<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO______________
Commission file number 0-12628
-------
CML GROUP, INC.
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 04-2451745
- - ------------------------ -----------------------------------
(State of Incorporation) (IRS Employer Identification Number)
524 Main Street, Acton, Massachusetts 01720
- - --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 264-4155
--------------
Not Applicable
---------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No______
------
Number of shares outstanding of each of the issuer's classes of common stock:
50,166,067 shares of common stock, $.10 par value, as of June 3, 1994.
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Page 1 of 16 Pages
Exhibit Index Begins at Page 15
<PAGE> 2
<TABLE>
CML GROUP, INC. AND SUBSIDIARIES
--------------------------------
Form 10-Q
Index
-----
<CAPTION>
Page
----
<S> <C> <C>
Part I: Financial Information
Item 1: Financial Statements
Consolidated Condensed Balance Sheets as of
April 30, 1994 and July 31, 1993 3 - 4
Consolidated Condensed Statements of Income
for the three-month and nine-month periods ended
April 30, 1994 and May 1, 1993 5
Consolidated Condensed Statements of Cash
Flows for the nine-month periods ended
April 30, 1994 and May 1, 1993 6
Notes to Consolidated Condensed Financial Statements 7 - 9
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 12
Part II: Other Information 13 - 14
Signatures 14
Exhibit Index 15
</TABLE>
2
<PAGE> 3
Part I: FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
CML GROUP, INC. & SUBSIDIARIES
Consolidated Condensed Balance Sheets
-------------------------------------
ASSETS
<CAPTION>
April 30, 1994 July 31, 1993
-------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 52,445,000 $ 64,010,000
Accounts receivable - trade 38,320,000 23,884,000
Prepaid income taxes 7,127,000 7,127,000
Inventories:
Raw materials 11,728,000 8,940,000
Work in process 4,853,000 2,603,000
Finished goods 67,002,000 56,950,000
----------------- -----------------
Total inventories 83,583,000 68,493,000
Other current assets 24,973,000 12,879,000
----------------- -----------------
Total current assets 206,448,000 176,393,000
----------------- -----------------
Property, plant and equipment, at cost:
Land and buildings 19,490,000 14,663,000
Machinery and equipment 74,752,000 56,379,000
Leasehold improvements 103,809,000 89,122,000
----------------- -----------------
198,051,000 160,164,000
Less accumulated depreciation 62,303,000 48,707,000
----------------- -----------------
135,748,000 111,457,000
----------------- -----------------
Goodwill 35,240,000 33,847,000
Other assets 17,337,000 18,474,000
----------------- -----------------
$394,773,000 $340,171,000
================= =================
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
3
<PAGE> 4
<TABLE>
CML GROUP, INC. & SUBSIDIARIES
Consolidated Condensed Balance Sheets
-------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
April 30, 1994 July 31, 1993
-------------- -------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 255,000 $ 303,000
Accounts payable 30,361,000 36,199,000
Accrued compensation 6,869,000 7,537,000
Accrued restructuring costs 1,453,000 2,274,000
Accrued income taxes 5,698,000 5,036,000
Other accrued expenses 35,320,000 23,853,000
----------------- -----------------
Total current liabilities 79,956,000 75,202,000
----------------- -----------------
Noncurrent liabilities:
Long-term debt 1,354,000 1,529,000
Convertible subordinated debentures 57,500,000 57,500,000
Other noncurrent liabilities 22,574,000 21,690,000
----------------- -----------------
Total noncurrent liabilities 81,428,000 80,719,000
----------------- -----------------
Stockholders' equity:
Common stock par value $.10 per share
Authorized - 120,000,000 shares
Issued - 51,788,308 shares and
51,580,098 shares 5,179,000 5,158,000
Additional paid-in capital 76,284,000 75,347,000
Retained earnings 175,602,000 116,136,000
----------------- -----------------
257,065,000 196,641,000
Less treasury stock, at cost, 1,443,567
shares and 888,798 shares 23,676,000 12,391,000
----------------- -----------------
233,389,000 184,250,000
----------------- -----------------
$394,773,000 $340,171,000
================= =================
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
4
<PAGE> 5
<TABLE>
CML GROUP, INC. & SUBSIDIARIES
Consolidated Condensed Statements of Income
-------------------------------------------
For the periods ended April 30, 1994
and May 1, 1993
<CAPTION>
Three Months Nine Months
------------ -----------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $198,088,000 $169,363,000 $627,245,000 $512,902,000
------------ ------------ ------------ ------------
Less costs and expenses:
Cost of goods sold 70,662,000 62,021,000 231,562,000 196,252,000
