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Exhibit 99
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CML News Release
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524 Main Street
Acton, Massachusetts 01720
Telephone (978) 264-4155
CONTACT: Lynn Harrison
Director of Investor Relations
978-264-4155
FOR IMMEDIATE RELEASE
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January 26, 1998
CML ANNOUNCES STRATEGIC REVIEW
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Acton, Mass., January 26, 1998 -- CML Group, Inc. (NYSE: CML), today
announced that its Board of Directors is conducting a comprehensive review of
the Company's strategic alternatives. In conjunction with that review, the
Company has engaged Lehman Brothers to assist in identifying and evaluating
opportunities for maximizing shareholder value, including possible sale,
recapitalization, and/or joint venture opportunities for the Company and/or its
two operating divisions.
CML also announced a number of organizational changes undertaken in
conjunction with the strategic review. John Pound, a director of CML Group, has
been appointed by the Board to serve as chairman of the Company and will oversee
the strategic review on behalf of the Board. Charles M. Leighton will continue
as chief executive officer of CML with responsibility for assisting Lehman
Brothers in its evaluation of alternatives for CML and its divisions. William J.
Healey, a consultant to CML's NordicTrack division, has been appointed to the
positions of president and chief executive officer of NordicTrack, and has full
operational authority over that division. G. Robert Tod has been appointed
chairman of NordicTrack and continues to serve as president and chief operating
officer of CML Group and will also work with Lehman
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Brothers on the strategic review. Kathy Tierney, currently president of the
Company's Smith & Hawken division, has been appointed to the additional position
of chief executive officer of Smith & Hawken.
"We are dedicated to the goal of maximizing value for all of CML's
shareholders," said Charles M. Leighton, chief executive officer of CML Group.
"The changes that we have announced today will help us in attaining that goal."
"I am very pleased to be able to assist CML in its pursuit of its best
strategic opportunities," said John Pound. "I look forward to working with
members of CML's Board and management team to pursue CML's value opportunities."
CML also reported that it expects revenues from its second fiscal
quarter, ending January 31, 1998, to be below expectations, due principally to
lower than anticipated NordicTrack sales. NordicTrack's revenue shortfall has
resulted primarily from a slower-than-expected ramp-up in its new elliptical
product category.
The Company indicated that expected second quarter results for its Smith
& Hawken division will be in line with or exceed expectations. CML also
indicated that the lower-than-expected results for NordicTrack will adversely
impact the Company's operating results, cash flows, and liquidity. Therefore,
the Company has commenced discussions with BankBoston about terms to ensure
continued borrowing availability under the Company's credit line. Based on
preliminary discussions, CML believes that BankBoston will support the Company
through its strategic review process.
CML is a leading direct marketer of products for consumers that enhance
healthy, active lifestyles. Its products are sold under the trade names
NordicTrack, Nordic Advantage and Smith & Hawken.
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This news release contains forward-looking statements relating to market
acceptance of the Company's product lines and the Company's quarterly
performance over the balance of fiscal 1998, 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 availability of capital resources; and
delays in the introduction of new products.
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