-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mcuc4ikjAM9d7Quu4QILZ7LIbikaHTGiDkEleIivZNT9BLyxALxX9smoFNawsCXZ /nzIqDvWS0CMegYLDKxBkw== 0000950135-98-001615.txt : 19980318 0000950135-98-001615.hdr.sgml : 19980318 ACCESSION NUMBER: 0000950135-98-001615 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980317 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CML GROUP INC CENTRAL INDEX KEY: 0000729576 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 042451745 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09630 FILM NUMBER: 98567654 BUSINESS ADDRESS: STREET 1: 524 MAIN ST CITY: ACTON STATE: MA ZIP: 01720 BUSINESS PHONE: (978) 264-4155 MAIL ADDRESS: STREET 1: 524 MAIN STREET CITY: ACTON STATE: MA ZIP: 01720 10-Q 1 CML GROUP, INC. 1 =============================================================================== 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 JANUARY 31, 1998 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: (978) 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 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: 49,925,069 shares of common stock, $.10 par value, as of March 12, 1998. =============================================================================== 2 CML GROUP, INC. AND SUBSIDIARIES Form 10-Q INDEX PAGE Part I: Financial Information Item 1: Financial Statements Consolidated Condensed Balance Sheets as of January 31, 1998 and July 31, 1997 3 - 4 Consolidated Condensed Statements of Operations for the three-month and six-month periods ended January 31, 1998 and February 1, 1997 5 Consolidated Condensed Statements of Cash Flows for the six-month periods ended January 31, 1998 and February 1, 1997 6 Notes to Consolidated Condensed Financial Statements 7 - 13 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 14 - 22 Part II: Other Information Item 1: Legal Proceedings 23 Item 4: Submission of Matters to a Vote of Security Holders 23 Item 6: Exhibits and Reports on Form 8-K 24 Signatures 24 Exhibit Index 25 2 3 Part I: FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS CML GROUP, INC. & SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) ASSETS
JANUARY 31, 1998 JULY 31, 1997 ---------------- ------------- Current assets: Cash and cash equivalents $ 445 $ 4,359 Accounts receivable, net 11,678 8,151 Inventories: Raw materials 1,208 1,971 Work in process 1,020 836 Finished goods 37,767 31,115 --------- --------- Total inventories 39,995 33,922 Deferred income taxes 2,202 3,903 Other current assets 9,028 8,479 --------- --------- Total current assets 63,348 58,814 --------- --------- Property, plant and equipment, at cost: Land and buildings 16,417 19,404 Machinery and equipment 42,413 45,257 Leasehold improvements 26,576 30,020 --------- --------- 85,406 94,681 Less accumulated depreciation (48,694) (46,223) --------- --------- 36,712 48,458 --------- --------- Goodwill 8,427 8,546 Deferred income taxes 13,388 24,412 Other assets 5,668 6,106 --------- --------- $ 127,543 $ 146,336 --------- ---------
See Notes to Consolidated Condensed Financial Statements. 3 4 CML GROUP, INC. & SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands except share information) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
JANUARY 31, 1998 JULY 31, 1997 ---------------- ------------- Current liabilities: Current portion of long-term debt $ 35 $ 35 Revolving line of credit 16,200 -- Accounts payable 19,246 10,839 Accrued compensation 5,417 4,339 Accrued advertising 4,502 1,514 Accrued insurance 3,833 4,544 Accrued lease termination costs 2,433 2,587 Other accrued expenses 37,171 25,261 --------- --------- Total current liabilities 88,837 49,119 --------- --------- Noncurrent liabilities: Long-term debt 234 245 Convertible subordinated debentures 41,593 41,593 Other noncurrent liabilities 9,614 9,651 --------- --------- Total noncurrent liabilities 51,441 51,489 --------- --------- Stockholders' equity (deficiency): Common stock, par value $.10 per share Authorized - 120,000,000 shares Issued - 52,772,482 shares and 52,738,268 shares 5,277 5,274 Additional paid-in capital 80,438 80,654 Accumulated deficit (62,345) (3,642) --------- --------- 23,370 82,286 Less treasury stock, at cost, 2,865,428 shares and 2,901,401 shares (36,105) (36,558) --------- --------- (12,735) 45,728 --------- --------- $ 127,543 $ 146,336 --------- ---------
See Notes to Consolidated Condensed Financial Statements. 4 5 CML GROUP, INC. & SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In thousands except share data) For the periods ended January 31, 1998 and February 1, 1997
THREE MONTHS SIX MONTHS ------------ ---------- 1998 1997 1998 1997 ---- ---- ---- ---- Net sales $ 109,491 $ 115,381 $ 167,061 $ 182,339 --------- --------- --------- --------- Less costs and expenses: Cost of goods sold 58,220 52,207 89,361 81,578 Selling, general and administrative 64,423 69,424 110,537 128,047 expenses Impairment charges 2,877 497 2,877 497 Restructuring charges 8,533 -- 8,533 -- Interest expense 1,153 295 2,111 756 --------- --------- --------- --------- 135,206 122,423 213,419 210,878 --------- --------- --------- --------- Loss from operations before income taxes (25,715) (7,042) (46,358) (28,539) Income tax provision (benefit) 19,364 (1,857) 12,345 (9,703) --------- --------- --------- --------- Net loss ($ 45,079) ($ 5,185) ($ 58,703) ($ 18,836) --------- --------- --------- --------- Loss per share: Basic ($0.90) ($0.10) ($1.17) ($0.38) ------ ------ ------ ------ Diluted ($0.90) ($0.10) ($1.17) ($0.38) ------ ------ ------ ------ Weighted average number of shares outstanding 50,002,846 49,915,109 49,979,042 49,863,660
See Notes to Consolidated Condensed Financial Statements. 5 6 CML GROUP, INC. & SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands)