Selling, general and administrative expenses 100,567,000 81,762,000 293,304,000 226,558,000
Interest expense 560,000 555,000 1,824,000 1,264,000
------------ ------------ ------------ ------------
171,789,000 144,338,000 526,690,000 424,074,000
------------ ------------ ------------ ------------
Income before provision for income taxes 26,299,000 25,025,000 100,555,000 88,828,000
Provision for income taxes 9,237,000 10,010,000 38,050,000 35,532,000
------------ ------------ ------------ ------------
Net income $17,062,000 $15,015,000 $62,505,000 $53,296,000
============ ============ ============ ===========
Earnings per share:
Primary $0.33 $0.29 $1.21 $1.03
===== ===== ===== =====
Fully diluted $0.33 $0.29 $1.19 $1.02
===== ===== ===== =====
Weighted average number of shares outstanding 51,554,304 51,994,791 51,781,621 51,969,920
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
5
<PAGE> 6
<TABLE>
CML GROUP, INC. & SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
-----------------------------------------------
<CAPTION>
For the Nine Months Ended
-------------------------
April 30, 1994 May 1, 1993
-------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $62,505,000 $53,296,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 17,930,000 13,148,000
Provision for doubtful notes receivable -- 682,000
Loss on disposal of property, plant and equipment 1,366,000 2,096,000
Changes in working capital items (39,652,000) (3,374,000)
(Increase) decrease in other assets 484,000 (2,095,000)
Decrease in goodwill -- 479,000
Increase in other noncurrent liabilities 884,000 37,000
-------------- ---------------
Net cash provided by operating activities 43,517,000 64,269,000
-------------- ---------------
Cash flows from investing activities:
Additions to property, plant and equipment (41,916,000) (30,082,000)
Acquisition of Smith & Hawken -- (14,766,000)
Reduction in notes receivable 96,000 547,000
-------------- ---------------
Net cash used in investing activities (41,820,000) (44,301,000)
--------------- ---------------
Cash flows from financing activities:
Decrease in long-term debt (223,000) (5,232,000)
Proceeds from sale of convertible debentures -- 57,500,000
Dividends paid (3,039,000) (1,998,000)
Exercise of stock options 396,000 1,009,000
Acquisition of treasury stock (10,396,000) (4,352,000)
--------------- ---------------
Net cash provided by (used in) financing activities (13,262,000) 46,927,000
--------------- ---------------
Net increase (decrease) in cash and cash equivalents
during the period (11,565,000) 66,895,000
Cash and cash equivalents at the beginning of the period 64,010,000 3,517,000
--------------- --------------
Cash and cash equivalents at the end of the period $52,445,000 $70,412,000
=============== ==============
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
- - ----------------------------------------------------
Note 1
- - ------
The accompanying consolidated condensed financial statements and notes should
be read in conjunction with the financial statements contained in the Company's
Annual Report on Form 10-K. In the opinion of management, the accompanying
consolidated condensed financial statements include all adjustments necessary
for a fair presentation of the results of the interim periods presented and all
such adjustments are of a normal recurring nature. The retail industry is
seasonal in nature and the results of operations for the interim periods
presented may not be indicative of the results for a full year.
The Company does not currently provide any benefit plans covered by SFAS
Nos. 106 or 112.
Certain 1993 amounts have been reclassified to conform to the 1994 presentation.
Note 2 - Long-term Debt
- - -----------------------
<TABLE>
Consolidated long-term debt is summarized as follows:
<CAPTION>
April 30, 1994 July 31, 1993
-------------- -------------
<S> <C> <C>
Note payable $1,386,000 $1,489,000
Obligations under capital leases 223,000 343,000
---------- ----------
1,609,000 1,832,000
Less current portion 255,000 303,000
---------- ----------
Long-term debt $1,354,000 $1,529,000
========== ==========
</TABLE>
Note 3 - Contingencies
- - ----------------------
Litigation
----------
In October 1992, The Nature Company filed a lawsuit against Natural Wonders,
Inc. in federal court which seeks both damages and injunctive relief to remedy
alleged false representations, intellectual property infringement and unfair
competition by Natural Wonders. In November 1992, Natural Wonders responded by
filing counterclaims against The Nature Company alleging unfair competition,
interference with Natural Wonders' contractual relations and prospective
business advantage in violation of state and federal antitrust laws. The
Nature Company is vigorously opposing the counterclaim.
