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 MAY 29, 1999 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 0-24390
TREND - LINES, INC.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact name of registrant as specified in its charter)
Massachusetts 04-2722797
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
135 American Legion Highway, Revere, Massachusetts 02151
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of principal executive office) (Zip Code)
(781) 853 - 0900
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Registrant's telephone number, including area code)
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......
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS NUMBER OF SHARES OUTSTANDING June 2, 1999
- ----- -----------------------------------------
Class A Common Stock, $.01 par value 5,959,553
Class B Common Stock, $.01 par value 4,681,082
<PAGE>
Trend-Lines, Inc. and Subsidiary
INDEX
Page
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
May 29, 1999 (Unaudited) and February 27, 1999 3
Condensed Consolidated Statements of Operations
Three Months Ended May 29, 1999 and
May 30, 1998 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended May 29, 1999 and
May 30, 1998 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition And Results of Operations 9-13
Part II - Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
TREND-LINES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(Unaudited)
ASSETS
May 29, February 27,
1999 1999
-------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 541 $ 540
Accounts receivable, net 23,938 22,270
Inventories 134,895 131,219
Prepaid expenses and other current assets 5,913 9,508
-------- ---------
Total current assets 165,287 163,537
PROPERTY AND EQUIPMENT, NET 21,384 21,413
INTANGIBLE ASSETS, NET 6,534 6,621
OTHER ASSETS 1,298 1,367
-------- ---------
$194,503 $ 192,938
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank credit facility $ 85,302 $ 80,152
Current portion of capital lease obligations 965 1,028
Accounts payable 58,364 62,589
Accrued expenses 8,700 8,056
-------- ---------
Total current liabilities 153,331 151,825
-------- ---------
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION 560 671
-------- ---------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value -
Class A --
Authorized - 20,000,000 shares
Issued - 6,469,553 shares at May 29, 1999
and February 27, 1999 64 64
Class B --
Authorized - 5,000,000 shares
Issued and outstanding - 4,681,082 shares
at May 29, 1999 and February 27, 1999 47 47
Additional paid-in capital 41,625 41,625
Retained earnings 1,336 1,166
Less 500,000 Class A shares held in treasury
at May 29, 1999 and February 27, 1999, at cost (2,460) (2,460)
-------- ---------
Total stockholders' equity 40,612 40,442
-------- ---------
$194,503 $ 192,938
======== =========
See notes to condensed consolidated financial statements
<PAGE>
TREND-LINES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(Unaudited)
Three Months Ended
May 29, May 30,
1999 1998
----------- -----------
NET SALES $ 70,981 $ 59,639
COST OF SALES 48,841 42,058
----------- -----------
Gross Profit 22,140 17,581
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 20,273 23,418
----------- -----------
Income (loss) from operations 1,867 (5,837)
INTEREST EXPENSE, NET 1,588 1,053
----------- -----------
Income (loss) before provision (benefit)
for income tax 279 (6,890)
PROVISION (BENEFIT) FOR INCOME TAXES 109 (2,287)
----------- -----------
Net income (loss) $ 170 $ (4,603)
=========== ===========
BASIC NET INCOME (LOSS) PER SHARE $ 0.02 $ (0.43)
=========== ==========
DILUTED NET INCOME (LOSS) PER SHARE $ 0.02 $ (0.43)
=========== ===========
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING (Note 2) 10,650,635 10,641,896
=========== ===========
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (Note 2) 10,720,279 10,641,896
=========== ===========
See notes to condensed consolidated financial statements.
<PAGE>
TREND-LINES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(Unaudited)
Three Months Ended
May 29, May 30,
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 170 $ (4,603)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities--
Depreciation and amortization 1,225 1,014
Changes in current assets and liabilities
Accounts receivable (1,668) 1,167
Inventories (3,676) (7,293)
Prepaid expenses and other current assets 3,595 (8)
Accounts payable (4,225) (5,061)
Accrued expenses 644 2,980
--------- ---------
Net cash used in operating activities (3,935) (11,804)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,109) (2,093)
Increase (decrease) in other assets 69 (4)
--------- ---------
Net cash used in investing activities (1,040) (2,097)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under bank credit facilities 5,150 13,970
Net payments on capital lease obligations (174) (180)
Proceeds from exercise of stock options - 100
--------- ---------
Net cash provided by financing activities 4,976 13,890
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1 (11)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 540 669
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 541 $ 658
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (refunded) for:
Interest $ 1,571 $ 1,021
========= =========
Income taxes $ (3,574) $ 1,550
========= =========
See notes to condensed consolidated financial statements.
