<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 29, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-7288
THE BOMBAY COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 75-1475223
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
550 Bailey Avenue, Suite 700, Fort Worth, Texas 76107
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(Address of principal executive offices) (Zip Code)
(817) 347-8200
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(Registrant's telephone number, including area code)
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(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 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
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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 at April 29, 1995
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Common stock, $1 par value 37,068,482
1 of 10
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended April 29, 1995
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item Page No.
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<S> <C> <C>
1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 7-8
PART II -- OTHER INFORMATION
6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
2
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
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April 29, May 1,
1995 1994
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<S> <C> <C>
Net sales $77,943 $64,342
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Costs and expenses:
Cost of sales, buying and store occupancy 54,629 41,894
Selling, general and administrative 25,100 18,776
Interest, net (318) (215)
Store closing costs adjustment (Note 2) (4,400) --
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Total costs and expenses 75,011 60,455
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Income before income taxes 2,932 3,887
Provision for income taxes 1,152 1,524
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Net income $1,780 $2,363
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Net income per average common share and
common equivalent share $0.05 $0.06
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Average common shares and common
equivalent shares outstanding 37,441 38,378
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Cash dividends per common share -- --
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
April 29, January 28, May 1,
1995 1995 1994
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ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $28,867 $30,670 $23,430
Inventories 68,122 73,208 74,882
Deferred taxes 11,749 12,117 2,035
Other current assets 8,738 11,487 14,959
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Total current assets 117,476 127,482 115,306
Property and equipment, net 50,500 51,123 43,515
Goodwill, less amortization 617 623 643
Other assets 10,225 10,519 9,787
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Total assets $178,818 $189,747 $169,251
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $17,491 $24,955 $16,592
Accrued payroll and bonuses 3,374 4,271 5,986
Store closing reserves (Note 2) 12,667 20,824 --
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Total current liabilities 33,532 50,050 22,578
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Accrued rent and other liabilities 5,335 4,887 4,207
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Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized -- -- --
Common stock, $1 par value, 50,000,000
shares authorized, 37,068,482, 36,649,966
and 36,366,368 shares issued, respectively 37,068 36,650 36,366
Additional paid-in capital 71,066 68,433 64,462
Retained earnings 32,365 30,585 42,290
Cumulative effect of foreign currency translation (548) (858) (652)
-------- -------- --------
Total stockholders' equity 139,951 134,810 142,466
-------- -------- --------
Total liabilities and stockholders' equity $178,818 $189,747 $169,251
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
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April 29, May 1,
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $1,780 $2,363
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 3,264 2,354
Deferred income taxes and other (92) (103)
Noncash contributions to employee benefit plans 438 347
Store closing reserve adjustment (4,400) --
Change in assets and liabilities:
(Increase) decrease in inventories 4,153 (12,651)
(Increase) decrease in other current assets 3,141 (6,874)
Decrease in current liabilities (11,001) (2,004)
Increase in noncurrent assets (47) (1,294)
Increase in noncurrent liabilities 477 108
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Net cash used by operations (2,287) (17,754)
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Cash flows from investing activities:
Purchases of property and equipment (1,840) (8,966)
Sales of property and equipment 148 90
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Net cash used by investing activities (1,692) (8,876)
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Cash flows from financing activities:
Sale of stock to employee benefit plans 218 187
Proceeds from the exercise of employee stock options 2,026 --
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Net cash provided by financing activities 2,244 187
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Effect of exchange rate change on cash (68) 106
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Net decrease in cash (1,803) (26,337)
Cash at beginning of period 30,670 49,767
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Cash at end of period $28,867 $23,430
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Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes $333 $3,028
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Accounting Principles
In the opinion of the Company, the accompanying consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of April 29,
1995 and May 1, 1994, and the results of operations and cash flows for the three
months then ended. The results of operations for the three month periods ended
April 29, 1995 and May 1, 1994 are not necessarily indicative of the results to
be expected for the full fiscal year. The consolidated financial statements
should be read in conjunction with the financial statement disclosures contained
in the Company's Report to Shareholders for the seven months ended January 28,
1995.