In May 1993, Soloflex, Inc. commenced a civil suit against NordicTrack in
federal court alleging false advertising, intellectual property infringement,
trademark dilution and other common law causes of action, all allegedly arising
out of NordicTrack's advertising. Soloflex has filed a motion for preliminary
injunction. NordicTrack has filed a counterclaim against Soloflex alleging false
advertising and seeking unspecified actual and punitive damages to be proved at
trial.
Both of these lawsuits are still in the discovery stage and, while the Company
believes that it will prevail, no assurance can be given of a favorable outcome
in either or both lawsuits. The
7
<PAGE> 8
Company believes that an unfavorable outcome in either or both lawsuits would
not have a material adverse effect on the Company's financial condition but
could adversely affect the operating results for the period or periods in which
such outcome occurs.
The Company is involved in various other legal proceedings and claims which
have arisen in the ordinary course of business. Management believes the outcome
of such proceedings will not have a material adverse impact on the Company's
financial condition or results of operations.
Environmental Matters
---------------------
On June 3, 1991, the Company received from the United States Environmental
Protection Agency ("EPA") a Special Notice Letter ("Special Notice") containing
a formal demand on the Company as a Potentially Responsible Party ("PRP") for
reimbursement of the costs incurred and expected to be incurred in response to
environmental problems at a so-called "Superfund" site in Conway, New
Hampshire. The EPA originally estimated the costs of remedial action and future
maintenance and monitoring programs at the site at about $7.3 million. The
Superfund site includes a vacant parcel of land owned by a subsidiary of the
Company as well as adjoining property owned by others. No manufacturing or
other activities involving hazardous substances have ever been conducted by the
Company or its affiliates on the Superfund site in Conway. The environmental
problems affecting the land resulted from activities by the owners of the
adjoining parcel. Representatives of the Company have engaged in discussions
with the EPA regarding responsibility for the environmental problems and the
costs of cleanup. The owners of the adjoining parcel are bankrupt. The EPA
commenced cleanup activities at the site in July 1992.
The EPA has expended approximately $1.4 million for the removal phase of the
site cleanup, which has now been completed. The EPA had estimated that the
removal costs would exceed $3.0 million, but only a small portion of the solid
waste removed from the site was ultimately identified as hazardous waste.
Therefore, the EPA's actual response costs for the removal phase were less than
the EPA originally estimated. The EPA has recently begun to implement the
groundwater phase of the cleanup, which was originally estimated by the EPA to
cost approximately $4.0 million.
The Company believes that the EPA's estimated cost for cleanup, including the
proposed remedial actions, is excessive and involves unnecessary actions. In
addition, a portion of the proposed remedial cost involves cleanup of the
adjoining property that is not owned by the Company or any of its affiliates.
Therefore, the Company believes it is not responsible for that portion of the
cleanup costs. The Company has reserves and insurance coverage (from its
primary insurer) for environmental liabilities at the site in the amount of
approximately $2.3 million. The Company also believes that it is entitled to
additional insurance from its excess insurance carriers. However, if excess
liability coverage is not available to the Company and the ultimate liability
substantially exceeds the primary insurance amount and reserves, the liability
would have a material adverse effect upon the Company's operating results for
the period in which the resolution of the claim occurs, but would not have a
material adverse effect upon the Company's financial condition.
8
<PAGE> 9
In June 1992, the EPA notified the Company it may be liable for the release of
hazardous substances by a former subsidiary at a hazardous waste treatment and
storage facility in Southington, Connecticut. The EPA has calculated the
Company's volumetric contribution at less than two tenths of one percent. The
EPA has not completed its Remedial Investigation/Feasibility Study and,
therefore, an estimate of cleanup costs is not available.
Note 4 - Dividend
- - -----------------
On February 28, 1994, the Company's Board of Directors declared a cash dividend
of $0.02 per share, payable June 17, 1994 to shareholders of record as of May
31, 1994.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
----------------------
Financial Condition
- - -------------------
Stockholders' equity increased by $49.2 million from $184.2 million at July 31,
1993 to $233.4 million at April 30, 1994 due primarily to net income of $62.5
million partially offset by the repurchase of $11.3 million of common stock.