FOR THE SIX MONTHS ENDED ------------------------ JANUARY 31, 1998 FEBRUARY 1, 1997 ---------------- ---------------- Cash flows from operating activities: Net loss ($58,703) ($18,836) ------- ------- Adjustments to reconcile net loss to net cash provided by operating activities: Impairment charges 2,877 497 Restructuring charges 8,533 -- Depreciation and amortization 7,307 7,059 Loss on disposal of property, plant and equipment 79 875 Decrease in working capital items 9,939 36,592 (Increase) decrease in other assets 11,111 (6,155) Decrease in other noncurrent liabilities (37) (21) ------- ------- Total adjustments 39,809 38,847 ------- ------- Net cash provided by (used in) operating activities (18,894) 20,011 ------- ------- Cash flows from investing activities: Additions to property, plant and equipment (2,138) (2,975) Net proceeds from the sale of businesses 768 3,913 Reductions in notes receivable 42 37 ------- ------- Net cash provided by (used in) investing activities (1,328) 975 ------- ------- Cash flows from financing activities: Decrease in long-term debt (11) (9) Increase in revolving line of credit 16,200 -- Dividends paid -- (497) Exercise of stock options 119 281 ------- ------- Net cash provided by (used in) financing activities 16,308 (225) ------- ------- Net increase (decrease) in cash and cash equivalents during the period (3,914) 20,761 Cash and cash equivalents at the beginning of the period 4,359 17,673 ------- ------- Cash and cash equivalents at the end of the period $ 445 $ 38,434 ------- -------
See Notes to Consolidated Condensed Financial Statements. 6 7 CML GROUP, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1 The accompanying Consolidated Condensed Financial Statements and Notes should be read in conjunction with the consolidated financial statements contained in the Annual Report on Form 10-K of CML Group, Inc. (the "Company"). In the opinion of the Company's 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, except for the adjustments discussed in Note 3. 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 preparation of consolidated financial statements in accordance with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the period. Actual results could differ from those estimates. The Company's fiscal year ends on July 31; references to fiscal 1998 and fiscal 1997 refer to the fiscal year ending July 31, 1998 and fiscal year ended July 31, 1997, respectively. Certain fiscal 1997 amounts have been reclassified to conform to the fiscal 1998 presentation. Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," is effective for the Company beginning in fiscal 1999. SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" is effective for financial statements for periods beginning after December 15, 1997 but is not required to be applied to interim financial statements in the initial year of application. Adoption of these statements is not expected to have a material effect on the consolidated financial statements. The Company adopted SFAS No. 128,"Earnings per Share," effective for the quarter ended January 31, 1998. Accordingly, the Company was required to restate prior-period earnings per share data presented. Implementation of SFAS No. 128 had no effect on previously reported earnings per share information. 7 8 NOTE 2 - MANAGEMENT'S PLAN The Company incurred a net loss of $45.1 million, including an income tax provision of $19.4 million, and a net loss of $58.7 million, including an income tax provision of $12.3 million, in the second quarter and first six months of fiscal 1998, respectively. In fiscal 1997, the Company incurred a net loss of $5.2 million in the second quarter and $18.8 million during the first six months. The losses during the second quarter and first six months of both fiscal years were primarily due to operating losses at NordicTrack. In fiscal 1998, NordicTrack's operating losses were primarily the result of significantly lower sales of aerobic exercise products, including cross-country skiers, non-motorized treadmills and abdominal exercisers, and the slower than anticipated ramp-up in sales of the new line of elliptical products, which were partially offset by lower operating costs. In addition, during the second quarter of fiscal 1998, NordicTrack announced plans to shut down its internal manufacturing and distribution activities and to outsource those activities to third-party vendors. NordicTrack also announced plans to exit the direct response and catalog businesses. As a result of these decisions, NordicTrack recorded restructuring and asset impairment charges totaling $11.4 million. See Note 3 for information concerning NordicTrack's reorganization. Smith & Hawken's results were affected by the seasonal nature of its business, with the second quarter showing improvement over the first quarter. During the second quarter of fiscal 1998, the Company's Board of Directors announced a comprehensive review of the Company's strategic alternatives including possible sale, recapitalization and/or joint venture opportunities for the Company and/or its two operating subsidiaries. To the extent that the Company continues to own and operate NordicTrack, it will be required to expend substantial resources to fund NordicTrack's operations until NordicTrack attains breakeven financial performance or is sold. There can be no assurance, however, that the Company will be able to identify a prospective purchaser for NordicTrack or that a sale on favorable terms can be arranged within a reasonable period of time. The Company's financial performance during the second half of fiscal 1998 and in the future will depend upon its ability to purchase goods and services on credit, to meet its obligations as they become due, to borrow funds under its revolving credit agreement and to successfully implement the restructuring plan at NordicTrack. To obtain the funds necessary to support its operations, the Company may be required to sell assets or to effect public or private financing transactions or both. No assurance can be given, however, that the Company will be able to raise the required funds on favorable terms or on any terms, and, if it fails to do so, the Company may either be sold or seek protection under the insolvency laws. The Company is subject to contingent liabilities discussed in Note 6. 