<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
SEPTEMBER 16, 1999
Date of Report (Date of
earliest event reported August 26, 1999)
THE COSMETIC CENTER, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NO. 0-14756
DELAWARE 52-1266697
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or jurisdiction)
8700 ROBERT FULTON DRIVE
COLUMBIA, MARYLAND 21046
(Address of principal (Zip Code)
executive offices)
(301) 497-6800
Registrant's telephone number, including area code:
- --------------------------------------------------------------------------------
(Former names or former address, if changed since last report)
================================================================================
<PAGE>
ITEM 5. OTHER EVENTS
As previously reported by The Cosmetic Center, Inc. (the "Company"), on April
16, 1999, the Company filed in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), Bankruptcy Case No. 99-888 (PJW),
a voluntary petition for relief under Chapter 11 of the United States Bankruptcy
Code. In accordance with its Chapter 11 reporting obligations, the Company filed
its monthly operating report for the month ended July 1999 (the "Monthly
Report") with the Office of the U.S. Trustee and the Bankruptcy Court on
September 2, 1999. Portions of the Monthly Report are attached with this Current
Report on Form 8-K as Exhibit 99.1. Due to the volume of supporting documents
and the expense associated with the electronic filing of the Monthly Report
in its entirety, certain underlying exhibits and attachments to the Monthly
Report are not attached as part of Exhibit 99.1, but are available upon
request from the Office of the United States Trustee, the Bankruptcy Court or
the Company. In addition, the Company agrees that it will furnish copies of the
omitted attachments to the Commission upon its request.
The Company is also reporting that Kevin Regan resigned as a director of the
Company and as Chief Executive Officer of the Company effective August 26, 1999,
leaving Gary Nacht as the sole director of the Company. Also effective August
26, 1999, Michael Sherman has been appointed as the new Chief Executive Officer
of the Company and Oleg Ostrovsky has been appointed as an executive vice
president of the Company.
On September 15, the Company disseminated the press release filed with this
Current Report on Form 8-K as Exhibit 99.2 announcing that it had converted
its Chapter 11 bankruptcy case into a Chapter 7 bankruptcy case and that a
trustee will be appointed to administer the case on a going-forward basis.
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits. The following exhibits are furnished as part of this report:
Exhibit Description
------- -----------
99.1 Monthly Operating Report of The Cosmetic Center, Inc.
as filed with the Office of the U.S. Trustee and the
United States Bankruptcy Court for the District of
Delaware on September 2, 1999.
99.2 Press Release dated September 15, 1999, issued by
The Cosmetic Center, Inc.
FORWARD LOOKING STATEMENTS
This Report contains forward-looking statements. The words, "believe",
"expect", and "anticipate" and similar expressions identify such
forwarding-looking statements. These forward-looking statements reflect the
Company's views with respect to future events and financial performance. Such
statements are subject to risks and uncertainties that could cause the Company's
actual results and financial position to differ materially from those projected
in the forward-looking statements. Risks associated with the Company's
forward-looking statements include, but are not limited to, those risk factors
described in the Company's Form 10-K under the caption "Business Risk Factors".
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE COSMETIC CENTER, INC.
By: /s/ Michael Sherman
-----------------------------------
Name: Michael Sherman
Title: Chief Executive Officer
Dated: September 16, 1999
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
99.1 Monthly Operating Report of The Cosmetic Center, Inc.
as filed with the Office of the U.S. Trustee and the
United States Bankruptcy Court for the District of
Delaware on September 2, 1999.
99.2 Press Release dated September 15, 1999, issued by
The Cosmetic Center, Inc.