During the first nine months of fiscal 1994, the Company spent approximately
$41.9 million on additions to property, plant and equipment. The Company's
ratio of long-term debt to equity decreased from 0.32 to 1 at July 31, 1993 to
0.25 to 1 at April 30, 1994 primarily due to the increase in stockholders'
equity. The Company's available cash decreased from $64.0 million at July 31,
1993 to $52.4 million at April 30, 1994 primarily due to additional investments
in working capital, plant and equipment and the repurchase of common stock.
Total unused borrowing capacity under the Company's revolving credit agreement
was approximately $58.4 million at April 30, 1994 compared to $27.2 million at
July 31, 1993.
Results of Operations
- - ---------------------
During the third quarter of fiscal 1994, net sales increased by $28.7 million
to $198.1 million, or 16.9%, over the third quarter of fiscal 1993, while net
income increased by 14.0% to $17.1 million as compared to $15.0 million in the
third quarter of fiscal 1993. For the first nine months of fiscal 1994, net
sales increased by $114.3 million to $627.2 million, or 22.3%, compared to
$512.9 million in the first nine months of fiscal 1993 while net income
increased by 17.3% to $62.5 million as compared to $53.3 million in the first
nine months of fiscal 1993.
Total retail store sales increased by $25.2 million to $102.0 million, or
32.8%, over the third quarter of fiscal 1993. During the third quarter of
fiscal 1994, comparable store sales decreased by 0.2%. For the first nine
months of fiscal 1994, total retail store sales increased by $72.0 million to
$358.9 million, or 25.1%, over the first nine months of fiscal 1993 and
comparable store sales decreased by 1.8%. The increase in total retail store
sales for the third quarter and first nine months of fiscal 1994 was due
primarily to the addition of new NordicTrack, The Nature Company and Britches
Great Outdoors stores.
Direct response and mail order sales increased by $3.5 million to $96.1
million, or 3.8%, over the third quarter of fiscal 1993 and by $42.3 million to
$268.3 million, or 18.7%, over the first nine months of fiscal 1993. The
increase in direct response and mail order sales for the third quarter and
first nine months of fiscal 1994 was due primarily to higher direct response
sales at NordicTrack and the acquisition of Smith & Hawken in February 1993.
Cost of goods sold decreased from 36.6% and 38.3% of sales in the third quarter
and first nine months of fiscal 1993, respectively, to 35.7% and 36.9% of sales
in the third quarter and first nine months of fiscal 1994, respectively. The
decrease in cost of goods sold for the third quarter and first nine months of
fiscal 1994 was due primarily to higher gross margins at NordicTrack, The
Nature Company and Britches of Georgetowne.
Selling, general and administrative expenses increased from 48.3% and 44.2% of
sales in the third quarter and first nine months of fiscal 1993, respectively,
to 50.8% and 46.8% of sales in the third quarter and first nine months of
fiscal 1994, respectively. The increase in selling,
10
<PAGE> 11
general and administrative expenses for the third quarter and first nine months
of fiscal 1994 was due to higher expenses at NordicTrack and The Nature Company
and the acquisition of Smith & Hawken.
Interest expense was $0.6 million, or 0.3% of sales, in the third quarter of
fiscal 1994 and the third quarter of fiscal 1993. During the first nine months
of fiscal 1994, interest expense increased to $1.8 million, or 0.3% of sales,
compared to $1.3 million, or 0.2% of sales, in the first nine months of fiscal
1993. The increase in interest expense during the first nine months of fiscal
1994 was due primarily to the interest expense associated with the $57.5
million principal amount of 5-1/2% convertible subordinated debentures issued
during fiscal 1993.
The provision for income taxes as a percentage of pretax income decreased from
40.0% in each of the third quarter and first nine months of fiscal 1993 to
35.1% in the third quarter and 37.8% in the first nine months of fiscal 1994.
The increase in net income during the third quarter and first nine months of
fiscal 1994 was due primarily to higher sales and higher gross margins.
During the third quarter of fiscal 1994, NordicTrack's sales increased by $21.3
million to $142.5 million, or 17.6%, over the third quarter of fiscal 1993.
