impact of changes in those assumptions.
Consolidated Financial Statements General
7. We note your presentation of Condensed Consolidated Statements of Comprehensive Income in your interim financial statements. Please revise your financial statements for the three years ended June 30, 2012 to reflect the retrospective adoption of the Financial Accounting Standards Board’s Accounting Standards Update No. 2011 -05. See FASB ASC 220 for guidance. Please also revise your disclosures under recent accounting pronouncements on page F -16.
Note 3. Segment Reporting, page F -16
8. We note your response to our prior comment 21. However, we also note the following:
Jules Kaufman Coty Inc. February 8, 2013 Page 3
Your fragrance products are presented and discus sed as Designer, Celebrit y and Lifestyle. These classifications appear indicate differences in focus, targeted consumers and marketing. Your color cosmetic products appear to have different end uses some of which are targeted to different areas of the bod y. Your skin and body care products appear to have different end uses and recent acquisitions in this segment have expanded your product offerings.
Based on the above, we continue to believe you should revise your disclosure s to include revenue by product line.
You may contact Patricia Armelin, Staff Accountant , at (202) 551 -3747 or Anne McConnell, Staff Accountant, at (202) 551 -3709 if you have questions regarding comments on the financial statements and related matters. Please contact Jessica Dickerson, Staff Attorney , at (202) 551 -3749 or me at (202) 551 -3765 with any other questions.
Sincerely,
/s/ Pamela Long
Show Raw Text
February 8, 2013 Via E -mail Jules Kaufman General Counsel Coty Inc. 2 Park Avenue New York, NY 10016 Re: Coty Inc. Amendment No. 2 to Registration Statement on Form S -1 Filed January 24, 2013 File No. 333 -182420 Dear Mr. Kaufman : We have reviewed your response letter and the amendment to your registration statement , and we have the following comments. General 1. If applicable, please provide updated financial statements and related disclosures to comply with Rule 3-12 of Regulation S -X. Please b e advised that if you intend to seek effectiveness before updated financial statem ents are required , you should provide a recent developments section t o disclose and discuss your results for the recently completed quarter ended December 31, 2012 and pr ovide pro forma discl osures related to the dividend declared subsequent to the current interim balance sheet date. 2. We note your response to comment 1 in our letter dated November 12, 2012, including the revised disclosure on pages 22 and 111 of the 10 -K. Please briefly describe to us the re-exports to Syria tha t you believe may constitute violations of the U.S. Export Administration Regulations. Risk Factors, page 19 We may incur penalties and experience other adverse effects on our business as a result of possible EAR violations, page 22 3. We note in the course of your internal investigation you determined your majorit y-owned subsidiary in the EAU may have violated anti -boycott laws. We also note your disclosure that if OAC determines you violated U.S. anti -boycott laws “the penalties for these violations could be material”. Based on your disclosures, it is not clear to us if you believe a material loss related to violations of U.S. anti -boycott laws is remote, reasonabl y possible or probable. It is also not clear to us why these potential vio lations Jules Kaufman Coty Inc. February 8, 2013 Page 2 are not also discussed under Legal Proceeding or in the notes to you r financial statements. Please clarify or revise. Please be advised that if your current conclusion regarding EAR violations on page 22 is also meant to cover the potential violations of U.S. anti -boycott laws , you should clarify that fact. Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 46 Financial Condition, Liquidity and Capital Resources page 75 Cash Flows, page 78 4. Please disclose and discuss the reasons for the disproportionate increase in accounts receiv able relative to the decline in revenue that occurred during the quarter ended September 30, 2012. Contractual Obligations and Commitments, page 80 5. Please provide a note to your tabular presentation to disclose how you estimated the interest on long -term debt obligations and disclose the potential impact that a fixed change in the interest rate on your variable rate debt would have on these amounts . Critical Accounting Policies and Estimates, page 83 Goodwill, Other Intangible Assets and Long -Lived Assets , page 84 6. We note your response s to our prior comments 12 and 14 ; however, we also note the significant decline s in certain fair value assessments over a relatively short time frame and the continuing significance of goodwill and intangible assets to your financial statements . In light of these facts, it continues to appear to us that you should provide additional disclosures regarding the material assumptions underlying your impairment analyses relating to your other reporting units and intangible assets, as well as sensitivity analyses that disclose the potential impact of changes in those assumptions. Consolidated Financial Statements General 7. We note your presentation of Condensed Consolidated Statements of Comprehensive Income in your interim financial statements. Please revise your financial statements for the three years ended June 30, 2012 to reflect the retrospective adoption of the Financial Accounting Standards Board’s Accounting Standards Update No. 2011 -05. See FASB ASC 220 for guidance. Please also revise your disclosures under recent accounting pronouncements on page F -16. Note 3. Segment Reporting, page F -16 8. We note your response to our prior comment 21. However, we also note the following: Jules Kaufman Coty Inc. February 8, 2013 Page 3 Your fragrance products are presented and discus sed as Designer, Celebrit y and Lifestyle. These classifications appear indicate differences in focus, targeted consumers and marketing. Your color cosmetic products appear to have different end uses some of which are targeted to different areas of the bod y. Your skin and body care products appear to have different end uses and recent acquisitions in this segment have expanded your product offerings. Based on the above, we continue to believe you should revise your disclosure s to include revenue by product line. You may contact Patricia Armelin, Staff Accountant , at (202) 551 -3747 or Anne McConnell, Staff Accountant, at (202) 551 -3709 if you have questions regarding comments on the financial statements and related matters. Please contact Jessica Dickerson, Staff Attorney , at (202) 551 -3749 or me at (202) 551 -3765 with any other questions. Sincerely, /s/ Pamela Long Pamela Long Assistant Director cc: Andrew L. Fabens ( via e -mail) Gibson, Dunn & Crutcher LLP