<PAGE>
Exhibit 99.1
THE COSMETIC CENTER, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
July 24, December 26,
1999 1998
--------- ---------
(unaudited) (unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,916 $ 6,430
Accounts receivable, net 1,639 2,251
Inventories 11,114 78,553
Prepaid expenses 653 144
--------- ---------
TOTAL CURRENT ASSETS 18,323 87,378
Property and Equipment, net 7,871 12,325
Deposits and Other Non Current Assets 514 1,440
Intangible Assets, net -- 3,665
--------- ---------
TOTAL ASSETS $ 26,708 $ 104,808
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,069 $ 19,906
Accounts payable - Prestige -- 6,000
Accrued expenses and other 3,879 11,530
Notes payable -- 42,617
Note payable - Products Corporation -- 850
Note payable - Prestige -- 20,255
--------- ---------
TOTAL CURRENT LIABILITIES 5,948 101,158
LIABILITIES SUBJECT TO COMPROMISE 51,167 --
Note payable - Products Corporation -- 850
Other long-term liabilities -- 1,158
STOCKHOLDER'S EQUITY:
Class C common stock, $.01 par value; 40,000,000 shares
authorized; 10,015,101 shares issued and outstanding 100 100
Additional paid in capital 41,357 41,284
Retained earnings (Accumulated deficit) (71,865) (39,742)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (30,408) 1,642
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,708 $ 104,808
========= =========
</TABLE>
<PAGE>
THE COSMETIC CENTER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Month Ending 6 Months Ending
July 24, July 24,
1999 1999
<S> <C> <C>
Net sales $ 9,617 $ 90,076
--------- ---------
Cost of sales, including buying, occupancy and distribution 7,183 71,497
Selling, general and administrative expenses 6,097 38,003
Restructuring Expenses 7,322 8,495
--------- ---------
Operating expenses 20,602 117,995
--------- ---------
Loss from operations (10,985) (27,919)
Interest expense (1,216) (4,258)
Other income, net 6 54
--------- ---------
Loss from operations before income taxes (12,195) (32,123)
--------- ---------
Provision for income taxes -- --
--------- ---------
Net loss $ (12,195) $ (32,123)
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Significant Fluctuations
Jul-99
<S> <C>
RENT EXPENSE
Reversing Straight Line rent (635,579)
Rent Expense 867,723
====================
232,144
====================
LIQUIDATION EXPENSE
Write Off of GOB I Inventory 3,361,104
Hilco Liquidation Exp (1,126,219)
====================
2,234,885
====================
PUBLIC CORP EXPENSE
Write Off unsupported accrual (16,509)
Merrill Corp Fees 1,543
====================
(14,967)
====================
SERVICES
700.281.994 Hilco Direct Bill Expense 294,959
700.480 Inventory Service 30,039
700.280.963 T. Horowitz 23,180
700.450/451 Lease Admin/Consulting 16,162
c PWC 55,000
c Trustee 10,000
c Ashby & Geddes 1,864
c L. Yarnell 6,035
c Beckett Brown Int'l (security) 5,588
c Misc 590
700.485 Musak 1,023
700.660.961 Placement Fees 1,320
====================
445,760
====================
INTEREST EXPENSE
890.110.999 Main line interest 164,673
890.115.999 Amort PPD Financing 1,309,753 write off Prepaid financing
890.140.999 Interest - Other (87,519) Take IL refund into income
890.150.999 Interest - IC (170,598) Correction to true up interest payable-revlon thru 4/16/99
====================
1,216,309
====================
RESTRUCTURING EXPENSES
895.502.999 Restructuring - CC/PFC 2,165,197 Write off GOB I inventory net against zero out accrued goodwill
895.503.999 Restructuring - Chapter 11 4,931,326 Rejected lease accrual
895.400.999 Administrative Expense 225,000 admin exp accrual
====================
7,321,523
====================
</TABLE>
<PAGE>
Exhibit 99.2
[LOGO]
Contact: Wendi Kopsick
Kekst and Company
(212)521-4800
FOR IMMEDIATE RELEASE
COSMETIC CENTER CASE CONVERTED TO CHAPTER 7
COLUMBIA, MARYLAND, September 15, 1999 - The Cosmetic Center, Inc. today
announced that it has converted its Chapter 11 bankruptcy case to Chapter 7.
A trustee will be appointed by the Court to administer the case on a
going-forward basis.
Cosmetic Center filed its Chapter 11 case on April 16, 1999 and, on
July 9, 1999, announced its intention to proceed with an orderly wind-down of
its operations. As part of the wind-down of its business, Going-Out-of
Business sales are currently being conducted at its store locations.
Certain statements contained in this press release are "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, such as statements referring to future business development
activities, and are thus prospective. Such forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but
are not limited to, economic conditions, competition and other uncertainties
detailed from time to time in the Company's Securities and Exchange
Commission filings.
###
