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 July 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.
(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)
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 praticable date.
Class Number of shares outstanding at July 29, 1995
----- ---------------------------------------------
Common stock, $1 par value 37,153,856
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended July 29, 1995
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Item
----
1. Financial Statements
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II -- OTHER INFORMATION
4. Submission of Matters to a Vote of Security Holders
6. Exhibits and Reports on Form 8-K
Signatures
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
July 29, July 31, July 29, July 31,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $69,669 $78,199 $147,612 $142,541
------- ------- -------- --------
Costs and expenses:
Cost of sales, buying and
store occupancy 49,311 50,438 103,940 92,333
Selling, general and
administrative 21,689 24,180 46,789 42,956
Interest expense (income),
net (252) (131) (570) (347)
Store closing costs
adjustments (1,600) -- (6,000) --
------- -- ------- --
Total costs and expenses 69,148 74,487 144,159 134,942
------ ------ ------- -------
Income before income taxes 521 3,712 3,453 7,599
Provision for income taxes 205 1,441 1,357 2,965
--- ----- ----- -----
Net income $316 $2,271 $2,096 $4,634
==== ====== ====== ======
Net income per average common
share and common equivalent
share $0.01 $0.06 $0.06 $0.12
===== ===== ===== =====
Average common shares and
common equivalent shares
outstanding 37,613 37,827 37,527 38,102
====== ====== ====== ======
Cash dividends per common
share -- -- -- --
== == == ==
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
<CAPTION>
July 29, January 28, July 31,
1995 1995 1994
---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $22,242 $30,670 $10,371
Inventories 66,586 73,208 83,078
Deferred taxes 3,342 12,117 2,198
Other current assets 12,791 11,487 12,087
------ ------ ------
Total current assets 104,961 127,482 107,734
Property and equipment, net 49,470 51,123 56,448
Goodwill, less amortization 611 623 636
Other assets 10,021 10,519 13,399
------ ------ ------
Total assets $165,063 $189,747 $178,217
======== ======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable and accrued
expenses $14,892 $24,955 $22,126
Accrued payroll and bonuses 3,059 4,271 5,079
Store closing reserves (Note 2) -- 20,824 --
-- ------ --
Total current liabilities 17,951 50,050 27,205
------ ------ ------
Accrued rent and other liabilities 6,205 4,887 4,426
----- ----- -----
Stockholders' equity:
Preferred stock, $1 par value
1,000,000 shares authorized -- -- --
Common stock, $1 par value,
50,000,000 shares authorized,
37,153,856, 36,649,966 and
36,448,043 shares issued,
respectively 37,154 36,650 36,448
Additional paid-in capital 71,621 68,433 66,228
Retained earnings 32,681 30,585 44,561
Cumulative effect of foreign
currency translation (549) (858) (651)
----- ----- -----
Total stockholders' equity 140,907 134,810 146,586
------- ------- -------
Total liabilities and
stockholders' equity $165,063 $189,747 $178,217
======== ======== ========
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<CAPTION>
Six Months Ended
----------------
July 29, July 31,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $2,096 $4,634
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 6,107 5,051
Deferred income taxes and other 8,019 624
Noncash contributions to employee 835 1,284
benefit plans
Store closing reserve adjustments (6,000) --
Change in assets and liabilities:
(Increase) decrease in inventories 5,705 (20,983)
Increase in other current assets (647) (4,169)
Increase (decrease) in current liabilities (24,877) 2,395
Increase in noncurrent assets (214) (3,013)
Increase in noncurrent liabilities 1,397 1,307
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Net cash used by operations (7,579) (12,870)
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Cash flows from investing activities:
Purchases of property and equipment (3,541) (27,494)
Sales of property and equipment 258 246
--- ---
Net cash used by investing activities (3,283) (27,248)
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Cash flows from financing activities:
Sale of stock to employee benefit plans 406 393
Proceeds from the exercise of employee
stock options 2,110 234
----- ---
Net cash provided by financing activities 2,516 627
----- ---
Effect of exchange rate change on cash (82) 95
---- --
Net decrease in cash (8,428) (39,396)
Cash at beginning of period 30,670 49,767
------ ------
Cash at end of period $22,242 $10,371
======= =======
<CAPTION>
Supplemental disclosures of cash flow information:
<S> <C> <C>
Cash paid during the period for income taxes $698 $4,947
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
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 July 29,
1995 and July 31, 1994, and the results of operations and cash flows for the six
months then ended. The results of operations for the six month and three month
periods ended July 29, 1995 and July 31, 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 quarters ended April 29, 1995 and July 29, 1995, respectively, $4.4
million and $1.6 million of the original reserve was reversed based on favorable
results of negotiated lease terminations, thereby reflecting lower costs than
originally projected. All Alex & Ivy stores were closed as of May 10, 1995 and
all store lease termination agreements were fully executed as of July 29, 1995.
(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.
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 432 stores located in 42 states
in the United States and nine Canadian provinces. At July 29, 1995, Bombay
operated 212 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 the majority of the 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 closure of these 58 stores was completed on May 10, 1995.
The largest 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 July 29, 1995 and July 31, 1994
----------------------------------------------
Net sales were $69,669,000 for the quarter ended July 29, 1995 compared to
$78,199,000 for the same period last year. Net sales, excluding Alex & Ivy,
were $69,164,000 for the quarter ended July 29, 1995 compared to $72,920,000 for
the prior year period. Same store sales for Bombay stores decreased 11% for the
second fiscal quarter. The same store sales include 38 stores which were
converted to a large store format during the last twelve months. Excluding
these converted large format stores, same store sales for the three months ended
July 29, 1995 decreased 14%.