<PAGE>
TREND-LINES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The information set forth in these financial statements is unaudited and may be
subject to normal year end adjustments. In the opinion of management, the
information reflects all adjustments, which consist of normal recurring
accruals, that are considered necessary to present a fair statement of the
results of operations of Trend-Lines, Inc. (the "Company") for the interim
periods presented. The operating results for the three months ended May 29, 1999
are not necessarily indicative of the results to be expected for the fiscal year
ending February 26, 2000.
The financial statements presented herein should be read in conjunction with the
financial statements included in the Company's Annual Report on Form 10-K for
the fiscal year February 27, 1999. Certain information in footnote disclosures
normally included in financial statements has been condensed or omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission.
2. Earnings Per Share Data
In fiscal 1997, the Company adopted SFAS No. 128 Earning Per Share, which
changed the method of calculating earnings per share. SFAS 128 requires the
presentation of "basic" earnings per share and "diluted" earnings per share.
Basic earnings per share is computed by dividing the net income available to
common shareholders by the weighted average number of shares of common stock
outstanding. For the purposes of calculating diluted earnings per share, the
denominator includes both the weighted average number of common stock
outstanding and the dilutive effect of common stock equivalents such as stock
options and warrants. For the quarter ended May 30, 1998 the effect of dilutive
stock options were not included in the earnings per share calculation as their
effect would have been antidilutive. The total of 538,047 dilutive options were
excluded.
Below is a summary of the shares used in calculating basic and diluted earnings
per share:
Three Months Ended
May 29, May 30,
1999 1998
Weighted average number of shares of common
Stock outstanding 10,650,635 10,641,896
Impact of Dilutive stock options 69,644 0
Diluted weighted average shares outstanding 10,720,279 10,641,896
3. Bank Credit Facility
During fiscal 1996, the Company entered into a secured line of credit agreement
with a bank (the "credit facility") that, as amended during fiscal 1998, expires
on December 31, 2001. The credit facility bears interest at the bank's reference
rate plus .75% (8.50% at May 29, 1999) or LIBOR plus 2.25% (7.17% at May 29,
1999). If for any 12 month rolling period, the fixed charges ratio exceeds
certain limits, as defined, the bank's interest rate on the credit facility is
decreased by .25% for the period immediately following such rolling period. A
commitment fee of .375% per year of the average unused commitment amount, as
defined, is payable monthly. The credit facility allows for borrowing up to $100
million based on a percentage of inventory (the "advance rate"). Borrowings
include 50% of the amounts reserved for outstanding letters of credit.
<PAGE>
At May 29, 1999, the Company had approximately $85.3 million of borrowings
outstanding and approximately $.5 million of letters of credit outstanding. The
Company had approximately $.7 million in available borrowings under this
facility at May 29, 1999. The bank has a security interest in substantially all
assets of the Company. The bank credit facility agreement contains certain
financial covenants, including, but not limited to, maintaining minimum levels
of tangible net worth, and interest coverage ratios and limitations on capital
expenditures. At May 29, 1999, the Company was in compliance with all financial
covenants.
The borrowing base of the credit facility is to a maximum amount of $100
million. The advance rate is 65% through the last day of May, 1999, 70% from the
first day of June, 1999 through the last day of October, 1999, and 65%
thereafter. The Company is required to maintain an interest coverage ratio of
2.00:1.00 for the nine months ended May 31, 1999, and 2.00:1.00, on a rolling 12
month basis for each quarter thereafter. The adjusted tangible net worth as of
the last day of the first fiscal quarter of 1999 is required to be $40.0
million, the second and third fiscal quarter of 1999 is required to be $41.0
million, and for the fourth fiscal quarter 1999 and each fiscal quarter
thereafter, adjusted tangible net worth is required to be $42.0 million. Capital
expenditures may not exceed $6,000,000 for any fiscal year.
