FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 28, 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
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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)
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
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
October 28, 1995
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Common stock, $1 par value 37,270,445
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Financial Statements ...................................
Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................
PART II -- OTHER INFORMATION
Exhibits and Reports on Form 8-K .......................
Signatures .............................................
<TABLE>
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
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October October October October
28, 30, 28, 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $70,424 $77,473 $218,036 $220,014
Costs and expenses:
Cost of sales, buying and 49,052 51,813 152,993 144,146
store occupancy
Selling, general and 24,082 24,911 70,872 67,867
administrative
Interest expense (income),net (101) 163 (672) (184)
Store closing costs -- -- ( 6,000) --
adjustments
Total costs and expenses 73,033 76,887 217,193 211,829
Income (loss) before income (2,609) 586 843 8,185
taxes
Provision (benefit) for (1,026) 229 331 3,194
income taxes
Net income (loss) ($1,583) $357 $512 $4,991
Net income (loss) per average
common share and common
equivalent share ($0.04) $0.01 $0.01 $0.13
Average common shares and
common equivalent shares 37,592 37,773 37,549 37,992
outstanding
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>
October January October
28, 28, 30,
1995 1995 1994
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(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $798 $30,670 $1,569
Inventories 85,928 73,208 101,591
Deferred taxes 2,830 12,117 2,202
Other current assets 16,382 11,487 16,668
Total current assets 105,938 127,482 122,030
Property and equipment, net 48,252 51,123 64,569
Goodwill, less amortization 603 623 629
Other assets 9,909 10,519 10,865
Total assets $164,702 $189,747 $198,093
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
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<S> <C> <C> <C>
Current liabilities:
Notes payable - banks $ -- $ -- $25,205
Accounts payable and accrued expenses 15,847 24,955 16,572
Accrued payroll and bonuses 2,620 4,271 2,465
Store closing reserves (Note 2) -- 20,824 --
Total current liabilities 18,467 50,050 44,242
Accrued rent and other liabilities 6,113 4,887 4,879
Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized -- -- --
Common stock, $1 par value, 50,000,000
shares authorized, 37,270,445,
36,649,966
and 36,600,711 shares issued, 37,270 36,650 36,601
respectively
Additional paid-in capital 72,344 68,433 67,949
Retained earnings 31,098 30,585 44,918
Cumulative effect of foreign (590) (858) (496)
currency translation
Total stockholders' equity 140,122 134,810 148,972
Total liabilities and $164,702 $189,747 $198,093
stockholders' equity
<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>
Nine Months Ended
October October
28, 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $512 $4,991
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 9,103 7,730
Deferred income taxes and other 7,558 600
Noncash contributions to employee benefit plans 1,244 1,670
Store closing reserve adjustments (6,000) --
Change in assets and liabilities:
Increase in inventories (12,519) (39,314)
Increase in other current assets (3,264) (5,803)
Decrease in current liabilities (25,598) (5,084)
Increase in noncurrent assets (481) (3,617)
Increase in noncurrent liabilities 1,359 1,920
Net cash used by operations (28,086) (36,907)
Cash flows from investing activities:
Purchases of property and equipment and (5,049) (38,164)
other
Sales of property and equipment 358 283
Net cash used by investing activities (4,691) (37,881)
Cash flows from financing activities:
Net borrowings under line of credit -- 25,205
agreements
Sale of stock to employee benefit plans 624 1,130
Proceeds from the exercise of employee 2,333 261
stock options
Net cash provided by financing activities 2,957 26,596
Effect of exchange rate change on cash (52) (6)
Net decrease in cash (29,872) (48,198)
Cash at beginning of period 30,670 49,767
Cash at end of period $798 $1,569
<CAPTION>
Supplemental disclosures of cash flow information:
<S> <C> <C>
Cash paid during the period for income taxes $1,122 $5,572
<FN>
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
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 October
28, 1995 and October 30, 1994, and the results of operations and cash flows for
the nine months then ended. The results of operations for the nine month and
three month periods ended October 28, 1995 and October 30, 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.
(4) Subsequent Event - Lawsuits Discharged
---------------------------------------
In January and February 1995, three lawsuits were filed against the Company
and its Chief Executive Officer in the United States District Court for the
Northern District of Texas, seeking class action status on behalf of the
purchasers of the Company's common stock. In November 1995, the lawsuits were
settled for a nominal amount.