8 9 NOTE 3 - NORDICTRACK REORGANIZATION During the second quarter of fiscal 1998, NordicTrack announced plans to strategically reposition its operations by outsourcing its manufacturing and distribution activities and closing its Glencoe, Minnesota production facility; exiting or outsourcing its direct response and catalog businesses; and closing underperforming stores. As a result of these strategic initiatives, NordicTrack recorded non-recurring restructuring charges of $8.5 million for severance, plant shutdown and other costs and $2.7 million of asset impairment charges in compliance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Impaired assets included tooling used to manufacture cross-country skiers and non-motorized treadmills in Glencoe, Minnesota and retail store fixed assets. Tooling costs were written off in their entirety. Store fixed asset write-downs were measured based on a comparison of the assets' net book value to the net present value of the stores' estimated future net cash flows. Separately, an inventory write-down of $1.1 million was included in cost of goods sold and $2.0 million was accrued for lease termination and other costs related to the reorganization plan. NOTE 4 - LONG-TERM DEBT Consolidated long-term debt is summarized as follows: (in thousands) ------------------------------------ JANUARY 31, 1998 JULY 31, 1997 ---------------- ------------- Note payable $223 $233 Obligations under capital leases 46 47 ---- ---- 269 280 Less current portion (35) (35) ---- ---- Long-term debt $234 $245 ==== ==== 9 10 On March 11, 1998, the Company's revolving credit agreement was amended to, among other things, (i) increase the total amount that the Company's subsidiaries may borrow from $40.0 million to $50.0 million, (ii) increase the maximum overadvance amount from $15.0 million to up to $35.0 million, and (iii) extend the period during which overadvances are permitted to be outstanding. The amended agreement which matures July 10, 1998, provides that advances which do not constitute overadvances under the agreement bear interest at 3.0% above the lenders' "Base Rate" which approximates the lenders' prime rate. Overadvances under the agreement bear interest at 4.0% above the lenders' Base Rate. In connection with the financing, the Company issued the lenders warrants to purchase 1,621,741 shares of the Company's Common Stock at a nominal exercise price. Advances under the Company's revolving line of credit are classified as current liabilities in the accompanying Consolidated Condensed Balance Sheets. NOTE 5 - EARNINGS PER SHARE DISCLOSURES The net losses and the number of shares included in the calculations of the Company's basic and diluted net losses per share shown on the Consolidated Condensed Statements of Operations are the same. Certain securities that could potentially dilute basic earnings per share in the future were not included in the computations of diluted net losses per share because to do so would have been antidilutive for the periods presented. These securities include the Company's convertible subordinated debentures, the warrants which were issued after January 31, 1998 in connection with the amendment of the Company's credit facility, and stock options. NOTE 6 - CONTINGENCIES LITIGATION NordicTrack is named as the defendant in a Consolidated Class Action Complaint ("Consolidated Complaint") filed on September 25, 1996 in the United States District Court for the Southern District of New York and subsequently transferred to the United States District Court for the District of Minnesota on January 30, 1997. The named plaintiffs, Elissa Crespi and John Lucien Ware, Jr., allege in the Consolidated Complaint that NordicTrack made false and misleading claims in its advertising concerning the weight loss of persons using its ski exercisers by misrepresenting and failing to disclose material findings of weight loss studies conducted by or on behalf of NordicTrack. The named plaintiffs assert claims of common law fraud, fraudulent concealment, negligent misrepresentation and omission, breach of express and implied warranties, and violation of Section 349 of the State of New York General Business Law. The named plaintiffs also seek to represent a class allegedly consisting of all persons in the United States who purchased a NordicTrack ski exerciser during the period from November 15, 1993 to April 10, 1996, excluding NordicTrack and its employees. On September 2, 1997, the named plaintiffs filed a motion to remand the case to state court in New York, which NordicTrack opposed. The parties have reached an agreement-in-principle concerning the general terms and conditions of a class action settlement of the case which has been memorialized in a Memorandum of Understanding filed with the Minnesota Court. The parties are 10 11 presently in the process of negotiating an acceptable written settlement agreement and other documents relating to the proposed settlement. On January 8, 1998, the United States District Court for the District of Minnesota remanded the case to the Supreme Court for the State of New York for consideration of whether the proposed settlement should be approved and a final judgment and order entered thereon. Management believes the contemplated settlement will not have a material adverse impact on the Company's business, financial condition and results of operations. The Company can give no assurance at this time that the parties will be successful in negotiating a mutually acceptable written settlement agreement or that the proposed settlement will ultimately receive court approval. NordicTrack is the defendant in a lawsuit in the United States District Court for the District of Minnesota which commenced on August 12, 1996. In this action, the plaintiff, Precise Exercise Equipment ("Precise"), alleges that NordicTrack misappropriated trade secrets regarding Precise's abdominal exercise product and further breached a non-competition agreement. Discovery is ongoing and must be completed in August 1998 to meet the Court imposed schedule. While NordicTrack is vigorously defending against the allegations and believes it has meritorious defenses to Precise's claims, at this stage of the lawsuit the Company is unable to determine the likelihood and possible impact on the Company's business, financial condition and results of operations of an unfavorable outcome. In a complaint dated September 30, 1997, filed by Precor Incorporated ("Precor") in the United States District Court for the Western District of Washington in Seattle, Precor alleges that the manufacture, offering for sale and sale by NordicTrack of its exercisers marketed under the Ellipse(TM) trademark infringe a United States patent which Precor has licensed from the inventor, Larry Miller (the "Miller Patent"). The technology used in NordicTrack's Ellipse(TM) exerciser is licensed by NordicTrack from a third party, and the Company believes that NordicTrack's products do not infringe the Miller Patent. In February 1998, Precor amended the complaint to add infringement claims against a major wholesale customer of NordicTrack's, and the licenser of NordicTrack's technology. The complaint is scheduled for mediation in September 1998 and for trial in February 1999. While NordicTrack believes it has meritorious defenses to the complaint and intends to vigorously defend against the allegations, this lawsuit is in its earliest stages and the Company is unable to determine the likelihood and possible impact on the Company's business, financial condition and results of operations of an unfavorable outcome. The Company is involved in various other legal proceedings which have arisen in the ordinary course of business. Management believes the outcome of such other legal proceedings will not have a material adverse impact on the Company's business, financial condition and results of operations. 