4. Selected Information By Business Segment
Information as to the operations of the different business segments with respect
to sales and operating income is set forth below for quarters ended May 29, 1999
and May 30, 1998 (in thousands):
Three Months Ended
May 29, May 30,
1999 1998
Net Sales
Retail
Tools $38,222 $31,432
Golf 22,013 17,536
Catalog
Tools 5,918 6,106
Golf 4,828 4,565
------- -------
$70,981 $59,639
======= =======
Income (loss) from operations
Retail
Tools $ 3,023 $ (603)
Golf 674 (106)
Catalog
Tools 1,153 (132)
Golf 237 ( 5)
General corporate expenses (3,220) (4,991)
------- -------
$ 1,867 $(5,837)
======= =======
The Company sells its products through its Woodworkers Warehouse, Post Tool and
Golf Day retail stores and its Trend-Lines and Golf Day catalogs. These
businesses have been aggregated into their respective reportable segments based
on the management reporting structure. The Company operates from a single
distribution center in Revere Massachusetts, for its Woodworkers Warehouse and
Golf Day operations and utilizes common labor pools, common management at the
corporate level and a single telemarketing sales force. Post Tool, Inc. has a
distribution center facility in Hayward, California. As a result, many of the
expenses of the Company are shared between the business segments. The
disclosures in the above table were determined after allocating shared resources
and expenses.
<PAGE>
The primary difference between the operating income for the quarter ended May
29, 1999 and the operating loss in the quarter ended May 30,1998, relates to the
problems encountered in the implementation of the new warehouse management
system.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Net sales for the first quarter of fiscal 1999 increased by $11.4 million, or
19.1%, from $59.6 million for the first quarter of fiscal 1998 to $71.0 million.
Net retail sales for the first quarter of 1999 increased $11.3 million or 22.9%
from $48.9 million for the first quarter of fiscal 1998 to $60.2 million.
Despite lower sales last year caused by warehouse management system
implementation problems, catalog sales were only $75,000 more than last year.
This is partially due to the Company's practice, which the Company plans to
continue, of not mailing catalogs to areas where it operates retail stores. The
revenue growth of retail stores is primarily attributable to store sales growth
at existing retail locations as well as the expansion of the Company's retail
store base. Comparable store sales for Woodworkers Warehouse, Post Tool and Golf
Day stores for the first quarter of fiscal 1999 increased by 16.5% as compared
to the first quarter of fiscal 1998. The store base expanded 6.6% from 213
locations at the end of the first quarter of fiscal 1998 to 227 locations at the
end of the first quarter of fiscal 1999. Furthermore, in order to rebuild retail
customer traffic, the Company was more promotional in its advertising efforts,
which also stimulated sales growth.
The following table presents net sales and gross margin data of the Company for
the quarters indicated:
<PAGE>
Three Months Ended
May 29, May 30,
1999 1998
(In thousands, except percentage data)
Net Sales:
Retail
Tools $38,222 $31,432
Golf 22,013 17,536
Catalog
Tools 5,918 6,106
Golf 4,828 4,565
------- -------
Total $70,981 $59,639
======= =======
Gross Margin 31.2% 29.5%
Following is a summary of retail store growth:
Three Months Ended
May 29 May 30
1999 1998
Stores operated at the beginning of the quarter
Tools 149 132
Golf 82 71
Total 231 203
Stores opened during the quarter
Tools 1 8
Golf 0 5
--- ---
Total 1 13
Stores closed during the quarter
Tools 2 3
Golf 3 0
--- ---
Total 5 3
Stores operated at the end of the quarter
Tools 148 137
Golf 79 76
--- ---
Total 227 213
=== ===
Gross profit for the first quarter of fiscal 1999 increased $4.6 million, or
25.9%, from $17.6 million for the first quarter of fiscal 1998 to $22.2 million
for the first quarter of fiscal 1999. As a percentage of net sales, gross profit
increased 1.7% from 29.5% of net sales for the first quarter of fiscal 1998 to
31.2% of net sales in the first quarter of fiscal 1999. Gross margin for the
first quarter of fiscal 1998 was lower than normal due to reduced catalog
shipments that resulted from warehouse management system implementation
problems. Gross margin for the first quarter of fiscal 1999 was consistent with
historical performance parameters given the different levels of gross margin
that are inherent between the retail and catalog businesses.
