UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 3, 1998
RENAISSANCE COSMETICS, INC.
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(Exact name of registrant as specified in its charter)
State of Delaware 33-87280 06-1396287
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
635 Madison Avenue, New York, New York 10022
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (617) 497-5584
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
On February 3, 1998, the Registrant issued the press release
attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7. EXHIBITS
Exhibit Number
(Referenced to Item 601
of Regulation S-K) Description of Exhibit
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99.1 Registrant's Press Release, dated as of
February 3, 1998.
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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.
Date: February 3, 1998
RENAISSANCE COSMETICS, INC.
By: /s/ Robert J. Corso
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Name: Robert J. Corso
Title: Chief Financial Officer
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EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
Exhibit No. Description of Exhibit
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99.1 Registrant's Press Release, dated as of
February 3, 1998.
EXHIBIT 99.1
Contact John Jackson
212-521-5916
For Immediate Release
RENAISSANCE COSMETICS, INC. ANNOUNCES PRELIMINARY RESULTS
New York, February 3, 1998: Renaissance Cosmetics, Inc. today announced that its
operating results for its third fiscal quarter ended December 31, 1997 would be
significantly below analysts' expectations. Robert Corso, the Company's Chief
Financial Officer, indicated that the Company expected net sales for the quarter
to be between $53 and $55 million, resulting in a loss before interest, taxes,
depreciation and amortization in the range of $14 to $16 million, after giving
effect to certain balance sheet adjustments referenced below. Mr. Corso stressed
that these expected results represented estimates and were subject to change,
which could be material, as the Company continues to finalize the quarter's
operating results. The Company expects to report final results for the quarter
during the week of February 16, 1998.
Mr. Corso stated that the third quarter results reflect lower than expected
holiday fragrance sales, lower than expected sales from the Company's "Cosmar"
brand, and weakness in the Company's Brazilian business caused by local economic
conditions. Norbert Becker, the Company's Chief Executive Officer, explained:
"This is the second holiday season in a row in which the mass market fragrance
industry underperformed relative to industry expectations. In our opinion, we
must now conclude that our business environment has changed fundamentally, and
the way fragrance companies have done business in the past will not be
successful in this new environment. We owe it to our financial and trade
partners, as well as our employees, to examine and reconsider every aspect of
our business and tailor it as necessary to fit the current industry environment.
We continue to be committed to the fragrance business and believe that our long
term strategy will be successful, but the way we execute that strategy must
change."
Terry Theodore, the Company's Chairman, stated that "In October 1997 when I
became Chairman, I started working with the new CEO and his management team to
assess every aspect of how Renaissance does business, and I am confident that
management is taking the Company in the right direction to maximize the
Company's operating performance and value for each of its constituencies. In
light of the changing market conditions, management and I agree that every
department at Renaissance must change the way it operates, and this will affect
how we manufacture, market, sell and account for our operations. "
In light of changing market conditions, the Company performed a comprehensive
review of its balance sheet that resulted in adjustments to estimates of
reserves for sales returns, customer chargebacks, accounts receivable, trade
promotions and inventory of
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approximately $16 million. Certain of these adjustments reflect actual costs
related to prior year activities that exceeded the estimated accruals
established at March 31, 1997.
Mr. Corso added that the Company believes that the factors that affected the
Company's performance in the third quarter would cause the Company's fourth
quarter performance to be significantly below analysts' expectations as well.
"In addition," he said, "the reexamination of our business that Mr. Becker
mentioned will likely result in a restructuring charge in the fourth quarter in
an amount not yet determined. While this will adversely affect the reported
operating results, the underlying changes that we will make to our business will
be important factors in our ability to operate successfully in the future."
The Company's operating results for its third fiscal quarter will result in
covenant defaults under its revolving credit facility, which would preclude
additional borrowing under that facility unless the Company obtains a waiver of
the defaults. "We have initiated discussions with our secured lenders, and we
hope to obtain an appropriate waiver," said Mr. Corso. There can be no assurance
that the requisite waiver will be obtained from the Company's lenders. If it is
not obtained, the lenders would have the right to preclude additional borrowings
and accelerate the Company's obligation to repay the approximately $52 million
that is currently outstanding under the facility. Accordingly, failure by the
Company to obtain a waiver of the covenant default would have a material adverse
effect on the Company.
The Company is reviewing its cash requirements to ensure that its liquidity over
the upcoming year will accommodate the marketing, product launch and other
trade-related efforts that are essential to the Company's business success in
the current market environment. This review will include an assessment of the
Company's ability to make the February 15, 1998 semiannual interest payment due
in connection with the Company's $200 million aggregate principal amount of
11-3/4% Senior Notes due in 2004.
The Company is a manufacturer and marketer of mass market fragrances and
cosmetics sold in the United States and internationally. Statements contained in
this news release, if not historical, are forward looking statements within the
meaning of section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, which involve risks and uncertainties that
could cause actual results to differ materially from the results described in
the forward looking statements. Such risks and uncertainties include the
Company's high level of debt and leverage, the effect on the Company of
restrictive debt covenants, the Company's dependence on key personnel,
competition in the Company's markets, changes in the retail industry, the
effects of seasonality and the Company's reliance on the year-end holiday season
and risks inherent in foreign operations. A further discussion of factors that
could affect the Company's results is included in the Company's reports filed
with the Securities and Exchange Commission.
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