(2) Closing of Alex & Ivy
On January 13, 1995, the Board of Directors announced the closing of the
Company's Alex & Ivy chain of retail stores. A reserve of $41 million was
established, representing the estimated costs of closing the 58-store division.
During the quarter ended April 29, 1995, $4.4 million of the original reserve
was reversed based on favorable results of negotiated lease terminations,
thereby reflecting lower costs than originally projected. In the quarter ended
April 29, 1995, a total of 40 Alex & Ivy stores were closed, with the remaining
stores closed as of May 10, 1995, and 43 store lease termination agreements were
fully executed.
(3) Preferred Share Purchase Rights
On June 1, 1995, the Board of Directors approved a dividend distribution of
one Preferred Share Purchase Right ("Rights") on each outstanding share of
Company Common Stock, payable on June 15, 1995. The Rights, which have ten
year terms, will be exercisable, upon the earlier of (i) the tenth calendar day
after the first public announcement that a person or group, together with its
affiliates and associates, has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the Company's outstanding Common Stock,
or (ii) the tenth business day after the commencement of, or first public
announcement of an intention to commence, a tender or exchange offer which
would result in a person or group obtaining beneficial ownership of 15% or more
of the Company's outstanding Common Stock. Each Right (other than those held
by the acquirer) will entitle its holder to purchase at the Right's exercise
price of $50.00 one one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Company or a number of shares of Company Common Stock
having a market value of twice the Right's exercise price. Rights held by the
15% holder will become void. In the event that the Company is acquired in a
merger or other business combination, or 50% or more of the Company's assets or
earning power, are sold, leased, exchanged or otherwise transferred, each Right
holder (other than the acquirer, whose Rights become void) shall thereafter
have the right to receive, for the exercise price, that number of shares of
common stock of the acquiring company which at the time of such transaction
would have a market value of twice the exercise price.
The Board of Directors of the Company will be entitled to redeem the Rights
at one cent per Right any time before any such person acquires 15% or more of
the outstanding Common Stock or the expiration date.
6
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THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The Bombay Company, Inc. ("Company") is a specialty retailer of home
furnishings and accessories. The Bombay Company ("Bombay") markets
traditionally styled furniture, prints and accessories throughout its 429
stores located in 43 states in the United States and nine Canadian provinces.
At April 29, 1995, Bombay operated 203 stores which are in its large format of
approximately 4,000 square feet. It is the Company's intention to continue to
open new large format stores and convert existing small stores to the large
format, but not necessarily at the same opening rates or sizes experienced
during prior years. On January 13, 1995, the Company announced the closing of
the Alex & Ivy retail chain.
The Company changed its fiscal year end, effective January 28, 1995, to the
Saturday nearest the end of January. The larger percentage of the Company's
sales and operating income are realized in the fiscal quarter that includes
December (Christmas season). Although the precise effect of inflation on
operations cannot be accurately determined, management does not believe
inflation has a material effect on sales or results of operations.
Results of Operations
Quarters Ended April 29, 1995 and May 1, 1994
Net sales increased 21% to $77,943,000 for the quarter ended April 29, 1995
compared to $64,342,000 for the same period last year. Net sales, excluding
Alex & Ivy, were $63,719,000 for the quarter ended April 29, 1995 compared to
$60,622,000 for the prior year period. The sales increase is due to the
addition of 30 stores and 47 stores converted to the large store format since
May 1, 1994, but partially offset by same store sales decreasing 2%. Excluding
the converted stores, same store sales declined 8%.
Cost of sales, including buying and store occupancy costs, was $54,629,000
for the first quarter compared to $41,894,000 for the same period last year.