<PAGE>
Selling, general and administrative expenses for the first quarter of fiscal
1999 decreased $3.2 million, or 13.4%, from $23.4 million for the first quarter
of fiscal 1998 to $20.2 million for the first quarter of fiscal 1999. As a
percentage of net sales, selling, general and administrative expenses decreased
10.7% from 39.3% of net sales in the first quarter of fiscal 1998 to 28.6% of
net sales in the first quarter of fiscal 1999. The decrease in selling, general
and administrative expenses is primarily related to the elimination of the
non-recurring expenses incurred last year as a result of the problems
encountered in the implementation of the then new warehouse management system.
Interest expense for the first quarter of fiscal 1999, net of interest income,
increased by $.5 million from $1.1 million in the first quarter of fiscal 1998
to $1.6 million in the first quarter of fiscal 1999. The increase in interest
expense was attributable to the increase in the amount outstanding under the
Company's existing bank credit facility.
Liquidity and Capital Resources
The Company believes that projected cash flows from operations in combination
with current available resources are sufficient to meet working capital needs,
such as store openings and debt payments. Achievement of projected cash flows
from operations, however will be dependent upon the Company's attainment of
sales, gross profit, expense and trade support levels that are consistent with
its financial plans. Such operating performance will be subject to financial,
economic and other factors affecting the industry and operations of the Company,
including factors beyond its control, and there can be no assurance that the
Company's plans will be achieved. If projected cash flows from operations are
not realized, then the Company may have to explore various available
alternatives, including obtaining further modification to its existing lending
arrangements or attempting to locate additional sources of financing.
The Company's working capital increased by $.3 million, from $11.7 million as of
February 27, 1999 to $12.0 million as of May 29, 1999. The increase resulted
primarily from an increase in accounts receivable of $1.7 million, an increase
in inventory of $3.7 million and a decrease in accounts payable of $4.2 million,
which was offset by an increase in the net borrowings under the Company's bank
credit facility of $5.2 million, an increase in accrued expenses of $.6 million
and a decrease in other current assets of $3.6 million.
During the first quarter of 1999, the cash used in operating activities was $3.9
million. The primary uses of the cash were a decrease in accounts payable of
$4.2 million, an increase in inventories of $3.7 million, an increase in
accounts receivable of $1.7 million, offset by a decrease in prepaid expenses of
$3.6 million and an increase in accrued expenses of $.6 million and depreciation
and amortization of $1.2 million.
The net cash used in investing activities was approximately $1.0 million. The
main use of the cash was for the purchase of property and equipment.
The net cash provided by financing activities was approximately $5.0 million and
was primarily attributable to the increase in borrowings on the Company's bank
credit facility of $5.2 million.
During fiscal 1996, the Company entered into a secured line of credit agreement
with a bank (the "credit facility") that, as amended during fiscal 1998, expires
on December 31, 2001. The credit facility bears interest at the bank's reference
rate plus .75% (8.50% at May 29, 1999) or LIBOR plus 2.25% (7.17% at May 29,
1999). If for any 12 month rolling period the fixed charges ratio exceeds
certain limits, as defined, the bank's interest rate on the credit facility is
decreased by .25% for the period immediately following such rolling period. A
commitment fee of .375% per year of the average unused commitment amount, as
defined, is payable monthly. The credit facility allows for borrowing up to $100
million based on a percentage of inventory (the "advance rate"). Borrowings
include 50% of the amounts reserved for outstanding letters of credit.
