(COMTEX) B: CML Reports Fiscal 1998 Results
B: CML Reports Fiscal 1998 Results
ACTON, MASS. (Oct. 29) BUSINESS WIRE -Oct. 29, 1998--CML Group, Inc.
(NYSE:CML) today reported a consolidated net loss of $127,378,000, or
$2.54 per share, for the fiscal year ended July 31, 1998, compared with
a net loss of $40,214,000, or $0.81 per share, in fiscal 1997. The
Company's consolidated results for fiscal 1998 included a provision for
income taxes of $31,416,000, reflecting a reduction of the Company's
deferred income tax balances. The consolidated results for the prior
year reflected an income tax benefit of $20,717,000.
The net loss for fiscal 1998 also included restructuring and asset
impairment charges of $11,767,000, which NordicTrack recorded for the
shutdown of its manufacturing and distribution facility in Glencoe,
Minnesota, and to exit the direct response and catalog businesses.
Sales for fiscal 1998 totaled $274,360,000, compared with $341,315,000
for fiscal 1997, primarily reflecting the Company's decision to exit
the unprofitable direct response and catalog distribution channels.
For fiscal 1998, Smith & Hawken's operating profit was $2,801,000,
compared with an operating profit of $2,008,000 in fiscal 1997.
NordicTrack's operating loss, including restructuring and asset
impairment charges for fiscal 1998, was $85,649,000, compared with an
operating loss of $58,641,000 in fiscal 1997. For fiscal 1998, sales at
Smith & Hawken increased 19.7% over fiscal 1997 to $88,041,000, while
sales at NordicTrack decreased 30.4% to $186,319,000. The sales
decrease at NordicTrack was primarily attributable to the decision made
in January to exit the direct response and catalog sales channels.
For the fourth quarter of fiscal 1998, CML reported a net loss on a
consolidated basis of $25,007,000, or $0.49 per share. The net loss for
the quarter included restructuring charges of $357,000 related to the
strategic repositioning of NordicTrack which began during the second
quarter of the fiscal year. For the fourth quarter of fiscal 1997, the
Company reported a net loss of $12,776,000, or $0.26 per share. Sales
for the fourth quarter of fiscal 1998 totaled $47,529,000, compared
with $62,915,000 for the corresponding period of fiscal 1997.
For the fourth quarter of fiscal 1998, Smith & Hawken's operating
income equaled $3,968,000, compared with operating income of $2,874,000
in the corresponding period of fiscal 1997. NordicTrack's operating
loss for the fourth quarter of fiscal 1998 was $23,986,000, compared
with an operating loss of $21,205,000 in the corresponding period of
the fiscal 1997.
Sales at Smith & Hawken for the fourth quarter of fiscal 1998 totaled
$28,125,000, an increase of 23.8% over the corresponding quarter of
fiscal 1997, while sales at NordicTrack totaled $19,404,000,
representing a decrease of 51.7% over the prior year quarter. The sales
decrease at NordicTrack was primarily attributable to the decision made
in January to exit the direct response and catalog sales channels.
Separately, CML plans to file an application with The Securities and
Exchange Commission (SEC) for a 15-day extension in the filing of the
Company's Annual Report on Form 10-K for the fiscal year ended July 31,
1998. The Company also disclosed that as a result of the Company's
recurring losses from operations and stockholders' deficit, the Company
expects that its independent auditors report on the Company's fiscal
1998 consolidated financial statements will contain an explanatory
paragraph relating to uncertainty with respect to the Company's ability
to continue as a going concern in its present configuration.
As previously announced, CML is taking steps to position its Smith &
Hawken subsidiary to execute its strategic plan. To that end, CML is in
discussions with its lenders to provide Smith & Hawken with continued
and expanded financing for its retail store expansion strategy. The
Company's lenders have indicated their intent to provide continued and
expanded financing to Smith & Hawken subject to final agreement on
terms and conditions.
CML is a marketer of products for consumers that enhance healthy,
active lifestyles. Its products are sold under the trade names Smith &
Hawken, NordicTrack and Nordic Advantage. This news release contains
forward-looking statements relating to the Company's future strategic
prospects and opportunities, and such statements involve risks and
uncertainties. In addition to the risk factors referred to in the
Company's Annual Report on Form 10-K for the fiscal year ended July 31,
1997, factors which may affect the Company's future operating results
include: the market's response to the Company's new and existing
products; the impact of competition in the Company's marketplace; the
ability of the Company to successfully manage its marketing channels,
including its wholesale channel; the Company's continuing efforts to
reduce costs; the Company's ability to successfully execute the
NordicTrack restructuring plan; the Company's ability to successfully
introduce new NordicTrack product lines; the availability of capital
resources; and delays in the introduction of new products.
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