As a percentage of sales, cost of sales increased to 70% for the quarter
compared to 65% for the prior year. Bombay, excluding Alex & Ivy, had an
increase in its cost of sales percentage to 69.2% for the first quarter
compared to last year's 63.9%. The 5.3% increase is due to higher buying and
occupancy costs (4.1%) and lower product margin (1.2%). The occupancy costs
percentage increased as a result of the retail square feet added since last
year and the effect of declining same store sales relative to the fixed nature
of occupancy costs. The lower product margin reflects higher warehouse costs
due to the addition of the new distribution center opened in Fall 1994.
Selling, general and administrative expenses were $25,100,000 or 32.2% of
sales for the quarter compared to $18,776,000 or 29.2% of sales for the
comparable prior year period. The percentage for Bombay, excluding Alex & Ivy,
increased to 33.7% for the first quarter compared to 28.6% for the prior year
period. The 5.1% increase is principally associated with store operating
costs, such as advertising, insurance, payroll and supplies, relative to the
same stores sales decline.
The estimated costs of lease obligations for the Alex & Ivy store closings
were adjusted by reversing $4.4 million of the original reserve based on
favorable results of negotiated lease terminations, thereby reflecting lower
costs than originally projected.
7
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Liquidity and Capital Resources
The primary sources of liquidity and capital resources are cash flows from
operations and bank borrowings. Historically, for approximately six months of
the year, bank borrowings have been utilized to fund seasonal inventory
purchases. In addition, the bank credit lines are used throughout the year to
support letters of credit which are used extensively for overseas merchandise
purchases. Letters of credit totaling $26,590,000 were outstanding at April
29, 1995. Bank lines total $75,000,000, of which $45,000,000 to $50,000,000 is
committed under revolving credit agreements expiring December 31, 1995.
At April 29, 1995, cash was $28,867,000, a decrease of $1,803,000 since
January 28, 1995. Sources of cash for the three months ended April 29, 1995
were primarily from net income of $1,780,000, reduced inventory levels of
$4,153,000, decrease in other current assets of $3,141,000 and proceeds from
sale of common stock of $2,244,000. The primary uses of cash were reductions
in liabilities of $10,524,000 and noncash items of $790,000. Capital
expenditures were $1,840,000 for the three months ended April 29, 1995. A
total of three new stores and two conversions were completed, and computer
hardware upgrades were added during the first quarter of fiscal 1995.
The store expansion program for the remainder of the fiscal year
anticipates approximately six new stores and 12 store conversions to be opened.
The total estimated capital expenditures for fiscal 1995 are $10,000,000. The
Company believes that its current cash position, cash flow from operations and
borrowings available under credit lines will be sufficient to fund current
operations and its capital expenditure program.
8
<PAGE> 9
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended April
29, 1995. The Exhibits filed as a part of this report are listed below.
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
27 Financial Data Schedule
</TABLE>
9
<PAGE> 10
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
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.
THE BOMBAY COMPANY, INC.
(Registrant)
/s/ Robert E. M. Nourse
Robert E. M. Nourse
President and Chief Executive Officer
/s/ James E. Herlihy
James E. Herlihy
Executive Vice President
and Chief Financial Officer
Date: June 9, 1995
10
<PAGE> 11
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibt
No. Description
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<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> APR-29-1995
<CASH> 28,867
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 68,122
<CURRENT-ASSETS> 20,487
<PP&E> 50,500
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 178,818
<CURRENT-LIABILITIES> 33,532
<BONDS> 0
<COMMON> 37,068
0
0
<OTHER-SE> 102,883
<TOTAL-LIABILITY-AND-EQUITY> 178,818
<SALES> 77,943
<TOTAL-REVENUES> 77,943
<CGS> 54,629
<TOTAL-COSTS> 79,729
<OTHER-EXPENSES> (4,400)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (318)
<INCOME-PRETAX> 2,932
<INCOME-TAX> 1,152
<INCOME-CONTINUING> 1,780
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,780
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
<FN>
<F1>included in PP&E
</FN>
</TABLE>
