SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20579
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended
Date of Report (Date of earliest event reported): May 8, 1997 (April 25, 1997)
The Cosmetic Center, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-14756 52-1266697
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
8839 Greenwood Place
Savage, Maryland 20763
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (301) 497-6800
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On April 25, 1997, pursuant to the Agreement and Plan of Merger among
The Cosmetic Center, Inc. (the "Corporation"), Revlon Consumer Products
Corporation ("Revlon") and Prestige Fragrance & Cosmetics, Inc. ("PFC") dated as
of November 27, 1996 and amended as of February 20, 1997 and March 20, 1997 (the
"Merger Agreement"), the Corporation consummated the previously announced merger
of PFC, a wholly owned subsidiary of Revlon, with and into the Corporation (the
Merger"), with the Corporation surviving the Merger. Pursuant to the Merger,
Revlon received 8,479,335 shares of the Corporation's newly issued Class C
Common Stock, par value $.01 per share (the "Class C Common Stock"), the only
class of the Corporation's stock outstanding after the Merger, in exchange for
its one share of PFC stock outstanding prior to the Merger. As a result of the
Merger, the Corporation's stockholders were entitled to receive for each share
of Class A Common Stock or Class B Common Stock they held one share of newly
issued Class C Common Stock or, at each stockholder's election and subject to
the limitation discussed below, $7.63 in cash (the "Cash Election"). Holders of
options to purchase the Corporation's Class A Common Stock or Class B Common
Stock with an exercise price of less than $7.63 were entitled to elect to
receive for each such option they held an equivalent option to purchase Class C
Common Stock or, at each such optionholder's election and subject to the
limitation discussed below, cash equal to the difference between $7.63 and the
exercise price per share of such options. The right of stockholders and
optionholders to receive cash was limited to an aggregate of 2,829,065 shares
and options for shares. Holders of 3,688,440 shares of Class A Common Stock and
Class B Common Stock in the aggregate and 86,500 options exercised their Cash
Election so that after pro-ration 2,764,116 shares of Class A Common Stock and
Class B Common Stock in the aggregate were accepted for Cash Election. The
number of shares of Class C Common Stock owned by Revlon after the Merger
constitute approximately 85% of the outstanding Class C Common Stock after
giving effect to the Cash Election. Prior to the Merger, Anita J. Weinstein,
Mark S. Weinstein and Susan K. Magenheim owned or had the power to vote
approximately 51.4% of the Corporation's outstanding Class B voting common
stock.
Contemporaneous with the consummation of the Merger, the Corporation
entered into a Loan and Security Agreement with BankAmerica Business Credit,
Inc., as Agent, and the Lenders parties thereto, which provides for a credit
facility of up to $70.0 million (the "Financing") of which approximately $35.2
million was borrowed ($14.0 million to refinance the Corporation's then existing
credit facility and approximately $21.2 million to fund the Cash Election). The
Corporation's accounts receivable and inventory and proceeds therefrom are
pledged to secure its obligations under the Financing.
Revlon, Inc. beneficially owns all of the outstanding shares of
Revlon's common stock. MacAndrews & Forbes Holdings Inc. ("MacAndrews
Holdings"), which is wholly owned by Ronald O. Perelman, owns, indirectly
through Revlon Worldwide Corporation, shares of Revlon, Inc. common stock
representing approximately 83.1% of the outstanding shares of common stock and
approximately 97.4% of the voting power of the outstanding shares of common
stock of Revlon, Inc. All of the Corporation's Class C Common Stock held by
Revlon has been pledged as collateral for Revlon's obligations under Revlon's
credit agreement and a credit agreement of a subsidiary
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of Revlon. Shares of intermediate parent holding companies of Revlon are or may
from time to time be pledged to secure obligations of MacAndrews Holdings or its
affiliates.
Pursuant to the Merger Agreement, the Corporation's Board of Directors
was enlarged to nine members, and the members appointed upon consummation of the
Merger were the nine nominees named in each of the Merger Agreement and the
Proxy Statement/Prospectus included in the Corporation's Registration Statement
on Form S-4 filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, on December 20, 1996 (Commission File No.
333-18321), and the amendments thereto filed January 31, 1997, February 25,
1997, March 24, 1997 and April 3, 1997 (the "Form S-4"). Pursuant to the
Stockholders Agreement among Mark S. Weinstein, Anita J. Weinstein, Susan K.
Magenheim and a partnership composed of Mr. Weinstein, Mrs. Weinstein and Mrs.