NordicTrack's retail sales increased from $34.6 million in the third quarter of
fiscal 1993 to $53.8 million in the third quarter of fiscal 1994 due primarily
to the opening of new stores. NordicTrack's comparable store sales increased
7.4% during the third quarter of fiscal 1994. NordicTrack's direct response
sales increased by $2.2 million during the third quarter of fiscal 1994 to
$88.7 million, or 2.5%, over the third quarter of fiscal 1993.
During the first nine months of fiscal 1994, NordicTrack's sales increased by
$72.2 million to $379.5 million, or 23.5%, over the first nine months of fiscal
1993. NordicTrack's retail sales increased $46.0 million, or 46.7%, from $98.5
million in the first nine months of fiscal 1993 to $144.5 million in the first
nine months of fiscal 1994. NordicTrack's comparable store sales increased
5.5% during the first nine months of fiscal 1994. During the first nine months
of fiscal 1994, NordicTrack's direct response sales increased by $26.2 million
to $235.0 million, or 12.5%, over the first nine months of fiscal 1993. The
increase in retail sales at NordicTrack was due primarily to the opening of new
stores. NordicTrack operated 75 stores at the end of the third quarter of
fiscal 1994 compared to 38 stores at the end of the third quarter of fiscal
1993.
The Nature Company segment includes The Nature Company, Smith & Hawken
(acquired in February 1993) and two early stage retail concepts, Hear Music and
Scientific Revolution. During the third quarter of fiscal 1994, The Nature
Company segment's sales increased by $5.2 million to $34.3 million, or 17.9%,
over the third quarter of fiscal 1993. The Nature Company segment's retail
sales increased by $3.8 million, or 16.5%, to $26.9 million compared to $23.1
million during the third quarter of fiscal 1993. The Nature Company segment's
comparable store sales decreased 5.2% during the third quarter of fiscal 1994.
At the end of the third quarter of fiscal 1994, The Nature Company segment
operated 131 stores compared to 105 stores at the end of the third quarter of
fiscal 1993. During the third quarter of fiscal 1994, The Nature Company
segment's mail order sales increased by $1.4 million to $7.4 million compared
to $6.0 million during the third quarter of fiscal 1993. The increase in mail
order sales during the third quarter of fiscal 1994 was due primarily to the
acquisition of Smith & Hawken.
During the first nine months of fiscal 1994, The Nature Company segment's sales
increased by $33.2 million to $157.0 million, or 26.8%, over the first nine
months of fiscal 1993. The Nature Company segment's retail sales increased by
$17.1 million, or 16.1%, to $123.6 million compared to $106.5 million in the
first nine months of fiscal 1993. The Nature Company segment's comparable
store sales decreased 4.9% during the first nine months of fiscal 1994. During
the first nine months of fiscal 1994, The Nature Company segment's mail order
sales
11
<PAGE> 12
increased by $16.2 million to $33.4 million compared to $17.2 million during
the first nine months of fiscal 1993. The increase in mail order sales during
the first nine months of fiscal 1994 was due primarily to the acquisition of
Smith & Hawken.
During the third quarter of fiscal 1994, Britches' sales increased by $2.2
million, or 11.5%, to $21.3 million compared to $19.1 million during the third
quarter of fiscal 1993. Sales of the company's casual men's clothing division,
Britches Great Outdoors, increased by $2.9 million, or 23.0%, during the third
quarter of fiscal 1994 to $15.5 million compared to $12.6 million during the
third quarter of fiscal 1993. Sales of the company's professional men's
clothing division, Britches of Georgetowne, decreased by $0.7 million, or
10.8%, during the third quarter of fiscal 1994 to $5.8 million compared to $6.5
million during the third quarter of fiscal 1993. On a comparable store basis,
Britches Great Outdoors' sales decreased 2.0% and Britches of Georgetowne's
sales decreased 11.3% during the third quarter of fiscal 1994. At the end of
the third quarter of fiscal 1994, Britches operated 72 and 14 Great Outdoors
and Britches of Georgetowne stores, respectively, compared to 52 and 14 Great
Outdoors and Britches of Georgetowne stores, respectively, at the end of the
third quarter of fiscal 1993.
During the first nine months of fiscal 1994, Britches' sales increased $8.9
million, or 10.9%, to $90.8 million compared to $81.9 million during the first
nine months of fiscal 1993. Sales of Britches Great Outdoors increased by
$11.0 million to $70.5 million, or 18.5%, and sales of Britches of Georgetowne
decreased by $2.1 million to $20.3 million, or 9.4%, compared to the first nine
months of fiscal 1993. On a comparable store basis, Britches Great Outdoors'
sales decreased 3.1% and Britches of Georgetowne's sales decreased 9.0% during
the first nine months of fiscal 1994.
