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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-01629
PROSPECTUS
352,941 Shares
CML GROUP, INC.
Common Stock
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The 352,941 shares of common stock, $.10 par value (the "Common Stock"),
of CML Group, Inc. (the "Company") covered by this Prospectus are issued and
outstanding shares which may be offered and sold, from time to time, by William
Wilkinson, a stockholder of the Company (the "Selling Stockholder"). The shares
of Common Stock covered by this Prospectus (the "Shares") were issued to the
Selling Stockholder on June 27, 1996 in connection with the settlement of a
claim by the Selling Stockholder (the "Settlement") against NordicTrack, Inc., a
wholly-owned subsidiary of the Company ("NordicTrack"). The Settlement provides
that of the 352,941 shares of Common Stock issued to the Selling Stockholder,
88,000 of such shares will not be sold by the Selling Stockholder pursuant to
this Prospectus until after September 30, 1996 and an additional 175,941 of
such shares shall be non- transferable until after January 1, 1997. The
Selling Stockholder has advised the Company that he proposes to sell, from time
to time subject to the restrictions set forth in the preceding sentence, all
or part of the shares covered by this Prospectus on the New York Stock Exchange
in ordinary brokerage transactions, in negotiated transactions, or otherwise,
at market prices prevailing at the time of sale or negotiated prices. See
"PLAN OF DISTRIBUTION."
The Company will not receive any of the proceeds from the sale of shares
covered by this Prospectus but will bear all expenses incurred in effecting the
registration of such shares, including all registration and filing fees, "blue
sky" fees, printing expenses, and the legal fees of counsel to the Company.
The Selling Stockholder will bear all brokerage or underwriting expenses or
commissions, if any, applicable to the shares.
On July 1, 1996, the closing sale price of the Common Stock on the New
York Stock Exchange was $4.125 per share.
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THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is July 2, 1996.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048, and
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials also may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. In addition, the Company is required to file electronic
versions of these documents with the Commission through the Commission's
Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The Commission
maintains a World Wide Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The Common Stock of the Company is
traded on the New York Stock Exchange. Reports and other information concerning
the Company may be inspected at the New York Stock Exchange.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Common Stock offered hereby. This Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, as certain items are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Company and the Shares, reference is made to such Registration Statement
and the exhibits and schedules thereto. Statements contained in this Prospectus
regarding the contents of any agreement or other document are not necessarily
complete, and in each instance reference is made to the copy of such agreement
or document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement, including all exhibits and schedules thereto, may be inspected
without charge at the office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of all or any part thereof may be obtained
from the Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the fiscal year
ended July 31, 1995;
(ii) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended October 28, 1995;
(iii) The proxy statement for the Company's Annual Meeting of
Stockholders held on December 1, 1995;
(iv) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended January 27, 1996, as amended by Amendment No. 1 on Form
10-Q/A, dated March 15, 1996;
(v) The Company's Current Report on Form 8-K, dated February 22, 1996;
(vi) The Company's Current Report on Form 8-K, dated April 12, 1996;
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(vii) Specimen certificate for shares of Common Stock of the Company
is incorporated herein by reference to Exhibit 4 to the Company's
Registration Statement on Form S-1 (File No. 2-86828);
(viii) Form of Rights Certificate is incorporated herein by reference to
Exhibit B to Exhibit 1 to the Company's Form 8-A filed July 13,
1988;
(ix) Rights Agreement, dated as of June 28, 1988, between the Company
and The First National Bank of Boston is incorporated herein by
reference to Exhibit 1 to the Company's Form 8-A filed July 13,
1988, as amended by the Company's Form 8 filed August 5, 1988;
(x) Form of Certificate of Designation of Series A Junior
Participating Preferred Stock is incorporated herein by reference
to Exhibit A to Exhibit 1 to the Company's Form 8-A filed
July 12, 1988; and
(xi) The Company's Current Report on Form 8-K, dated June 6, 1996.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the Common Stock
registered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). All such requests shall be
directed to: CML Group, Inc., 524 Main Street, Acton, Massachusetts 01720,
Attention: Vice-President, Investor Relations, Telephone: (508) 264-4155.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
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THE COMPANY
CML Group, Inc. (the "Company" or "CML") was incorporated under the laws
of the State of Delaware in 1969. The Company's principal executive offices are
located at 524 Main Street, Acton, Massachusetts 01720, and its telephone number
is (508) 264-4155.