Magenheim (the "Principal Stockholders") and Revlon dated November 27, 1997, for
three years from the consummation of the Merger, the Principal Stockholders are
required to vote all of their Class C Common Stock in favor of Revlon's nominees
for director so that Revlon will at all times maintain representation on the
Corporation's Board of Directors equal to Revlon's percentage ownership of Class
C Common Stock, but not less than seven board seats, including two independent
directors, and Revlon is required to vote its shares in favor of the Principal
Stockholders' nominees for director equal to their aggregate percentage
ownership of Class C Common Stock after giving effect to the Merger and the Cash
Election, but not less than one nor more than two board seats.
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
The information required by this Item 2 has been previously reported by
the Corporation in the Corporation's Proxy Statement/Prospectus included in the
Form S-4. See also Item 1.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On May 1, 1997 the Corporation's Board of Directors adopted the
recommendation of the Audit Committee and retained KPMG Peat Marwick LLP,
independent certified public accountants ("KPMG"), as the Corporation's
independent auditors for the Corporation's 1997 fiscal year, replacing Arthur
Andersen LLP, the Corporation's auditors for the fiscal year ended September 27,
1996 ("Arthur Andersen"). This change in independent auditors was not based upon
any disagreements or reportable events as those terms are used in Item 304 of
Regulation S-K, and Arthur Andersen did not resign or decline to stand for
re-election. Rather, because for accounting purposes the Merger will be treated
as a reverse acquisition, with the result that PFC's historical financial
statements will be the continuing historical financial statements of the
Corporation, and because KPMG audited the 1993, 1994, 1995 and 1996 financial
statements of PFC, the Corporation determined that it was in its best interests
to retain KPMG. The change in accountants was recommended by the Corporation's
Audit Committee.
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Arthur Andersen's reports on the Corporation's financial statements for
the fiscal years ended September 29, 1995 and September 27, 1996 did not contain
an adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope, or accounting principles. During the fiscal
years ended September 29, 1995 and September 27, 1996 there were no
disagreements with Arthur Andersen (even if resolved to the satisfaction of
Arthur Andersen) on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Arthur Andersen, would have caused Arthur
Andersen to make reference to the subject matter of the disagreement in
connection with its audit reports. There were no events that would be
"reportable events" pursuant to Item 304(a)(v) of Regulation S-K during the
fiscal years ended September 29, 1995 and September 27, 1996 and in any
subsequent interim period. As required pursuant to Item 304 of Regulation S-K, a
letter from Arthur Andersen addressed to the Securities and Exchange Commission
(the "Commission") confirming that it agrees with the statements in this
paragraph is filed as Exhibit 16 hereto. The Corporation has requested KPMG to
review the disclosure in this Item 4 and has provided KPMG with the opportunity
to furnish the Corporation with a letter addressed to the Commission containing
any new information or clarification or the respects in which it does not agree
with the statements made in this Item 4, and KPMG has advised that no such
letter is necessary.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The financial statements and pro forma financial information required
by this Item 7 with respect to the matters addressed in Item 2 above have been
previously reported by the Corporation in the balance sheets of PFC as of
December 31, 1996 and 1995 and the related statements of operations, retained
earnings and cash flows for each of the years in the three-year period ended
December 31, 1996, together with the related notes, and the unaudited pro forma
financial statements of the Corporation post-Merger, together with the related
notes, all contained in the Corporation's Proxy Statement/Prospectus included in
the Form S-4.
2. Agreement and Plan of Merger by and among the Corporation, Revlon
and PFC, dated as of November 27, 1996 and amended as of February 20, 1997
and March 20, 1997 (incorporated herein by reference to Annex I to the
Corporation's Proxy Statement/Prospectus included in the Form S-4).
16. Letter dated May 8, 1997 from Arthur Andersen LLP to the
Securities and Exchange Commission (filed herewith) (provided with respect to
the matters addressed in Item 4).
ITEM 8. CHANGE IN FISCAL YEAR.
As a result of the reverse acquisition accounting for the Merger, the
Corporation elected to adopt PFC's fiscal year, which ends December 31. On May
1, 1997, the Corporation's Board of Directors changed the Corporation's fiscal
year end to the last Friday of December.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
THE COSMETIC CENTER, INC.
Dated: May 8, 1997 By: /s/ Bruce E. Strohl
____________________________
Name: Bruce E. Strohl
Title: Senior Vice President-Finance
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Exhibit 16
May 8, 1997
Office of the Chief Accountant
SECPS Letter File
Securities and Exchange Commission
Mail Stop 9-5
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: The Cosmetic Center, Inc.
Dear Gentlemen:
We have read Item 4 included in the attached Form 8-K dated May 8, 1997 of The
Cosmetic Center, Inc. to be filed with the Securities and Exchange Commission
and are in agreement with the statements contained therein.
Very truly yours,
Arthur Andersen LLP
Copy to:
Mr. Bruce Strohl
Vice President, Finance and Administration
The Cosmetic Center, Inc.
8839 Greenwood Place
Savage, Maryland 20763