11 12 ENVIRONMENTAL MATTERS On June 3, 1991, the Company received from the United States Environmental Protection Agency ("EPA") a Special Notice Letter 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 a third party. 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 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 it originally estimated. The EPA implemented the groundwater phase of the cleanup, which the EPA originally estimated would 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 business, financial condition and results of operations for the period in which the resolution of the claim occurs. In June 1992, the EPA notified the Company that it may be liable for the release of hazardous substances by the Company's former Boston Whaler 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. Because complete cleanup cost estimates for the site are not yet available, an accurate assessment of the Company's likely range of liability cannot be made. Accordingly, the impact on the Company's business, financial condition and results of operations is not presently determinable. 12 13 TAX MATTERS The Internal Revenue Service ("IRS") has been engaged in an examination of the Company's tax returns for the fiscal years 1987 through 1991. The IRS has issued a "30-day letter" to the Company proposing certain adjustments which, if sustained, would result in a tax deficiency for the years under examination. The adjustments proposed by the IRS primarily relate to: (i) the disallowance of deductions taken by the Company with respect to incentive compensation payments of $43.0 million made to the former owners of NordicTrack (acquired in June 1986) pursuant to their employment contracts; and (ii) incentive compensation payments made to the former owners of Britches of Georgetowne (acquired in August 1983 and sold in April 1996) pursuant to the terms of an earnout agreement and the valuation of certain assets acquired in connection with the acquisition of Britches of Georgetowne in the amount of $9.2 million. The net federal tax due relating to the proposed adjustments approximates $15.9 million. Interest on the proposed deficiencies approximates $20.2 million as of January 31, 1998. The incentive compensation payments to the former owners of NordicTrack were attributable to substantial increases in NordicTrack's sales and profits during the years under examination. The Company believes that the tax deductions taken were valid and in accordance with the Internal Revenue Code and intends to vigorously oppose the proposed adjustments. However, at this stage no assurance can be given of a favorable outcome on these matters. If the IRS proposed adjustments are sustained, any back taxes owed and associated interest would have a material adverse effect on the Company's consolidated operating results for the period in which such issues are finally resolved and would also have a material adverse effect on the Company's consolidated financial condition. As of January 31, 1998, the Company had net deferred tax assets of $15.6 million after recording a valuation reserve of $19.4 million during the second quarter of fiscal 1998, resulting in a total tax provision of $12.3 million for the first six months of fiscal 1998. The Company believes that it will generate sufficient future taxable income, either through operations or the sale of assets, to realize the remaining net deferred tax assets prior to expiration of any net operating losses. Net operating losses currently may be carried forward for up to 15 taxable years. There can be no assurance, however, that the Company will generate any specific level of earnings or that it will be able to realize any particular level of its net deferred tax assets in future periods. If the Company is unable to generate sufficient taxable income in the future through operating results or the sale of assets, increases in the tax valuation allowance will be required, resulting in additional charges to earnings. 13 14 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. INTRODUCTION This Quarterly Report contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," and similar expressions are intended to identify forward-looking statements. There are a number of factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements. These factors include, without limitation, those set forth below under the caption "Certain Factors that May Affect Future Results." The Company operates in two industry segments, NordicTrack and Smith & Hawken. NordicTrack designs, sources, manufactures and markets physical fitness and exercise equipment and other health-related products through specialty stores and kiosks operated by its wholly-owned subsidiary, Nordic Advantage and, beginning in fiscal 1998, to wholesale customers. During the second quarter of fiscal 1998, NordicTrack announced its intention to strategically transition the company from a marketing strategy and operation, driven by direct response advertising in print and on television, to one focused on its retail and wholesale channels. NordicTrack will exit the direct response and catalog businesses and pursue a partnership arrangement with a direct response marketing company for its advertising. NordicTrack also announced plans to discontinue in-house manufacturing. Smith & Hawken markets fine gardening tools, clothing, furniture, plants and accessories through its catalogs and specialty retail stores. FINANCIAL CONDITION On March 11, 1998, the Company announced it had amended its revolving credit agreement to provide the Company and its subsidiaries with up to $50.0 million of financing through July 10, 1998. The Company plans to use the funds for general corporate purposes, including the execution of a restructuring plan underway at NordicTrack and the expansion of Smith & Hawken. Because of the substantial losses incurred in fiscal 1997 and the expected continued losses in fiscal 1998 from NordicTrack's operations, the Company will need to raise additional funds to continue its business at current operating levels, including a restructured NordicTrack business. Accordingly, the Company is engaged in discussions with its