CML is a specialty marketing company offering: (i) physical fitness and
exercise equipment and other health-related products and (ii) gardening-
related gifts and accessories. The Company markets its products primarily
through direct response advertising in print and on television, through its
mail order catalogs and through its own specialty retail stores and kiosks. At
April 27, 1996, the Company operated 150 retail stores (excluding 126 stores
operated by The Nature Company and 9 stores operated by Hear Music) and 214
mall kiosks and had proprietary mail order customer lists containing
approximately 3 million names. The Company's principal specialty retailing
operations are conducted under the trade names NordicTrack[registered
trademark], NordicAdvantage[trademark] and Smith & Hawken[registered trademark].
As part of its strategy to focus its resources on businesses which have
the greatest growth prospects and offer the greatest potential return on
investment, the Company recently sold all of the capital stock of its men's
apparel subsidiary, Britches of Georgetowne and substantially all
of the assets of The Nature Company. In addition, the Company has decided to
sell Hear Music. No assurance can be given, however, that a sale of Hear Music
will occur.
CML's continuing operations consist of two industry segments: (i)
NordicTrack designs, manufactures and markets high quality aerobic and
anaerobic exercise equipment to consumers primarily through direct response
advertising in print and on television, its own mail order catalogs and retail
stores and kiosks operated by its wholly-owned subsidiary, NordicAdvantage and
(ii) Smith & Hawken markets gardening tools, plants and accessories.
Smith & Hawken's merchandise categories include garden furniture,
gardening tools, plants, garden-related accessories, books, housewares and
gifts and clothing.
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RISK FACTORS
In addition to the other information contained elsewhere in this
Prospectus, the following factors should be considered carefully by potential
investors in evaluating an investment in the Shares offered hereby.
CONSUMER SPENDING. The success of the Company is influenced by a number
of economic conditions affecting disposable consumer income, such as employment
levels, business conditions, interest rates and taxation rates. Adverse changes
in these economic conditions may restrict consumer spending, thereby negatively
affecting the Company's results of operations.
COMPETITION. The markets in which the Company is engaged are highly
competitive.
NordicTrack competes with several companies which design, manufacture
and distribute physical fitness and exercise equipment, including ICON Health
and Fitness, Inc., Road Master Industries, Inc., Diversified Products Corp.,
Health Rider, Inc., Soloflex, Inc. and Consumer Direct, Inc. During the past
five years, NordicTrack's competitors have introduced several new and
competitive products at competitive prices. The future success of NordicTrack
depends in part upon its ability to introduce new and competitive products
successfully and on a timely basis. The failure of the Company to successfully
compete with the competitors of NordicTrack could materially adversely affect
the financial condition of the Company.
Many of the competitors of Smith & Hawken are larger companies with
greater financial resources, a greater selection of merchandise and nationwide
distribution, including a large number and wide variety of specialty retail
stores, discount stores and department stores. Smith & Hawken competes with
mail order catalogs which sell gardening- related merchandise such as
Gardener's Eden, David Kay, Calyx & Corolla and Gardener's Supply. Smith &
Hawken also competes with independent garden stores and plant nurseries in
towns and cities throughout the United States. The failure of the Company to
successfully compete with the competitors of Smith & Hawken could adversely
affect the Company's operating results.
SEASONALITY. The Company's businesses are seasonal with significant
amounts of retail sales in the second and third fiscal quarters. The Company
expects this seasonality to continue in the future. Because of this
seasonality, the Company's revenues and earnings have fluctuated and may
continue to fluctuate from quarter to quarter.
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ADVERTISING AND MARKETING PROGRAMS. The Company's success in the
markets in which it competes depends in part upon the effectiveness of
advertising and marketing programs of the Company. The inability of the Company
to periodically design and successfully execute new and effective advertising
and marketing programs could adversely affect the Company's operating results.
COSTS OF POSTAGE AND SHIPPING. Postage expenses associated with mailing
catalogs and shipping charges associated with distributing merchandise to
customers are significant factors in the operation of the Company's businesses.
Increases in postage or shipping costs could adversely affect the Company's
operating results.
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS AND
SHAREHOLDER RIGHTS AGREEMENT. Certain provisions of Delaware law and of the
Company's Certificate of Incorporation could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of the Company. Such provisions could limit the
price that certain investors might be willing to pay in the future for shares of
Common Stock. Certain of these provisions could make it more difficult for
stockholders to effect certain corporate actions or could also have the effect
of delaying or preventing a change in control of the Company. The Company's
By-laws impose various procedural and other requirements which could make it
more difficult for stockholders to effect certain corporate actions. The rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any preferred stock that may be issued in the
future. The issuance of preferred stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a significant portion of the
outstanding Shares of voting stock of the Company. The Company has no present
plans to issue any shares of preferred stock. The Board of Directors adopted a
Shareholder Rights Agreement in 1988. While the primary purpose of the
Shareholder Rights Agreement is to enable stockholders to receive fair and equal
treatment in the event of any proposed acquisition of the Company, the
Shareholder Rights Agreement could make it more difficult for a third party to
acquire, and could discourage a third party from acquiring, the Company or a
large block of its capital stock.