Cost of sales, including buying and occupancy costs, was $49,311,000 for the
second fiscal quarter compared to $50,438,000 for the same period last year. As
a percentage of sales, cost of sales increased to 70.8% for the quarter compared
to 64.5% for the prior year. Bombay, excluding Alex & Ivy, had an increase in
its cost of sales percentage to 70.7% for the quarter ended July 29, 1995
compared to last year's 63.1%. The 7.6% increase is due to higher buying and
occupancy costs (5.0%) and lower product margin (2.6%). 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 is related to slightly higher product
costs and a shift in the company's marketing calendar, with the 1995 summer
promotions beginning four weeks earlier than in the prior year. In addition,
this year's summer promotions featured slightly more aggressive discounts in
selected product lines and discontinued merchandise.
Selling, general and administrative expenses were $21,689,000 or 31.1% of sales
for the quarter compared to $24,180,000 or 30.9% of sales for the comparable
prior year period. The percentage for Bombay, excluding Alex & Ivy, increased
to 31.2% for the second fiscal quarter compared to 29.4% for the prior year
period. The 1.8% increase is principally associated with advertising and
payroll costs. Fixed payroll costs increased relative to sales, but were
significantly offset by declines in performance-based pay.
The estimated costs of lease obligations for the Alex & Ivy store closings were
adjusted by reversing $1.6 million of the original reserve based on favorable
results of negotiated lease terminations, thereby reflecting lower costs than
originally projected.
Six Months Ended July 29, 1995 and July 31, 1994
------------------------------------------------
Net sales were $147,612,000 for the six months ended July 29, 1995, compared to
$142,541,000 for the same period last year. Excluding Alex & Ivy, sales for the
six months were $132,883,000 compared to $133,542,000 for the same period in the
prior year. Same store sales for Bombay stores decreased 7% for the six months
ended July 29, 1995. The same store sales include 38 stores which were
converted to a large store format during the last twelve months. Excluding
these large format stores, same store sales decreased 12% for the six months
ended July 29, 1995.
Cost of sales, including buying and store occupancy costs, was $103,940,000 or
70.4% of sales for the six months compared to $92,333,000 or 64.8% for the same
period last year. Bombay, excluding Alex & Ivy, had an increase in its cost of
sales percentage to 70.0% for the six months compared to last year's 63.4%. The
6.6% increase is due to higher buying and occupancy costs (4.7%) and lower
product margin (1.9%). The occupancy costs percentage increased as a result of
the retail square feet added since last year and effect of declining same store
sales relative to the fixed nature of occupancy costs. The lower product margin
is related to slightly higher product costs and a shift in the company's
marketing calendar, with the 1995 summer promotions beginning four weeks earlier
than in the prior year. Additionally, this year's summer promotions featured
slightly more aggressive discounts in selected product lines and discontinued
merchandise. Higher warehouse costs in the first fiscal quarter also
contributed to the decline in product margin for the six months ended July 29,
1995 as a new distribution center was opened in Fall 1994.
Selling, general and administrative expenses were $46,789,000 or 31.7% of sales
for the six months ended July 29, 1995 compared to $42,956,000 or 30.1% of sales
for the comparable prior year period. The percentage for Bombay, excluding Alex
& Ivy, increased to 32.4% for the six months compared to 29.1% for the prior
year period. The 3.3% increase is principally associated with store operating
costs, such as payroll, advertising and insurance. Fixed payroll costs
increased relative to sales, but were significantly offset by declines in
performance-based pay.
The estimated costs of lease obligations for the Alex & Ivy store closings were
adjusted by reversing $6.0 million of the original reserve based on favorable
results of negotiated lease terminations, thereby reflecting lower costs than
originally projected.
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 $23,880,000 were outstanding at July 29,
1995. Bank lines total $75,000,000, of which $50,000,000 is committed under
revolving credit agreements expiring December 31, 1995.
At July 29, 1995, cash and short-term investments were $22,242,000, a decrease
of $8,428,000 since January 28, 1995. Sources of cash for the six months ended
July 29, 1995 were primarily from net income of $2,096,000, reduced inventory
levels of $5,705,000, proceeds from the exercise of employee stock options of
$2,110,000 and noncash items totaling $8,961,000. The primary uses of cash were
reductions in liabilities of $24,877,000 and capital expenditures of $3,541,000.
A total of six new stores and eight store conversions were completed during the
six months ended July 29, 1995.
The store expansion program for the remainder of the fiscal year anticipates
approximately four new stores and two store conversions. The total estimated
capital expenditures for fiscal 1995 are $5,000,000. This estimate has been
significantly reduced since April 29, 1995 primarily due to lower store
construction costs and fewer store openings than originally planned. 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.
PART II - OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders
----------------------------------------------------------
(a)The Annual Meeting of Shareholders of the Company was held on June 1, 1995.
(b)Directors elected to hold office are listed in the Proxy Statement, filed
with the Commission on April 14, 1995, which is incorporated herein by
reference.
(c)Other matters voted upon: None
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a)The Exhibits filed as a part of this report are listed below.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
20 Notice of Annual Meeting of Shareholders and Proxy
Statement, filed with the Commission on April 14,
1995. Such Exhibit is incorporated herein by
reference.
27 Financial Data Schedule
</TABLE>
(b)On June 2, 1995 a Form 8-K was filed to report a dividend distribution of
Preferred Stock Purchase Rights.
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: August 30, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The
Bombay Company, Inc. quarterly report on Form 10-Q for the six months ended
July 29, 1995 and is qualified in its entirety by reference to such
Form 10-Q.
</LEGEND>
<CIK> 0000096287
<NAME> THE BOMBAY COMPANY, INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> JUL-29-1995
<CASH> 22242
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<INVENTORY> 66586
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<COMMON> 37154
0
0
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<OTHER-EXPENSES> (6000)
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</TABLE>