<PAGE>
At May 29, 1999, the Company had approximately $85.3 million of borrowings
outstanding and approximately $.5 million of letters of credit outstanding. The
Company had approximately $.7 million in available borrowings under this
facility at May 29, 1999. The bank has a security interest in substantially all
assets of the Company. The bank credit facility agreement contains certain
financial covenants, including, but not limited to, maintaining minimum levels
of tangible net worth, and interest coverage ratios and limitations on capital
expenditures. At May 29, 1999, the Company was in compliance with all financial
covenants.
The borrowing base of the credit facility is to a maximum amount of $100
million. The advance rate is 65% through the last day of May, 1999, 70% from the
first day of June, 1999 through the last day of October, 1999, and 65%
thereafter. The Company is required to maintain an interest coverage ratio of
2.00:1.00 for the nine months ended May 31, 1999, and 2.00:1.00, on a rolling 12
month basis for each quarter thereafter. The adjusted tangible net worth as of
the last day of the first fiscal quarter of 1999 is required to be $40.0
million, the second and third fiscal quarter of 1999 is required to be $41.0
million, and for the fourth fiscal quarter of 1999 and each fiscal quarter
thereafter, adjusted tangible net worth is required to be $42.0 million. Capital
expenditures may not exceed $6,000,000 for any fiscal year.
The Company anticipates that it will open 10 to 15 new stores in fiscal 1999
which will be somewhat offset by store closings. To the extent necessary, the
Company will continue to invest in leasehold improvements and equipment to
support its retail store expansion plans. In addition, the Company's expansion
plans will require the use of cash to fund increased inventories associated with
the operation of additional retail stores. The Company estimates that the cost
of opening a new store (exclusive of distribution center inventory) averages
approximately $350,000, of which $290,000 consists of inventory, in the case of
tool store, and approximately $425,000, of which $300,000 consists of inventory,
in the case of a golf store. In each case, a portion of the inventory investment
is financed with trade credit. The Company opened one new tool store and closed
three golf stores and two tool stores in the first quarter of fiscal 1999.
YEAR 2000
Like many other companies, the Year 2000 computer issue creates risk for the
Company. If both information technology systems and imbedded technology do not
correctly recognize date information when the year changes to 2000, it could
have an adverse impact on the Company's operations. The Company is currently
updating its software to accommodate programming logic that properly interprets
Year 2000 dates, which is planned to be completed by September, 1999. A review
of embedded technology used in equipment provided by outside vendors with the
manufacturers of such equipment, is planned to be completed by September, 1999.
The Company does not anticipate difficulty in resolving issues related to
embedded technology in the equipment provided by other manufacturers.
The Company is also inquiring of important third party vendors regarding their
readiness, and this review is planned to be completed by July, 1999. Except for
merchandising and call center applications, all software is under maintenance
agreements by software companies that provide updated, Year 2000 compliant
software. The Company is in the process of replacing its call center and
merchandising software with new, Year 2000 compliant applications to be supplied
by outside vendors at a cost estimated at approximately $2.0 million. This new
software is planned to be installed, tested and fully functional by August,
1999. Funds for this expenditure will be provided by either operating activities
or the Company's revolving credit facility.
Based on the Company's work to date and assuming that the Company's call center
and merchandising software replacement projects can be implemented as planned,
the Company believes that it will be Year 2000 compliant and that future costs
relating to the Year 2000 issue will not have a material impact on the Company's
consolidated financial position, results of operations or cash flows.
<PAGE>
Since the Company relies on third-party suppliers for many systems, products and
services including merchandise, telecommunications and call center support, the
Company could be adversely affected if these suppliers do not make necessary
changes to their own systems and products successfully and in a timely manner.
The Company will make inquiries with major third party suppliers regarding their
Year 2000 compliance. However, there can be no assurance that such third parties
will provide complete or accurate Year 2000 readiness disclosures.
Management of the Company believes it has an effective program in place to
resolve the Year 2000 issue in a timely manner. Nevertheless, since it is not
possible to anticipate all possible future outcomes, especially when third
parties are involved, there could be circumstances in which the Company could be
adversely affected. For example, the Company could encounter problems in taking
customer orders, shipping products, invoicing customers or collecting payments.
