<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
JULY 30, 1999
Date of Report (Date of
earliest event reported)
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)
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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 June 1999 (the "Monthly
Report") with the Office of the U.S. Trustee and the Bankruptcy Court on July
22, 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 a copies of the omitted
attachments to the Commission upon its request.
The Company is also reporting that Charles Kill, who was appointed the
Company's Chief Financial Officer, effective June 14, 1999, resigned his
position with the Company as of July 9, 1999. No successor for Charles Kill
has been named at this time. The Company is also reporting that Robert Ramsey
resigned as a director of the Company effective July 9, 1999.
The Company is also reporting that on July 22, 1999 the Company received
approval from the Bankruptcy Court to liquidate the Company's inventory by
instituting going-out-of-business sales at all of its remaining retail
locations and ceasing operations at its warehouses and that on July 22, 1999
the Bankruptcy Court approved the Agency Agreement between Hilco/Great
American Group ("Hilco"), as agent, and the Company. Pursuant to the terms of
the Agency Agreement, Hilco is the Company's exclusive liquidating agent. The
Agency Agreement also provides, in part, that Hilco will pay a Guaranteed
Amount to the Company equal to 76.5% of the aggregate "cost value" (i.e., the
actual cost of each item as recorded in the Company's records) of the
Company's inventory, subject to adjustment. The greater of (i) eighty-six
percent (86%) or (ii) a percentage sufficient to pay the Company's primary
secured creditors, BankBoston Retail Finance and Congress financial (the
"Secured Lenders"), in full including all principal, interest, fees and
expenses (not to exceed 90%), of the Guaranteed Amount (as defined in the Agency
Agreement) is to be paid to the Company, provided that if the amounts under
this clause are not sufficient to pay the Secured Lenders in full, the Sale
shall not proceed without the consent of BankBoston Retail Finance, within
one business day of the entry of the Approval Order (as defined in the Agency
Agreement), and, to the extent that any balance of the Guaranteed Amount is
due after application of Proceeds as set forth in Section 7.2 of the Agency
Agreement by the Company, such balance must be payable within two (2)
business days of the issuance of a final inventory report by a certified
inventory taking service. The Agency Agreement is available upon request to
any stockholder of the Company. The Company has determined that, in light of
the foregoing and of its current financial position, it is unlikely that the
holders of Common Stock of the Company will receive any distributions from
the Company in connection with its Bankruptcy and the liquidation of its
inventory.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits. The following exhibits are furnished as part of this report:
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
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 July 22, 1999.
</TABLE>
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/ Kevin Regan
---------------------------------
Name: Kevin Regan
Title: President
Dated: July 27, 1999
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
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 July 22, 1999.
</TABLE>
<PAGE>
THE COSMETIC CENTER, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
June 26, December 26,
1999 1998
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(unaudited) (unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,846 $ 6,430
Accounts receivable, net 1,231 2,251
Inventories 43,782 78,553
Prepaid expenses 648 144
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TOTAL CURRENT ASSETS 49,507 87,378
Property and Equipment, net 8,346 12,325
Deposits and Other Non Current Assets 994 1,440
Intangible Assets, net 3,030 3,665
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TOTAL ASSETS $ 61,877 $ 104,808
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,547 $ 19,906
Accounts payable - Prestige - 6,000
Accrued expenses and other 5,166 11,530
Notes payable 24,719 42,617
Note payable - Products Corporation - 850
Note payable - Prestige - 20,255
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TOTAL CURRENT LIABILITIES 32,432 101,158
LIABILITIES SUBJECT TO COMPROMISE 47,658 -
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) (59,670) (39,742)
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (18,213) 1,642
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY #REF! #REF!
========= =========
</TABLE>
<PAGE>
THE COSMETIC CENTER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Month Ending 6 Months Ending
June 26, June 26,
1999 1999
<S> <C> <C>
Net sales $13,227 $ 80,459
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Cost of sales, including buying, occupancy and distribution 11,874 64,314
Selling, general and administrative expenses 2,313 31,906
Restructuring Expenses 1,127 1,173
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Operating expenses 15,314 97,393
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Loss from operations (2,087) (16,934)
Interest expense (1,065) (3,042)
Other income, net 10 48
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Loss from operations before income taxes (3,142) (19,928)
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Provision for income taxes -- --
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Net loss $(3,142) $(19,928)
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</TABLE>