lenders to extend the existing $50.0 million credit facility beyond its current July 10, 1998 expiration date and increase its credit facility by an additional $25.0 million to $75.0 million. In addition, the Company is currently seeking to sell its NordicTrack business. In the event the Company is unable to obtain the funds needed to continue its business operations in accordance with its fiscal 1998 business plan or is unable to sell its NordicTrack business, the combination of potential continued losses and the concern among the Company's customers about the Company's future viability could force the Company to substantially curtail its business operations or to seek protection under the insolvency laws. 14 15 The Company believes that internally generated funds, available funds under its line of credit and proceeds from the sale of assets or securities or obtained through public or private financing transactions will be sufficient to meet its operating needs and anticipated capital expenditures through July 10 1998. Stockholders' equity had a deficit balance of $12.7 million at January 31, 1998, a decease of $58.5 million from July 31, 1997, primarily due to the net loss of $58.7 million for the first six months of fiscal 1998. A working capital deficit of $25.5 million existed at January 31, 1998 compared with working capital of $9.7 million at July 31, 1997. The change in working capital was primarily due to the use of excess cash and the revolving bank line of credit to finance operations, asset impairment and restructuring charges recorded by NordicTrack, and increases in accounts payable and accrued expenses, offset in part by higher inventories and accounts receivable. Inventories at January 31, 1998 were $6.1 million higher than at July 31, 1997 primarily due to lower than expected sales at NordicTrack. During the first six months of fiscal 1998, the Company invested approximately $2.1 million in property, plant and equipment, or a decrease of $0.9 million, compared with the $3.0 million spent during the first six months of fiscal 1997. The Company had approximately $0.4 million of cash and cash equivalents as of January 31, 1998 and $16.2 million of advances and $3.6 million of letters of credit outstanding under its senior revolving credit facility. In January 1998, the Company reported that expected revenues for the second quarter of fiscal 1998 would be below expectations, principally due to lower than anticipated sales from a slower than expected ramp-up of NordicTrack's new elliptical product category, which adversely affected operating results, cash flows and liquidity. The Company also announced that its Board of Directors engaged Lehman Brothers, an investment banking firm, to assist in conducting a comprehensive review of the Company's strategic alternatives including possible sale, recapitalization, and/or joint venture opportunities for the Company and/or its two operating divisions. RESULTS OF OPERATIONS For the second quarter of fiscal 1998, net sales decreased 5.1% to $109.5 million from $115.4 million in the second quarter of fiscal 1997 primarily due to lower NordicTrack sales offset, in part, by higher sales at Smith & Hawken. Sales for the first six months of fiscal 1998 were $167.1 million, a decrease of 8.4%, compared with $182.3 million of net sales for the first six months of fiscal 1997. The Company incurred a net loss of $45.1 million, or $0.90 per share, in the second quarter of fiscal 1998 compared with a net loss of $5.2 million, or $0.10 per share, during the same period of fiscal 1997. For the first six months of fiscal 1998, the Company reported a net loss of $58.7 million, or $1.17 per share, compared with a net loss of $18.8 million, or $0.38 per share, in fiscal 1997. The increase in the net losses for the quarter and first six months was primarily due to an income tax provision in the second quarter of fiscal 1998, NordicTrack's restructuring and asset impairment charges totaling $11.4 million and lower sales and gross margins at NordicTrack. 15 16 Retail sales for the second quarter of fiscal 1998 decreased 2.5% to $67.4 million from $69.1 million in the second quarter of fiscal 1997 and retail sales for the first six months of fiscal 1998 decreased 5.6% to $99.9 million from $105.8 million in the first half of fiscal 1997. The retail sales declines were primarily due to lower retail and comparable store sales at NordicTrack which were partially offset by retail and comparable store sales increases at Smith & Hawken. Direct response and mail order sales decreased $8.7 million to $37.6 million in the second quarter of fiscal 1998 and decreased $18.4 million to $58.1 million during the first six months of fiscal 1998, compared with the similar periods of fiscal 1997, primarily due to lower direct response sales at NordicTrack. Smith & Hawken's mail order sales increased during the second quarter and first six months of fiscal 1998 compared with the same periods of fiscal 1997. Cost of goods sold as a percentage of net sales increased from 45.2% in the second quarter of fiscal 1997 to 53.2% in the second quarter of fiscal 1998 and from 44.7% in the first six months of fiscal 1997 to 53.5% in the first six months of fiscal 1998, primarily due to higher cost of goods sold as a percentage of sales at NordicTrack. Cost of goods sold as a percentage of sales at Smith & Hawken increased during the first six months of fiscal 1998 but decreased during the second quarter of fiscal 1998, compared with the same periods of fiscal 1997. The increase in cost of goods sold as a percentage of net sales at NordicTrack was primarily due to reduced margins on non-motorized treadmills and abdominal products which experienced lower sales; higher sales of lower-margined products, including motorized treadmills; the liquidation of inventories of discontinued product lines; inefficiencies at the Glencoe, Minnesota manufacturing plant resulting from capacity underutilization; the write-down of inventories resulting from NordicTrack's decision to exit its direct response and catalog operations; and discounts to suppliers related to the wholesale distribution of NordicTrack's products. The effects of these changes were partially offset by lower cost of goods sold as a percentage of net sales from sales of cross-country skiers; UltraLift(TM), NordicTrack's strength-training machine; and NordicTrack's new elliptical line of products introduced in October 1997. The improvement in Smith & Hawken's second quarter cost of goods sold as a percentage of net sales was primarily due to higher margins generated in both the retail and catalog businesses. Selling, general and administrative expenses decreased as a percentage of sales from 60.2% in the second quarter of fiscal 1997 to 58.8% in the second quarter of fiscal 1998. For the first six months of the year, selling, general and administrative expenses as a percentage of sales declined from 70.2% in fiscal 1997 to 66.2% in fiscal 1998. The improvement resulted from lower advertising costs at NordicTrack and better cost controls at NordicTrack and Smith & Hawken. 