INTELLECTUAL PROPERTY RIGHTS. The Company is subject to the risk of
adverse claims and litigation alleging infringement of intellectual property
rights. There can be no assurance that third parties will not assert
infringement claims in the future with respect to the Company's current or
future products or that any such claims will not require the Company to enter
into royalty arrangements or result in costly litigation. While the Company
believes that it currently has all licenses necessary to conduct its business,
no assurance can be given that additional licenses will not be required in the
future. Furthermore, no assurance can be given that, if any additional licenses
are required, such licenses could be obtained on commercially reasonable terms.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholder.
<TABLE>
THE SELLING STOCKHOLDER
The following table sets forth the name and the number of shares of
Common Stock beneficially owned by the Selling Stockholder as of the date of
this Prospectus, the number of the shares to be offered by the Selling
Stockholder and the number and percentage of shares to be owned beneficially by
the Selling Stockholder if all of the shares offered hereby by the Selling
Stockholder are sold as described herein.
<CAPTION>
PERCENTAGE
NUMBER OF NUMBER OF NUMBER OF OF SHARES
SHARES OF SHARES OF SHARES OF OF COMMON
COMMON COMMON COMMON STOCK STOCK
NAME OF STOCK STOCK BENEFICIALLY BENEFICIALLY
SELLING BENEFICIALLY OFFERED OWNED AFTER OWNED AFTER
STOCKHOLDER OWNED HEREBY OFFERING OFFERING
- ----------- ----- --------- ------------ ------------
<S> <C> <C> <C> <C>
William Wilkinson 352,941 352,941 0 0%
</TABLE>
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PLAN OF DISTRIBUTION
Shares of Common Stock covered hereby may be offered and sold in private
transactions involving principals, in transactions involving brokers, or by both
methods. Sales through brokers may be made by any method of trading authorized
by any stock exchange on which the shares of Common Stock covered hereby may be
listed, including block trading in negotiated transactions. Without limiting
the foregoing, such brokers may act as dealers by purchasing any or all of the
shares covered by this Prospectus, either as agents for others or as principals
for their own accounts, and reselling such shares pursuant to this Prospectus.
Sales of shares are, in general, expected to be made at the market price
prevailing at the time of each such sale; however, prices in negotiated
transactions may differ considerably. The Selling Stockholder has advised the
Company that it does not anticipate paying any consideration, other than usual
and customary broker's commissions, in connection with sales of the shares. The
Selling Stockholder is acting independently of the Company in making decisions
with respect to the timing, manner and size of each sale.
In offering the shares of Common Stock covered by this Prospectus, the
Selling Stockholder and any broker-dealers who execute sales for such Selling
Stockholder, may be considered to be "underwriters" within the meaning of the
Securities Act, and any profits realized by the Selling Stockholder and the
compensation of such broker-dealers may be deemed to be underwriting discounts
and commissions.
The Selling Stockholder has advised the Company that during such time as
the Selling Stockholder may be engaged in a distribution of Common Stock
included herein the Selling Stockholder will comply with 10b-6 and 10b-7 under
the Exchange Act and, in connection therewith, the Selling Stockholder has
agreed not to engage in any stabilization activity in connection with the
Company's securities, to furnish to each broker through which Common Stock
included herein may be offered copies of this Prospectus, and not to bid for or
purchase any securities of the Company or attempt to induce any person to
purchase any of the Company's securities except as permitted under the Exchange
Act. The Selling Stockholder has also agreed to inform broker-dealers through
whom sales may be made hereunder and to inform the Company when the distribution
of the shares held by the Selling Stockholder is completed.
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LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Hale and Dorr, a partnership including professional corporations, 60
State Street, Boston, Massachusetts 02109. Paul P. Brountas, a partner in the
firm of Hale and Dorr, is the Secretary of the Company.
EXPERTS
The consolidated financial statements and the related supplemental
schedules incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 1995, have been audited
by Deloitte & Touche LLP, independent public accountants, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon such report given upon their authority as experts in accounting
and auditing.
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