The Company does not currently provide any benefit plans covered by SFAS Nos.
106 or 112.
12
<PAGE> 13
PART II: OTHER INFORMATION
Item 1: Legal Proceedings.
Environmental Matters
---------------------
Note 3 of Notes to Consolidated Condensed
Financial Statements in Item 1 of Part I hereof
is hereby incorporated by reference for
information concerning environmental matters.
Litigation
----------
In October 1992, The Nature Company filed a lawsuit against Natural
Wonders, Inc. in the United States District Court for the Northern District of
California which seeks both damages and injunctive relief to remedy alleged
false representations, intellectual property infringement and unfair
competition by Natural Wonders. In November 1992, Natural Wonders responded by
filing counterclaims against The Nature Company alleging unfair competition,
interference with Natural Wonders' contractual relations and prospective
business advantage in violation of state and federal antitrust laws, and
seeking damages treble the amount to be proved at trial. The Nature Company is
vigorously opposing the counterclaim.
In May 1993, Soloflex, Inc. commenced a civil suit against NordicTrack
in the United States District Court for the District of Oregon alleging false
advertising, intellectual property infringement, trademark dilution and other
common law causes of action, all allegedly arising out of NordicTrack's
advertising. Soloflex which is seeking damages in the amount of $25 million
has filed a motion for preliminary injunction. NordicTrack has filed a
counterclaim against Soloflex alleging false advertising and seeking
unspecified actual and punitive damages to be proved at trial.
Both of these lawsuits are still in the discovery stage and, while the
Company believes that it will prevail, no assurance can be given of a
favorable outcome in either or both lawsuits. The Company believes that an
unfavorable outcome in either or both lawsuits would not have a material
adverse effect on the Company's financial condition but could adversely affect
the operating results for the period or periods in which such outcome occurs.
The Company is involved in various other legal proceedings which have
arisen in the ordinary course of business. Management believes the outcome of
such proceedings will not have a material adverse impact on the Company's
financial condition or results of operations.
13
<PAGE> 14
Items 2-5: None.
Item 6: Exhibits and Reports on Form 8-K.
(a) Exhibits - See Exhibit Index.
(b) Reports on Form 8-K:
None.
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.
CML GROUP, INC.
---------------
(Registrant)
Date: June 14, 1994
------------- /s/ Glenn E. Davis
---------------------------------
Glenn E. Davis
Vice President and Controller
(Principal Accounting Officer)
14
<PAGE> 15
<TABLE>
EXHIBIT INDEX
<CAPTION>
Page No.
--------
<S> <C> <C> <C>
11 -- Statement Regarding Computation of Earnings Per Share 16
</TABLE>
15
<PAGE> 1
<TABLE>
Exhibit 11
----------
CML GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Third Quarter Nine Months
------------- -----------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary earnings per share:
Weighted average number of shares
outstanding:
Common 50,512,151 50,586,976 50,571,798 49,878,072
Shares deemed outstanding from the
assumed exercise of stock options
and from deferred compensation
awards 1,042,153 1,407,815 1,209,823 2,091,848
-------------- -------------- --------------- -----------
Total 51,554,304 51,994,791 51,781,621 51,969,920
============== ============== =============== ==========
Net income $17,062,000 $15,015,000 $62,505,000 $53,296,000
============== ============== =============== ===========
Primary earnings per share $0.33 $0.29 $1.21 $1.03
===== ===== ===== =====
Fully diluted earnings per share:
Weighted average number of shares
outstanding, as above 51,554,304 51,994,791 51,781,621 51,969,920
Shares deemed outstanding from the
assumed conversion of convertible
subordinated debentures 2,218,649 2,218,649 2,218,649 739,549
Additional shares deemed outstanding
from the assumed exercise of
stock options -- 39,840 33,683 145,611
-------------- -------------- -------------- ----------
Total 53,772,953 54,253,280 54,033,953 52,855,080
============== ============== =============== ==========
Additional income from the elimination of
the interest cost of the convertible subord-
inated debentures, net of income tax effect $543,000 $504,000 $1,563,000 $504,000
Fully diluted earnings per share $0.33 $0.29 $1.19 $1.02
===== ===== ===== =====
</TABLE>
16