16 17 During the second quarter of fiscal 1998, NordicTrack announced that it will focus on its retail and wholesale sales channels and that it plans to exit the direct response and catalog businesses. NordicTrack also announced that it would cease manufacturing and distribution activities at its Glencoe, Minnesota facility. As a result, NordicTrack recorded asset impairment charges of $2.8 million and restructuring charges of $8.5 million to cover estimated costs to strategically reposition its operations. NordicTrack immediately eliminated 51 full-time positions and 65 seasonal telemarketing positions. When manufacturing operations cease at NordicTrack's Glencoe, Minnesota facility in May 1998, 217 factory positions will be phased out. An additional 70 positions will be eliminated in September 1998 when the distribution function at this facility ceases. NordicTrack expects to incur additional restructuring charges in the second half of fiscal 1998 relating to the renegotiation and/or termination of certain contracts relating to and benefiting the direct response and catalog businesses. The Company incurred net interest expense of $1.2 million, or 1.1% of net sales, in the second quarter of fiscal 1998, compared with $0.3 million, or 0.3% of net sales, in the second quarter of fiscal 1997. During the first six months of fiscal 1998, net interest expense was $2.1 million, or 1.3% of net sales, compared with $0.8 million, or 0.4% of net sales, in fiscal 1997. The Company recorded an income tax provision of $19.4 million in the second quarter of fiscal 1998 and an income tax benefit of $1.9 million in the second quarter of fiscal 1997. The income tax provision in the second quarter of fiscal 1998 consisted of a reversal of the income tax benefit of $7.0 million recorded in the first quarter of fiscal 1998 and the recording of a valuation reserve of $12.3 million against existing net deferred tax assets. For the six month period ended January 31, 1998, the Company recorded income tax expense of $12.3 million, which consisted of increasing the valuation allowance discussed above. The income tax benefit recorded by the Company in the second quarter of fiscal 1997 represented the benefit it expected to realize upon utilization of tax loss carryforwards. As of January 31, 1998, the Company had net deferred tax assets of $15.6 million. The Company believes that it will generate sufficient future taxable income, either through operations or the sale of assets, to realize the net deferred tax assets prior to expiration of any net operating losses. Net operating losses currently may be carried forward for up to 15 taxable years. There can be no assurance, however, that the Company will generate any specific level of earnings or that it will be able to realize any particular level of its net deferred tax assets in future periods. If the Company is unable to generate sufficient taxable income in the future through operating results or the sale of assets, increases in the tax valuation allowance will be required, resulting in a charge to earnings. 17 18 NordicTrack's sales decreased 11.9% to $82.7 million in the second quarter of fiscal 1998, compared with $93.9 million for the second quarter of fiscal 1997, and decreased 14.9% to $126.1 million during the first six months of fiscal 1998 compared with sales of $148.3 million during the first half of fiscal 1997. Approximately 66.9% and 62.7% of NordicTrack's net sales in the second quarters of fiscal 1998 and fiscal 1997, respectively, were accounted for by sales at its Nordic Advantage subsidiary, which operates retail stores and mall kiosks. Nordic Advantage's sales decreased from $58.9 million in the second quarter of fiscal 1997 to $55.4 million in the second quarter of fiscal 1998, and from $88.7 million in the first half of fiscal 1997 to $80.2 million in the first half of fiscal 1998. The decrease in Nordic Advantage's sales was primarily due to declines in comparable store sales results and a decrease in the number of mall-based stores and kiosks operating during these periods. At the end of January 1998, Nordic Advantage operated 113 retail stores and 122 mall kiosks compared with 129 retail stores and 148 mall kiosks open at the end of January 1997. Comparable store sales at NordicTrack decreased 3.2% in the second quarter and 8.3% during the first six months of fiscal 1998. Direct response sales at NordicTrack decreased $12.2 million, or 34.8%, in the second quarter of fiscal 1998 and $22.7 million, or 38.1%, during the first six months of fiscal 1998. Wholesale sales at NordicTrack were $4.5 million in the second quarter and $9.0 million during the first six months of fiscal 1998. Cross-country skiers, AbWorks(TM), non-motorized treadmills, and rider products experienced continued sales declines during the second quarter and first six months of fiscal 1998. UltraLift(TM), NordicTrack's strength-training machine, and motorized treadmills experienced sales increases during these periods. Revenues at NordicTrack also were adversely affected by the slower than anticipated ramp-up in sales of the recently introduced Ellipse(TM) in both the retail and wholesale channels. Smith & Hawken's sales increased $5.3 million, or 24.7%, to $26.7 million during the second quarter and increased $6.9 million, or 20.2%, to $40.9 million in the first six months of fiscal 1998 compared with the corresponding periods of fiscal 1997. Retail sales increased $1.8 million, or 17.4%, to $12.0 million in the second quarter of fiscal 1998, and increased $2.5 million, or 14.8%, to $19.7 million in the first half of fiscal 1998. Comparable store sales increased 13.1% and 11.7% during the second quarter and first six months of fiscal 1998, respectively. Smith & Hawken operated 25 stores at the end of January 1998 compared with 24 stores at the end January 1997. Mail order sales at Smith & Hawken rose 31.4% to $14.7 million in the second quarter of fiscal 1998 and increased 25.7% to $21.3 million in the first half of fiscal 1998, compared with the corresponding periods of fiscal 1997. 