THE BOMBAY COMPANY, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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General
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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 436 stores
located in 42 states in the United States and nine Canadian provinces. At
October 28, 1995, Bombay operated 217 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
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Quarters ended October 28, 1995 and October 30, 1994
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Net sales were $70,424,000 for the quarter ended October 28, 1995 compared to
$77,473,000 for the same period last year. There were no Alex & Ivy sales or
operations in the quarter ended October 28, 1995. Net sales, excluding Alex &
Ivy, were $71,043,000 for the quarter ended October 30, 1994. Same store sales
for Bombay stores decreased 4% for the third fiscal quarter. The same store
sales include 18 stores which were converted to a large store format during the
last twelve months. Excluding these converted large format stores, same store
sales decreased 6% for the three months ended October 28, 1995.
Cost of sales, including buying and occupancy costs, was $49,052,000 for the
third quarter compared to $51,813,000 for the same period last year. As a
percentage of sales, cost of sales increased to 69.6% for the quarter compared
to 66.9% for the prior year. Excluding Alex & Ivy, the percentage was 65.0% for
the quarter ended October 30, 1994. The 4.6% increase for Bombay, excluding
Alex & Ivy, is due to higher buying and occupancy costs (3.1%) and lower product
margin (1.5%). The occupancy costs percentage increase is 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 primarily related to the effect of lowering selected retail prices, increase
in warehousing and freight costs, and a shift in sales mix as consumers tended
to purchase a greater proportion of merchandise on sale compared to full price
merchandise.
Selling, general and administrative expenses were $24,082,000 or 34.2% of sales
for the quarter compared to $24,911,000 or 32.2% of sales for the comparable
prior year period. Excluding Alex & Ivy, the percentage was 31.3% for the
quarter ended October 30, 1994. The 2.9% increase for Bombay, excluding Alex &
Ivy, is principally associated with advertising and payroll costs.
Nine Months Ended October 28, 1995 and October 30, 1994
- -------------------------------------------------------
Net sales were $218,036,000 for the nine months ended October 28, 1995, compared
to $220,014,000 for the same period last year. Excluding Alex & Ivy, sales for
the nine months were $203,307,000 compared to $204,586,000 for the same period
in the prior year. Same store sales for Bombay stores decreased 6% for the nine
months ended October 28, 1995. The same store sales include 18 stores which
were converted to a large store format during the last twelve months. Excluding
these large format stores, same store sales decreased 10% for the nine months
ended October 28, 1995.
Cost of sales, including buying and store occupancy costs, was $152,993,000 or
70.2% of sales for the nine months compared to $144,146,000 or 65.5% for the
same period last year. Bombay, excluding Alex & Ivy, had an increase in its
cost of sales percentage to 69.9% for the nine months compared to last year's
64.0%. The 5.9% increase is due to higher buying and occupancy costs (4.2%) and
lower product margin (1.7%). 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 primarily related to the effect of lowering selected retail
prices, increase in warehousing and freight costs, and a shift in sales mix as
consumers tended to purchase a greater proportion of merchandise on sale
compared to full price merchandise.
Selling, general and administrative expenses were $70,872,000 or 32.5% of sales
for the nine months ended October 28, 1995 compared to $67,867,000 or 30.8% for
the comparable prior year period. The percentage for Bombay, excluding Alex &
Ivy, increased to 33.0% for the nine months compared to 29.8% for the prior year
period. The increase is principally associated with payroll, advertising and
insurance 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 $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. Although no bank borrowings have been utilized in the current fiscal
year, it is expected that the credit lines will be used in November and the
early part of December. 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 $21,459,000 were outstanding
at October 28, 1995. Bank lines total $75,000,000, of which $50,000,000 is
committed under revolving credit agreements expiring December 31, 1995.
At October 28, 1995, cash and short-term investments were $798,000, a decrease
of $29,872,000 since January 28, 1995. Sources of cash for the nine months
ended October 28, 1995 were primarily net income, adjusted for noncash items, of
$12,417,000 and proceeds from the exercise of employee stock options of
$2,333,000. The primary uses of cash were reductions in current liabilities of
$25,598,000, increased inventory levels of $12,519,000 and capital expenditures
of $5,049,000. A total of ten new stores and ten store conversions were
completed, and two stores were closed during the nine months ended October 28,
1995.
The store expansion program for the remainder of the fiscal year anticipates
approximately one new store. The total estimated capital expenditures for
fiscal 1995 are $5,500,000. 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.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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No reports on Form 8-K have been filed during the quarter ended October 28,
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>
SIGNATURES
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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
<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 nine months
ended October 28, 1995 and is qualified in its entirety by reference to
such 10-Q.
</LEGEND>
<CIK> 0000096287
<NAME> THE BOMBAY COMPANY, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> OCT-28-1995
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<INVENTORY> 85928
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0
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<OTHER-SE> 102852
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<CGS> 152993
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<OTHER-EXPENSES> (6000)
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</TABLE>