The amount of potential lost revenue or related consequences as a result of
these unlikely contingencies has not been estimated.
The Company expects to evaluate the status of its contingency plans after it has
completed the remediation of the Y2K project for its information systems. In
addressing issues not resolved or contemplated for its systems, the Company
plans to allocate internal resources and may retain dedicated consultants and
vendor representatives to be available to take corrective action, if necessary.
However, the Company will adjust and adopt additional plans if situations arise
requiring modifications to existing contingency plans or new contingency plans,
as required.
Impact of Inflation
The Company does not believe that inflation has had a material impact on its net
sales or results of operations.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements included in this report that do not relate to present or historical
conditions are "forward-looking statements" within the meaning of the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Additional oral or written forward-looking statements may be made by the Company
from time to time, and such statements may be included in documents other than
this report that are filed with the Securities and Exchange Commission. Such
forward-looking statements involve risks and uncertainties that could cause
results or outcomes to differ materially from those expressed in such
forward-looking statements. Forward-looking statements in this report and
elsewhere may include without limitation, statements relating to the Company's
plans, strategies, objectives, expectations, intentions and adequacy of
resources and are intended to be made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Words such as "believes,"
"forecasts," "intends," "possible," "expects," "estimates," "anticipates," or
"plans" and similar expressions are intended to identify forward-looking
statements. Investors are cautioned that such forward-looking statements involve
risks and uncertainties including without limitation the following: (i) the
Company's plans, strategies, objectives, expectations and intentions are subject
to change at any time at the discretion of the Company; (ii) increased
competition, a change in the retail business in the tool and/or golf sectors or
a change in the Company's merchandise mix; (iii) a change in the Company's
advertising, pricing policies or its net product costs after all discounts and
incentives; (iv) the Company's plans and results of operations will be affected
by the Company's ability to manage its growth and inventory; (v) the Company's
ability to achieve its plans and strategies of growth will be dependent on
maintaining adequate bank and other financing: (vi) the timing and effectiveness
of programs dealing with the Year 2000 issue; and (vii) other risks and
uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission.
<PAGE>
TREND-LINES, INC. AND SUBSIDIARY
Part II - Other Information
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number
27 Financial Data Schedule (furnished to the Securities and Exchange
Commission for Electronic Data Gathering, Analysis and Retrieval [Edgar]
purposes only)
(b) Reports on Form 8-K - not applicable
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.
TREND-LINES, INC.
Registrant
Date: July 13, 1999 /s/
---------------------------------
Stanley D. Black
(Chief Executive Officer)
/s/
---------------------------------
Karl P. Sniady
(Executive Vice President,
Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL CONDITION AT MAY 29,
1999 (UNAUDITED) AND THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MAY
29, 1999 (UNAUDITED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> FEB-26-2000 FEB-27-1999
<PERIOD-START> FEB-28-1999 FEB-28-1998
<PERIOD-END> MAY-29-1999 FEB-27-1999
<CASH> 541 540
<SECURITIES> 0 0
<RECEIVABLES> 24,139 22,483
<ALLOWANCES> (201) (213)
<INVENTORY> 134,895 131,219
<CURRENT-ASSETS> 165,287 163,537
<PP&E> 35,309 34,201
<DEPRECIATION> 13,925 12,788
<TOTAL-ASSETS> 194,503 192,938
<CURRENT-LIABILITIES> 153,331 151,825
<BONDS> 0 0
0 0
0 0
<COMMON> 111 111
<OTHER-SE> 40,501 40,331
<TOTAL-LIABILITY-AND-EQUITY> 194,503 192,938
<SALES> 70,981 262,550
<TOTAL-REVENUES> 70,981 262,550
<CGS> 48,841 181,577
<TOTAL-COSTS> 48,841 181,577
<OTHER-EXPENSES> 20,273 86,393
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,588 5,580
<INCOME-PRETAX> 279 (11,000)
<INCOME-TAX> 109 (3,590)
<INCOME-CONTINUING> 170 (7,410)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 170 (7,410)
<EPS-BASIC> 0.02 (0.70)
<EPS-DILUTED> 0.02 (0.70)
</TABLE>