18 19 CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS The following important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made in this Quarterly Report and presented elsewhere by management from time to time. Recent Operating Losses Because of the substantial losses incurred in fiscal 1997 and the expected continued losses in fiscal 1998 from NordicTrack's operations, the Company will need to raise additional funds to continue its business at current operating levels, including a restructured NordicTrack business. Accordingly, the Company is engaged in discussions with its lenders to extend the existing $50.0 million credit facility beyond its current July 10, 1998 expiration date and increase its credit facility by an additional $25.0 million to $75.0 million. In addition, the Company is currently seeking to sell its NordicTrack business. In the event the Company is unable to obtain the funds needed to continue its business operations in accordance with its fiscal 1998 business plan or is unable to sell its NordicTrack business, the combination of potential continued losses and the concern among the Company's customers about the Company's future viability could force the Company to substantially curtail its business operations or to seek protection under the insolvency laws. In addition, if the Company continues to have net losses in the future, the Company may be unable to realize the benefit of the net deferred tax assets discussed in Note 6 of Notes to Consolidated Condensed Financial Statements which could result in a charge to earnings. Available Funds The Company's future financial performance will also depend on its ability to purchase goods and services on credit and to borrow funds under its revolving credit agreement. If the Company is unable to purchase goods and services on credit or the Company's lenders do not provide the Company with favorable credit arrangements, the Company may need to seek additional funds from other parties. There can be no assurance, however, that the Company would be able to obtain any such third-party funding or obtain such funding on terms as favorable as those offered by its current lenders. Also, in the event the Company elects to raise additional funds through the sale of assets or securities or both, the Company may not be able to complete such sales in a timely manner or on terms favorable to the Company. 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. In addition, the Company's results of operations could be adversely affected if consumer spending is lower than anticipated. 19 20 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, have greater financial resources and offer a greater selection of products. During the past several years, NordicTrack's competitors have introduced several new and competitive products at competitive prices which have adversely affected NordicTrack's revenues and profits. The future success of NordicTrack depends in part upon its ability to introduce new and competitive products successfully, on a timely basis and at competitive prices. The failure of NordicTrack to successfully compete with its competitors could materially adversely affect the Company's business, financial condition and results of operations. 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 also competes with mail order catalogs that sell gardening-related merchandise and independent garden stores and plant nurseries in towns and cities throughout the United States. The failure of Smith & Hawken to successfully compete with these companies could adversely affect the Company's business, financial condition and results of operations. New Products Several new and enhanced products were introduced by the Company in fiscal 1997 and a new line of elliptical products was introduced by NordicTrack in the first quarter of fiscal 1998. The Company's future financial performance will depend on the continued market acceptance of the Company's existing products and the successful development, introduction and customer acceptance of new and enhanced products. If these products do not receive favorable market acceptance, the Company's future operating results would be adversely affected. There can be no assurance that the Company will be successful in developing new products and marketing its existing or new products. New Management Team The Company has replaced the Chairman and Chief Executive Officer of CML Group, Inc. and a number of key executives at NordicTrack. There can be no assurance, however, that the new personnel will be able to successfully increase revenues or reduce costs at the Company or NordicTrack in the future. Seasonality The Company's businesses are seasonal, with significant amounts of retail sales in the second and third quarters of the Company's fiscal year. The Company expects this seasonality to continue in the future. Because of this seasonality, the Company's revenues and earnings have fluctuated and will continue to fluctuate from quarter to quarter. Advertising and Marketing Programs The inability of the Company to periodically design and successfully execute new and effective advertising and marketing programs could adversely affect the Company's business, financial condition and results of operations. During the second quarter of fiscal 1998, NordicTrack announced plans to exit the direct response and catalog businesses, and pursue a partnership with a direct response marketing company. There can be no assurances that such a partnership or its advertising efforts will be successful. 20 21 Cost Reduction Programs In the first half of fiscal 1998 and during fiscal 1997, the Company was able to significantly reduce its operating costs as net sales decreased. There can be no assurance, however, that the Company will be able to further reduce operating costs if sales decline in the future. In addition, postage expenses associated with mailing catalogs and shipping charges associated with acquiring and distributing products and merchandise to customers are significant factors in the operation of the Company's businesses. Increases in postage or shipping costs, or disruptions in delivery and shipping services, could adversely affect the Company's business, financial condition and results of operations. Intellectual Property Rights The Company will continue to be 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. Tax Matters The Internal Revenue Service ("IRS") has been engaged in an examination of the Company's tax returns for the fiscal years 1987 through 1991. The IRS has issued a "30-day letter" to the Company proposing certain adjustments which, if sustained, would result in a tax deficiency for the years under examination. The adjustments proposed by the IRS primarily relate to: (i) the disallowance of deductions taken by the Company with respect to incentive compensation payments of $43.0 million made to the former owners of NordicTrack (acquired in June 1986) pursuant to their employment contracts; and (ii) incentive compensation payments made to the former owners of Britches of Georgetowne (acquired in August 1983 and sold in April 1996) pursuant to the terms of an earnout agreement and the valuation of certain assets acquired in connection with the acquisition of Britches of Georgetowne in the amount of $9.2 million. The net federal tax due relating to the proposed adjustments approximates $15.9 million. Interest on the proposed deficiencies approximates $20.2 million as of January 31, 1998. The incentive compensation payments to the former owners of NordicTrack were attributable to substantial increases in NordicTrack's sales and profits during the years under examination. The Company believes that the tax deductions taken were valid and in accordance with the Internal Revenue Code and intends to vigorously oppose the proposed adjustments. However, at this stage no assurance can be given of a favorable outcome on these matters. If the IRS proposed adjustments are sustained, any back taxes owed and associated interest would have a material adverse effect on the Company's consolidated operating results for the period in which such issues are finally resolved and would also have a material adverse effect on the Company's consolidated financial condition. 21 22 Year 2000 Software Issues The Company has reviewed the implications of year 2000 compliance and has taken steps designed to ensure that the Company's computer systems and applications will manage dates beyond 1999. The Company believes that it has allocated adequate resources for this purpose and that planned software upgrades, which are underway and in the normal course of business, will address the Company's internal year 2000 needs. However, there can be no assurance that the systems of other parties upon which the Company's businesses also rely will be converted on a timely basis. The Company's business, financial condition and results of operations could be materially adversely affected by the failure of its systems and applications or those operated by other parties to properly operate or manage dates beyond 1999. 22 23 PART II: OTHER INFORMATION Item 1: Legal Proceedings. ENVIRONMENTAL MATTERS See Note 6 of Notes to Consolidated Condensed Financial Statements in Item 1 of Part I hereof, which is hereby incorporated by reference for information concerning environmental matters. LITIGATION See Note 6 of Notes to Consolidated Condensed Financial Statements in Item 1 of Part I hereof, which is hereby incorporated by reference for information concerning litigation. TAX MATTERS See Note 6 of Notes to Consolidated Condensed Financial Statements in Item 1 of Part I hereof, which is hereby incorporated by reference for information concerning tax matters. Items 2-3: None. Item 4: Submission of Matters to a Vote of Security Holders. The Company held its Annual Meeting of Stockholders on December 5, 1997. At this meeting the stockholders of the Company elected Charles M. Leighton as a Class A Director (by votes of 43,534,807 shares of Common Stock in favor and 2,264,497 shares of Common Stock withheld), Thomas H. Lenagh as a Class A Director (by votes of 43,554,452 shares of Common Stock in favor and 2,244,852 shares of Common Stock withheld), Ralph F. Verni as a Class A Director (by votes of 43,570,713 shares of Common Stock in favor and 2,228,591 shares of Common Stock withheld), and John A. C. Pound as a Class C Director (by votes of 43,560,975 shares of Common Stock in favor and 2,238,329 shares of Common Stock withheld). Each of the newly elected Class A Directors is to serve for a term of three years. The newly elected Class C Director is to serve for a term of two years. The other directors of the Company whose terms of office as directors continued after the meeting are G. Robert Tod, Dr. Roy W. Menninger, Lauren M. Tyler, Howard H. Callaway, and Alison Taunton-Rigby. At the Annual Meeting, stockholders holding 43,034,828 shares of Common Stock voted to ratify the appointment of Deloitte & Touche LLP as the Company's independent auditors for the fiscal year ending July 31, 1998. Stockholders holding 148,877 shares of Common Stock voted against such ratification and stockholders holding 2,615,599 shares of Common Stock abstained. Stockholders holding 34,989,990 shares of Common Stock voted to approve the transaction of such other business as may properly come before the Annual Meeting or adjournment thereof. Stockholders holding 8,048,704 shares of Common Stock voted against such proposal and 2,760,611 shares of Common Stock abstained. Item 5: None. 23 24 Item 6: Exhibits and Reports on Form 8-K. (a) Exhibits - See Exhibit Index. (b) Reports on Form 8-K: On January 27, 1998, the Company filed a Current Report on Form 8-K, dated January 26, 1998, announcing under Item 5 (Other Events) that its Board of Directors was conducting a comprehensive review of the Company's strategic alternatives with the assistance of Lehman Brothers. The Form 8-K included, as an exhibit, a copy of the Company's press release of the same date. In addition to announcing the comprehensive strategic review, the press release announced a number of organizational changes undertaken in conjunction with the review. 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: MARCH 17, 1998 /s/Paul J. Bailey -------------- ----------------- Paul J. Bailey Controller Principal Accounting Officer 24 25 EXHIBIT INDEX PAGE NO. 27 -- Financial Data Schedule 26 25 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF CML GROUP, INC. FOR THE SIX MONTHS ENDED JANUARY 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS JUL-31-1998 AUG-01-1997 JAN-31-1998 445,000 0 14,466,000 2,788,000 39,995,000 63,348,000 85,406,000 48,694,000 127,543,000 88,837,000 41,593,000 0 0 5,277,000 (18,012,000) 127,543,000 167,061,000 167,061,000 89,361,000 89,361,000 0 812,000 2,111,000 (46,358,000) 12,345,000 (58,703,000) 0 0 0 (58,703,000) (1.17) (1.17)
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